Business lines


Airports contributed -EUR447mn to Ferrovial’s equity accounted result in 2020, vs. EUR115mn in 2019.

  • HAH: -EUR396mn in 2020 (EUR106mn in 2019) due to:
    • The negative impact of COVID-19.
    • Exceptional costs related to restructuring plans (- EUR32mn).
    • A non-cash impairment and write-off charge on assets in the course of construction (-EUR21mn).
    • A deferred tax liability regularization (-EUR28mn) upon government leaving Corporate Income Tax rate at 19% vs 17% previously approved.
    • The negative evolution of derivatives mark to market (-EUR46mn).
  • AGS: -EUR51mn in 2020 (EUR9mn in 2019).
    • The negative impact of COVID-19.
    • Exceptional costs related to restructuring plans (-EUR3mn) and a deferred tax rate regularization (-EUR9mn).

In terms of distributions to shareholders:

  • HAH: Paid GBP100mn dividends in 2020 (GBP500mn in 2019). This distribution was made on February 2020 reflecting the cumulative outperformance before the significant impacts of COVID-19. Dividends distributed to Ferrovial amounted to EUR29mn in 2020. Dividends from Heathrow are not permitted until RAR is below 87.5%.
  • AGS: Has not paid dividends in 2020.

HEATHROW SP (25%, equity-accounted) – UK

COVID-19 & Heathrow’s response

The COVID-19 outbreak continues to represent a seismic challenge for the aviation industry, including Heathrow, as governments around the globe closed their borders and imposed quarantines. In response to the crisis, Heathrow quickly adapted its operating model and implemented a clear plan to navigate these turbulent times.

Safety and security remain as first and non-negotiable priority. The entire Heathrow airport experience has been reviewed to ensure that passengers are kept safe. Heathrow has added safety measures across the passenger journey following close collaboration with Public Health England and best practice. During 2020, Heathrow has encouraged the introduction of passenger testing within the UK’s airports working with a number of organizations to trial a wide variety of new and innovative testing technologies, even partnering with the airport’s transAtlantic carriers to better understand how various testing regimes could serve as a safe alternative to quarantine.

COVID-19 continues to have a significant impact on Heathrow’s financial performance. Management quickly and decisively rolled out an extensive cost reduction program to protect the financial resilience and cash position of the airport while ensuring an environment where passenger and staff security and safety remain the top priority. Operating costs reduced by a net amount of GBP303mn vs. Budget 2020 (Dec. 2019 Investor Report). Structural changes were implemented to achieve this target such as restructuring of the organization, pay cuts, bonus cancellation, recruitment freeze, utilizing the furlough scheme, renegotiating suppliers’ contracts and consolidation of operations.

In parallel, HAH significantly reduced its capital expenditure, by GBP700mn, to preserve cash with investment focused on the safety and resilience of the airport.

The liquidity position of Heathrow at 31 December 2020 was GBP3.9bn. In addition to raising GBP1.7bn from global capital markets during 2020, Heathrow strengthened its capital structure in October through Subordinated debt (ADI Finance 2 Ltd facility) of GBP750mn. The facility’s net proceeds were injected into the Heathrow Finance Group to provide further headroom to the group gearing covenant level including GBP600mn pushed into the Heathrow SP group that was used in late 2020 to optimize its working capital, Heathrow Finance also raised GBP50mm. Heathrow has sufficient liquidity to meet all payment obligations until at least April 2022 in a no revenue scenario, or well into 2023 under HAH’s traffic forecast.


Heathrow reported its lowest annual passenger numbers in 45 years. Although the hub and largest UK port status provided some resilience during these challenging times, offering as many flights to as many destinations as possible. Heathrow’s work includes: supporting 80% of incumbent airlines flying, consolidation of London operations, targeting new entrants benefiting from unused slots and supporting its cargo business, the best performer during the pandemic.

Million passengers DEC-20 DEC-19 VAR.
UK 1.5 4.8 -69.8%
Europe 9.8 33.2 -70.3%
Intercontinental 10.8 42.9 -74.8%
Total 22.1 80.9 -72.7%


Revenues: -61.7% in 2020 to GBP1,175mn.

