The foreign funds behind Heathrow have been warned the airport is threatened with nationalisation if they do not inject new money to help it cope with the pandemic.
The airline industry watchdog said that without emergency funding from shareholders including the sovereign wealth funds of Singapore and Qatar, Heathrow faces a similar fate to Railtrack, the former FTSE 100 company that collapsed in 2001 under debts of £3.5bn. Taxpayers stepped in and took back control of the rail network.
The Civil Aviation Authority (CAA) issued a thinly veiled threat to Heathrow owners also including the Spanish infrastructure company Ferrovial and a Chinese sovereign wealth fund, as well as the UK’s Universities Superannuation Scheme, after rejecting the airport’s demand for higher airline and passenger charges. The CAA said it did not have the powers to nationalise individual companies.
Heathrow has made the demand despite paying out £4bn in dividends via just one of the entities in its corporate structure since 2012.
The regulator said: “Heathrow’s request set out a solution that would involve consumers bearing a significant proportion of the costs associated with the pandemic and providing additional protection for shareholders. We have considered Railtrack as a relevant example of when a regulated company has faced severe financial issues.”
This weekend Heathrow hit back, accusing the CAA of sending a “terrible” message to foreign investors and threatening court action if regulators do not allow higher charges, which it claims it is entitled to.
Javier Echave, the airport’s finance chief, said: “You are breaking the principle of the UK being a safe haven for investors’ money.”
The row is escalating as concern over Heathrow’s ability to withstand more months of depressed air travel rises, given its heavy debts. It owes more than £17bn to banks and bondholders, but says it has funds to see it through until 2023 even though only 19m travellers passed through between January and September, a decline of almost 70pc.
The CAA’s comparison with Railtrack pointedly referenced a comment from Stephen Byers, transport secretary during the company’s collapse. He said shareholders “need to be fully aware of the projected liabilities of the companies in which they invest and the performance risks they face”.
A Heathrow spokesman said the airport was “completely different” to Railtrack and the CAA caveated its comparison by saying there were “a number of important differences in circumstances” between the two.
The CAA is now consulting the industry on its proposed rejection of Heathrow’s call for higher charges.
Richard Stephenson, communications director of the regulator, said: “We do not yet believe that Heathrow has demonstrated its request is a proportionate measure. That’s why we are seeking additional evidence.”
Mr Echave said that without the ability to charge more “when demand returns, Heathrow could become the dysfunctional gateway of Britain”.