Reckoning for Heathrow
THE pandemic has wreaked havoc on Britain’s air transport industry, hospitality and London’s role as one of the world’s great entrepot cities. Traffic at Heathrow plunged 88pc year- on-year in November to 747,000. Last year, 81m passengers went through the airport.
The owners – Spain’s Ferrovial, the Qatar Investment Authority et al – have mothballed Terminal 4 and there is a messy threat of a Christmas strike over plans to fire and rehire up to 4,000 workers on lower wages. That is not a good look for a company which paid its top 49 directors, including chief executive John Holland-Kaye, £21.9m in 2019.
The interruption to air traffic, tourism and hospitality is doing enormous damage to the capital. Property outfit Shaftesbury, the biggest landlord in Chinatown, Carnaby Street and the Seven Dials area in theatreland, ran up losses of £700m in the year to September. The value of its properties tumbled by one-fifth to £3.1bn.
It is a great paradox that at the moment in history when London is at its quietest, that a final decision on a third runway at Heathrow is expected to be handed down today by the Supreme Court after decades of wrangling. The project was halted this year after the Court of Appeal ruled the Government failed to take into account the impact of the Paris Climate Agreement.
For once, the interests of Heathrow’s owners and the climate change objectors look to be aligned. Heathrow bosses argue that expansion could be safely delayed for five years as the capacity won’t be needed for another 10-15 years because of the longterm damage wrought by coronavirus.
Friends of the Earth argues it should never be built if the new carbon neutral climate change target of 2050 is to be met.
The very notion that, after decades of screaming blue murder over capacity constraints at Heathrow and the diversion of traffic to Schiphol in the Netherlands, Paris and Frankfurt, the owners should use Covid to postpone the project is against the public interest!
A bigger Heathrow, capable of handling up to 142m passengers, is an integral part of the national infrastructure and critical to Britain’s global ambitions.
As a resident of Richmond, right under the flight path, I have good reason to welcome postponement. But Heathrow’s overseas owners, who have lived off the fat of the land for years, should not be allowed to escape their investment obligations.
WPP’s evasions
THE least that can be expected of public companies is that regulatory filings with the stock market tell the whole story. WPP’s announcement, when the London market opened yesterday, looked innocuous.
The world’s largest advertising agency (like other global firms such as Rolls-Royce) engages in complex hedging operations and a couple of technical accounting rules were breached. No one should be particularly concerned because the measures most analysts and investors used to judge performance, such as operating profit, net debt and cash flows, were unaffected.
When one digs deeper, however, this is not the whole story. The latest statutory results, which include below-the-line balance sheet movements such as hedges, provide an alternative reality. A record statutory loss of £2.6bn actually turns out to have been £2.9bn, after a further £301m of losses were recognised by the finance team.
The accounts are being adjusted back to 2017, but does it go back further? Why didn’t the independent auditors, Deloitte, ensure that accounting conventions were followed? And had a more rigorous approach been taken, would WPP’s extravagant payouts to executives have been quite as generous?
If credibility is not to be undermined, then investors deserve fuller answers.
Life changing
LV’S chief executive, Mark Hartigan, thinks that kind-hearted Bain Capital, sitting on vast assets of £42bn, will be better stewards of the historic life funds than a merger with fellow mutual Royal London.
There was little to choose between the two suitors when it came to the cash on offer, including enhancement of the withprofits funds.
LV was concerned that Royal London would rationalise by closing branches.
The idea that Bain will leave current cosy arrangements intact and at the same time invest heavily in modern IT and platforms is cloud cuckoo land.