  • Aeronautical: -64.7% vs 2019, predominantly due to reduced passenger numbers. Aeronautical revenue per passenger increased +29.2% to GBP29.26 (GBP22.64 in 2019). Revenue per passenger is largely distorted by the reduced number and an increase in cargo movements which are charged on a per movement basis.
  • Retail: -67.6% driven by reduced passenger numbers and mix of retail service available. Retail revenue per passenger increased +18.6% to GBP10.58 (GBP8.93 in 2019). Retail income per passenger is largely distorted due to the reduced passenger numbers.
  • Other revenues: -43.1% vs 2019. Other regulated charges -51.6% predominantly because of fewer passengers and aircraft movements impacting the ability to recover running costs. Heathrow Express saw a -77.8% in revenue due to fewer passengers. Property and other revenues -3.8% showing relative resilience due to rental alleviation being spread forward over the residual life of the contract.
Contribution to revenues

Adjusted operating costs (ex-depreciation & amortization and exceptional): -21.2% to GBP905mn. An extensive cost reduction program (described above) delivered GBP303mn of net savings vs. Budget 2020 (December 2019 Investor Report). Operating costs per pax +188.1% to GBP40.93 (GBP14.21 in 2019).

Adjusted EBITDA -85.9% to GBP270mn (GBP1,921mn in 2019) and adjusted EBITDA margin of 23.0% (62.6% in 2019).

Exceptional items: In 2020, there was an exceptional charge of GBP184mn (nil in 2019) to the income statement. As a consequence of the impact of the COVID-19 outbreak and the delay to expansion, Heathrow has undergone a business transformation in order to simplify operations and reduce costs. As a result, Heathrow has incurred GBP92mn of exceptional costs consisting of GBP142mn of people-related costs, principally redundancy, partially offset by a net GBP50mn credit associated with corresponding pension settlements and curtailments. In addition, Heathrow recognized a non-cash impairment and write-off charge of GBP92mn on assets in the course of construction. While the vast majority of expansion assets remain on the balance sheet in 2020, a number of partially complete projects have been placed on hold, some of these projects are unlikely to be restarted in the foreseeable future or are unlikely to be restarted without material changes to the original proposal design, GBP82mn of costs incurred to date on these projects have been impaired. In addition, GBP10mn of costs which relates to forecast re-work, which will be required as a result of the estimated delay to Expansion, have been impaired.

HAH net debt: The average cost of Heathrow’s external debt was 2.09%, including all the interest-rate, exchange-rate, accretion and inflation hedges in place (vs. 4.73% in December 2019).

Heathrow SP reprofiled a proportion of existing derivatives and completed a series of new transactions which will help to reduce interest payments over the next few years. This has reduced the cost of debt substantially in 2021 to 2022, which will increase after this period.

(GBP million) DEC-20 DEC-19 VAR.
Loan Facility (ADI Finance 2) 820 75 n.a.
Subordinated 2,313 1,919 20.5%
Securitized Group 16,606 13,644 21.7%
Cash & adjustments -3,949 -1,594 147.8%
Total 15,790 14,044 12.4%

The table above relates to FGP Topco, HAH’s parent company.

Financial Ratios: At 31 December 2020, Heathrow SP and Heathrow Finance continue to operate within required financial ratios.

As of 31 December 2020, a forecasting event and trigger event have occurred in relation to the forecast Interest Cover Ratios (ICRs) for Class A and Class B debt for the financial year ending 31 December 2020. As a result, a distribution lock-up is in place within Heathrow SP and will have no adverse effect on Heathrow SP’s creditors.

In July, Heathrow Finance bondholders approved a waiver for the ICR covenant for December 2020 (tested in June 2021), and an amendment of the RAR covenants to 95% (December 2020) & 93.5% (December 2021). The approval included the main following adjustments: no dividends paid until RAR is below 87.5%, minimum liquidity of GBP200mn, introduction of an additional RAR covenant at 95% (2021) and 92.5% (2022), along with a coupon step-up of up to 0.75%.

Liquidity position was enhanced by raising GBP2.5bn debt in 2020 across the capital structure in bond and loan format.

Regulatory Asset Base (RAB): At 31 December 2020, the RAB reached GBP16,492mn (GBP16,598mn in December 2019).

Sustainable growth: Heathrow remains committed to decarbonizing aviation. This year Heathrow became carbon neutral and they helped to launch the UK´s Sustainable Aviation roadmap, the first time that an entire national aviation industry had committed to net zero emissions by 2050.

Over next decade, lower carbon sustainable aviation fuel (SAF) represents the best way to accelerate a reduction in carbon. SAF can be utilized by existing aircraft without waiting for a 25-year asset replacement cycle. The challenge is that the small volumes of SAF currently produced are also expensive. A Government package of supply side regulations, demand incentives and financial support is needed, pursued with urgency and purpose.

