Heathrow eyes £2bn profit despite National Insurance hit
Heathrow has lifted profit forecasts after a stronger than expected bounce in travel demand and despite higher costs arising from the recent National Insurance hike.
The British Airways hub, which is Europe's busiest airport, said it now expects to post adjusted earnings before nasties of £1.98billion for this year, up from £1.95billion in December.
However, the airport's latest profit outlook would mark a 3 per cent decline year-on-year, owing to higher operating costs.
It said it faced ongoing cost pressures from security requirements, 'additional service mitigations', and rising contractual costs from National Insurance.
Chancellor Rachel Reeves announced last autumn that employers' National Insurance contributions would go up in early April from 13.8 per cent on annual wages above £9,100 to 15 per cent on salaries exceeding £5,000.
Many prominent businesses have complained that the tax increase, together with the higher minimum wage and less generous business rates relief, will lead to job cuts and lower profits.
The airport also continues to expect total passenger numbers of 84.2 million this year, compared to 83.9 million in 2024, due to elevated leisure demand and greater long-haul flying than initially predicted.
A total of 32.6 million people travelled through Heathrow in the first five months of 2025, supported by growth from Latin America, the Middle East and the Asia-Pacific markets.
Heathrow's cargo tonnage also rose by 16 per cent, as increased volumes from North America ahead of the introduction of recent tariffs offset declines in Europe.
The airport claimed to be the most punctual hub airport in Europe during the period, with 98.4 per cent of regulated queue times in Central Search Areas coming in under five minutes.
Thomas Woldbye, chief executive of Heathrow, said: 'As the UK's hub, delivering for our customers and the country is what matters.
'We are on track for another strong year with the best punctuality amongst the major hubs in Europe, over £1billion of investment to improve the airport and growing passenger numbers despite macroeconomic uncertainty.
'We are doing it all with an airport charge that, on a like-for-like basis, is aligned with our European competitors.'
Heathrow briefly closed on 21 March after suffering a power outage when a nearby electrical substation caught fire. Around 270,000 journeys were affected by the shutdown.
A review of the incident by former Transport Secretary Ruth Kelly said the airport 'made the right decisions in exceptionally difficult circumstances.'
Heathrow has agreed to implement all 28 recommendations made by Kelly's report.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
8 minutes ago
- Telegraph
Reeves expected to extend stealth raid on income tax
Rachel Reeves is expected to freeze income tax thresholds in her autumn Budget to fill a £40 billion black hole. The Chancellor has been put under pressure by three policy U-turns by Sir Keir Starmer, which are set to increase public spending by about £4 billion later in the year. Some within the Labour Party believe she may not survive the year if she is forced to raise taxes and impose further cuts at the same time. The latest policy reversal, on benefit cuts, will mean the Government will save just half of the £5 billion it hoped to recoup from sickness and disability payments. But Ms Reeves has left herself with few options to raise funds. As well as committing not to increase the rates of income tax, National Insurance or VAT, nor to raise corporation tax, she has insisted she will not break Labour's fiscal rules. Freezing the threshold for the additional rate of income tax was one of the suggestions in a memo from Angela Rayner, the Deputy Prime Minister, to Ms Reeves which was leaked to The Telegraph last month. The current freeze, which was due to be lifted in 2028, dragged seven million people into higher tax brackets last year, raising around £15 billion. Paul Johnson, the director of the Institute for Fiscal Studies, an independent think tank, said a further freeze in thresholds would be 'pretty high up the attractiveness scale' in this year's Budget. 'I think it's fairly likely, as a politically easy way to raise something of the order of £10 billion in additional revenue by the end of the Parliament,' he told The Telegraph. One Labour MP said the Chancellor was now 'in deep trouble' because she has already ruled out several of the easiest ways to raise revenue. 'It's hard to forgive her for where we are now. She locked herself in, foolishly, to a set of commitments that have become unsustainable,' the MP said. The Treasury was already facing a black hole of between £20 billion and £30 billion because of lower-than-expected growth forecasts, partly driven by Donald Trump's imposition of tariffs. The £4 billion cost of Sir Keir's U-turns is expected to be compounded by a revision to the Office for Budget Responsibility's (OBR) medium-term productivity forecast this summer and growth forecast this autumn, which could have an impact on revenues of between £7 billion and £8 billion. This week's decision to maintain benefit payments for existing claimants has cost the Treasury £2.5 billion, while the U-turn on winter fuel payments for pensioners cost a further £1.25 billion. Ms Reeves is facing backlash from Labour MPs over her proposal to cut benefits, which was designed to bring down the cost of welfare at the expense of thousands of claimants. Sir Keir, who