UK Edition
Heathrow backers plough £650m into airport as PM triggers Article 50
Heathrow’s overseas backers have flown in the face of any fears surrounding Britain’s triggering Article 50, its two-year divorce from the EU by pledging £650m in investments for major projects.
The London airport, which deals with more than 75m passengers every year, said its consortium of investors would spend the cash in 2019 on projects likely to include the expansion of Terminal 2 and a new southern access tunnel for road traffic to the airport.
The details of those projects will now be worked on by Heathrow and presented to the airport’s shareholders for approval.
The investment was discussed within the past week at the airport’s board meeting and suggests confidence by the overseas investors in Britain’s potential as negotiations with the EU get under way after the formal notification activating Article 50 yesterday.
The move by the investors follows a series of recent major investments in the UK by major global businesses, including Toyota’s plan to invest £240m in its Derbyshire car plant as well as plans by Dyson to increase its UK base tenfold by snapping up an ex-RAF base.
Since the turn of the year several major names have also pinned their colours to the mast, with McLaren stating it would open a £50m factory in Sheffield which would create 200 jobs while Amazon pledged it would create more than 5,000 full-time UK jobs.
Heathrow said the investment would enhance the passenger experience at the airport and improve its ability to deal with the growing demand for its services. It is already home to more than 80 airlines and flies to more than 180 destinations. The airport is understood to have around 30 airlines waiting to fly from it but which cannot be accommodated due to the lack of runway capacity.
The airport’s shareholders are responsible for more than $1trn of funds under management and under the consortium more than £11bn of private investment has been put into Heathrow in the past decade.
Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani, chief executive of Qatar Investment Authority, said: “Our investment in Heathrow is much more than just an investment in one of the world’s great airports – it’s an investment in Britain’s connections to the world.
“As the UK reshapes its role in the world, we confirm our commitment as proud partners of a great trading nation."
Heathrow chief John Holland-Kaye called the investment “great news for Heathrow passengers and for Britain”.
Roughly 26pc of UK exports by value go through Heathrow, usually in the cargo holds of passenger aircraft, the importance of which is likely to have been a major consideration in the Government’s announcement in October last year that it supported the site’s expansion.
The airport handles more freight by value than all other UK airports combined, accounting for approximately 31pc of the UK ’s non-EU trade, the expansion of which could be extremely important if negotiations between Britain and the EU are acrimonious.
A Government draft national policy statement on the expansion is now being carried out with a vote in Parliament on the final document expected this winter.
A planning application is also being drafted by Heathrow alongside the Government's policy statement and will be put before the planning inspectorate, which is expected to make a decision in 2020 meaning planes could be taking off from the new runway by 2025.
The Government has said a new runway at Heathrow will bring economic benefits to passengers and the wider economy worth up to £61bn. It reckons up to 77,000 additional local jobs are expected to be created over the next 14 years and the airport has committed to create 5,000 new apprenticeships over the same period.
The airport says it can expand without a consummate rise in airport-related car journeys to it, pointing to various public transport developments including High Speed 2 and London's Crossrail.
Heathrow is owned by a consortium of global investors which took the company private in 2006 after it being a listed company. The consortium includes Ferrovial S.A. (25pc), Qatar Investment Authority (20pc), Caisse de dépôt et placement du Québec (12.62pc), Singapore’s sovereign wealth fund GIC (11.2pc), Alinda Capital Partners of the United States (11.18pc), China Investment Corporation (10pc) and Universities Superannuation Scheme (10pc).