Heathrow Expansion: In February 2020, the Court of Appeal suspended the Airports National Policy Statement (ANPS). In October, Heathrow submitted an appeal to the Supreme Court and in December, the Supreme Court unanimously ruled the ANPS as lawful and legal Government policy. Their verdict confirmed the Government had taken into account the Paris Climate Change Agreement as part of the policy, and that this would be considered as part of the robust planning processes in the UK. Heathrow has already committed to net zero and this ruling recognizes the robust planning process that will require Heathrow to prove expansion is compliant with the UK’s climate change obligations, including the Paris Climate Agreement, before construction can begin. The Government has made decarbonizing aviation a central part of its green growth agenda, through wider use of Sustainable Aviation Fuel as well as new technology. This is the right result for the country, which will allow Global Britain to become a reality. As passenger numbers recover, HAH’s immediate focus will be to continue to ensure their safety and to maintain its service levels while Heathrow consults with investors, government, airline customers and regulators on the next steps.

Brexit: In December, the UK and EU agreed a Comprehensive Trade Agreement that came into force on 1 January 2021. Aviation was identified as a priority for both sides. The Agreement includes an aviation chapter, providing the rights for flights to continue between the EU and UK without disruption. All other air services between UK and rest of the world countries have been rolled over or renegotiated, meaning that flights can continue to all markets with certainty.

From a retail perspective and ahead of the end of the transition period, the Government announced changes to airside tax-free sales of all non-excise goods and the withdrawal of VAT Refund scheme from January 2021. These changes will impact Heathrow’s pricing proposition materially and are therefore a significant and credible threat to Heathrow’s income of GBP200mn annually. Removing tax free shopping would lead to a 15% increase in passenger charges from 2022, due to increased difficulty to remain price competitive vs. foreign airports and destinations, as well as the knock-on impact of passengers using the VAT refund scheme at the airport. Heathrow, World Duty Free, and Global Blue, have launched a Judicial Review on the Government’s decision for which hearing took place in late February.

Key regulatory developments

COVID-19 related RAB adjustment: In July 2020 Heathrow submitted an application to the CAA for an adjustment to the Regulated Asset Base (RAB) to adjust for an appropriate amount of the unexpected losses which occurred due to the impact of COVID-19. The adjustment is designed to secure the recovery of historic investment efficiently incurred as well as losses in return as per economic parameters used to set Heathrow’s allowed cost of capital. This proposal seeks the enforcement of the protection included in Heathrow’s settlement against unlimited downside triggered by exceptional circumstances. In October, the CAA published a consultation requesting further evidence that this action was required. In response to the CAA’s consultation Heathrow set out the need for the urgent adjustments prescribed in its license and how its proposed mechanism would ensure that Heathrow could continue to operate in the interests of users while smoothing the impact of this change on passengers over future years.

In February, the CAA published a further consultation, recognizing the existence of exceptional circumstances as defined in the license and accepting that doing nothing was not an option as well as laying out its two preferred solutions. Heathrow has proposed a reasonable adjustment that allows the CAA to act now in order to lower future charges and maintain investment in the airport, protecting jobs and avoiding rapid degradation of service. The CAA must ultimately take a decision, but failure to act in the right way and in a timely manner will see confidence in effective regulation evaporate. This would not just affect Heathrow, but will undermine the perception of investing in the UK and the Government’s Global Britain agenda.

H7 and Regulatory timetable: The H7 period is due to start on 1 January 2022. In December Heathrow submitted its Revised Business Plan (RBP) to the CAA. This set out Heathrow’s plans for the H7 period following consultation with airlines and the publication of further policy views from the CAA through 2020. Heathrow’s plan seeks to maximize passenger growth and minimize airport charges to support airlines in the recovery. The plan assumes Heathrow’s proposed RAB adjustment is fully implemented, which is a critical factor for the plan to be financeable and equity investible and also unlocks Heathrow’s capacity to use financial levers to keep prices as low as possible. Heathrow’s RBP will form the basis of the CAA’s decision making for the H7 period. Its RBP proposes a minimum 5-year regulatory period from 2022-26 as the basis of Heathrow’s H7 framework. Heathrow has proposed evolutions to the regulatory framework following the impact of COVID-19 to ensure that the framework is robust to future uncertainty and appropriately balances risk and reward in the H7 period and beyond. These evolutions include a proposed price control adjustment mechanism which automatically adjusts if revenues deviate from forecast by over 8% by making an adjustment to Heathrow’s RAB. Additionally, Heathrow is proposing changes to ensure it can mitigate any unforeseeable future costs caused by the pandemic and changes in relevant Health and Safety legislation.