watered down the measures to avoid the biggest rebellion of his career, insisted that his 'common sense' welfare reforms now strike 'the right balance'. But the situation leaves the Chancellor with little choice but to freeze income tax thresholds, which were due to rise in line with inflation from 2028. The policy would likely raise around £8 billion a year in tax receipts, but would cost a worker earning on an average salary thousands more in income tax by the end of the decade. Independent economists say a further freeze in the autumn is now all but certain, and that further increases on smaller taxes or a new raid on pensions could be required to make up the shortfall. Downing Street refused to rule out further tax rises on Friday, with a spokesman saying: 'As ever, as is a long-standing principle, tax decisions are set out at fiscal events.' However, Ms Reeves's team remains optimistic that good economic performance between now and the Budget will reduce the £105 billion cost of servicing government debt, which currently accounts for 8.2 per cent of public expenditure. The Bank of England is widely expected to cut interest rates at its next meeting on Aug 7, although gilt yields are not directly determined by the base rate. Treasury officials also hope that the cost of energy will continue to fall, although it is acknowledged that instability in the Middle East could drive up the price of crude oil once again. Ms Reeves is adamant that she will not break her fiscal rules – to increase public sector borrowing as a percentage of GDP or raise money on the markets to fund day-to-day spending – and believes that maintaining market stability should be the Government's primary goal. Balancing the books with a stealth tax on income has been a favoured policy lever of successive chancellors. The current freeze to 2028 was introduced by Sir Jeremy Hunt in his 2022 Budget. But the policy results in more people paying higher rates of income tax as their wages increase – an economic phenomenon known as fiscal drag. OBR figures show that in 2024-25, some £15.3 billion extra was due to be raised thanks to the frozen thresholds. In the same year, the OBR predicted that the total welfare bill was set to shoot up by £16.6 billion. Figures released on Thursday show that seven million people have been dragged into paying higher rates of income tax as a result of the stealth raid on wages. Frozen thresholds forced an extra 520,000 taxpayers into the 40p bracket in the last year, according to estimates by HMRC. It brings the total to just over seven million in 2025-26, a 60 per cent rise from the 4.4 million in 2021-22 when income tax thresholds were first frozen under the Tories. The number of 45p additional-rate taxpayers has more than doubled from 520,000 to 1.2 million over the same period. Last November, Ms Reeves told MPs she would not raise taxes again or increase borrowing and that the Government would need to 'live within the means we've set ourselves' for the remainder of the Parliament. 'We're not going to be coming back with more tax increases, or indeed more borrowing,' she told the Treasury select committee.
Business News Wales
29 minutes ago
- Business News Wales
Hospitality Sector Ranked Lowest for Hourly Pay, New Data Reveals
Hospitality businesses offer the lowest hourly pay of any UK sector, new research suggests. Business finance experts at business bank accounts said that analysis of ONS data shows that tighter margins mean that hospitality firms are forced to offer staff hardly more than minimum wage. It comes as the UKHospitality chief executive Kate Nicholls has criticised the Uk Government's efforts to boost business growth through its recently announced Industrial Strategy, saying it failed to address the challenges facing the hospitality sector. Industries with the lowest hourly pay: The accommodation and food service activities sector makes up a significant part of the UK's economy, with the hospitality sector's annual economic contribution hitting £93 billion in 2023 and estimated to increase by another £29 billion by 2027. Despite this, this industry's workers have the lowest hourly pay rate. An average working week is around 26 hours long, and the average hourly pay is £12.39 – just 18 pence above the national living wage. Businesses within the industry have faced a lot of financial hardship in recent years, the researchers said, including the Covid pandemic and National Insurance increases. This has made improving workers' pay increasingly difficult while still making a profit, contributing to lower hourly rates in the sector. The sector also ranked in the top 10 for the amount of overtime worked, with employees clocking an average of 2.8 hours of overtime per week. Joe Phelan, business bank accounts expert, said: 'Attracting and retaining high-quality talent doesn't just come down to salary – it's also about meeting evolving expectations around working conditions. Today's employees are more willing to walk away from roles that don't offer a healthy work-life balance or prioritise wellbeing. That means businesses need to offer more than just pay; they must create environments with manageable hours, flexibility, and genuine support. 'When companies get this right, they typically see lower staff turnover, higher engagement, and more consistent productivity, all of which feed into more stable operations and healthier cash flow. And with greater financial predictability comes the ability to plan and grow with confidence.'