The CAA is continuing to consult on its proposals for the regulatory framework which will be in place for the H7 period. Heathrow is expecting further consultations from the CAA in early 2021 focusing on policy development in areas such as capital efficiency and the recovery of early expansion costs. Heathrow is expecting the CAA’s Initial Proposals, which will provide its preliminary view on the price cap and conditions for the H7 period in Summer 2021.

Outlook: The outlook for 2021E EBITDA is consistent with the guidance from 2020 December Investor Report. Heathrow expects 37.1mn passengers (-54% vs. 2019), assuming no further recovery in 1Q, and two thirds of the annual volume forecast materializing during 2H.Given the degree of uncertainty around traffic recovery, HAH has also considered a severe but plausible scenario whereby traffic reduced to 27mn pax. in 2021. In this scenario, HAH concluded that sufficient mitigations would remain within management control to avoid any covenant breach.

Further steps have been taken to reduce costs, maintaining T4 non operational and T3 contingent on traffic recovery, and in the absence of meaningful government support, a reduction in people costs, management roles and removal of all legacy allowances.

No covenant breach during 2021 is forecasted under the current traffic scenario, given the mitigation plans from 2020 and latest cost savings initiatives.However, the impact of COVID-19 continues to create considerable uncertainty for the aviation industry. Plausible scenarios below this ‘severe but plausible’ downside could cause the Group to breach minimum levels required for covenant compliance.

AGS (50%, equity-accounted) – UK

AGS Response to COVID-19:AGS Airports have been significantly impacted by the unprecedented disruption to air travel following the spread of the COVID-19 pandemic and Flybe entering into administration. COVID-19, which followed shortly after Flybe’s collapse in March 5th, resulted in cancellations and a reduction in passengers as airlines reduced flights to a number of countries with COVID-19 outbreaks, border closures and quarantine measures.The main focus of AGS during these times has been to ensure the health&safety of all its passengers and employees.

Measures taken to reduce operating cost by GBP37mn and the capex program by GBP25mn in 2020 include:

  • Organizational transformation.
  • Removal of non-essential costs.
  • Adoption of the Furlough Scheme both for employees and outsourced services.
  • Rates waiver ratified by Scottish Parliament (Aberdeen & Glasgow).
  •  Contract renegotiations and volume related savings.
  • All non-essential capital expenditure has been removed.

Financial covenants: On June 15th, 2020, a waiver of the requirement to comply with the Financial Covenants (Leverage Ratio and DSCR) in the Facilities Agreement was agreed for the periods of June and December 2020. December’s waiver was subject to compliance with some liquidity conditions that were met by AGS. Ongoing dialogue between AGS, shareholders and lenders to support the asset in the coming months. GBP50mn have been committed by shareholders (Ferrovial share GBP25mm).

Traffic: number of passengers fell by -75.9% (3.3mn passengers) across the three airports mainly due to the COVID-19 impact and the collapse of Flybe.

  • Glasgow: traffic decreased by -78.0% vs. 2019 driven by the route suspensions due to COVID-19, the collapse of Flybe and the cancellation of Thomas Cook services in September 2019.
  • Aberdeen: -65.3% driven by the route suspensions due to COVID-19 and the absence of Flybe traffic since March. Aberdeen traffic has been more resilient to COVID-19 than other UK airports due to passengers related to Oil&Gas industry.
  • Southampton -83.4% on COVID-19 and Flybe collapse.
Million passengers DEC-20 DEC-19 VAR.
Glasgow 1.9 8.8 -78.0%
Aberdeen 1.0 3.0 -65.3%
Southampton 0.3 1.8 -83.4%
Total AGS 3.3 13.6 -75.9%

Revenues decreased by -67.4% to GBP71mn, and EBITDA by -126.1% to -GBP25mn driven by the reduced passenger volume across the three airports (-75.9%), partially offset by higher yield and a program of opex reductions.

Following drawdown of GBP38mn in undrawn facilities in March, the cash position reached GBP18mn as of 31 December 2020.

AGS net bank debt stood at GBP739mn as at 31 December 2020.