The Sun
40 minutes ago
- The Sun
Mercedes ramp up sensational Max Verstappen swoop despite bad blood with F1 rival George Russell
MERCEDES are ramping up their pursuit to sign Max Verstappen to form a dream team with George Russell. Toto Wolff confirmed today that there had been behind closed doors talks with the four-time world champion and that Mercedes were 'exploring' their future plans. 5 5 Russell, who is out of contract next year, also said that his team have been talking to Verstappen about signing a deal for 2026. The Brit, 27, also suggested on Thursday that his contract talks with Wolff had been delayed by the ongoing talks with Verstappen. Wolff said: "There is no delay in George's contract negotiations because it's pretty clear, since a long time, what our timings were and are. "We have known each other for such a long time, so there is no such thing as a delay. "As team principal of the best car brand in the world, it's clear you explore what a four-time world champion will do in the future, "That could be long into the future. That has no effect on us putting a signature on George's contract." Four-time world champion Verstappen has a contract with Red Bull until 2028 which is said to have a break clause which could be triggered to prompt an exit. 'That's not how it is and how it works. And I come back to my previous question. 'I want to just have the conversations behind closed doors not in town halls. And we have two drivers that have been in our programme since a long time. 'Drivers that I'm perfectly happy to have. Drivers that will do great in the future of the team. So it's a bit of a different situation.' Wolff suggested that Russell had been weighing up his options outside of Mercedes as well. The legendary Austrian boss added: 'We are going into territory that I don't want to discuss out here, but people talk, people explore. 'The most important thing is that in our organisation, we are transparent. But it doesn't change a millimetre of my opinion of George, his abilities or anything else. 'I like what George says and I'm always supportive of the driver. There is no such thing as saying things I wouldn't want him to say. 'We are very transparent in the team of what we do, what we plan. 'We've been like that since I was being put in charge of that. So that's not the issue. At the moment clearly, you need to explore what's happening in the future.' Eyebrows have been raised over whether Verstappen and Russell could fit in a team together with the duo having a history of bad blood. 5 The most recent incident involved Verstappen ramming into the British driver at the Spanish Grand Prix three-weeks ago. When asked if the pair could drive together at Mercedes, Wolff added: 'I can imagine every line-up. 'Nico Rosberg and Lewis Hamilton fighting for a world championship, so everything else afterwards is easy. 'There's pros and cons of having two drivers fighting each other hard. We've seen examples where that functioned and other examples where it didn't. 'When it comes to the contract situation, you know, our sport is pressure, constant pressure, whether you're in the car, outside of the car, you just need to cope with that. 'George knows that, like any other driver.' Earlier this year Wolff said zero negotiations had been held with Verstappen and that they were not 'flirting' with the prospect of signing him. He said: 'There is no flirt (with Verstappen) in that sense. You can flirt or you have conversations. 'It is in the nature of the sport that you talk about people, whether they're in the car or in the factory or in the racetrack. 'Most important thing is to stay true to your values. And for me, that is being integral and humble about the situation, respectful of the people. 'That's what we are trying to do in the team. I've been in situations like this before. Some of the conversations are more difficult than others.' Russell himself made it clear he was aware of Mercedes' interest in Verstappen, hinting that it could be delaying his contract renewal due at the end of the season. The Brit, 27, told Sky: "It's only normal that conversations with the likes of Verstappen are ongoing. "But from my side, if I'm performing as I'm doing, what have I got to be concerned about? There are two seats in every Formula 1 team. Toto has made it clear to me that how I'm performing is as good as anybody. "There is only one driver that you can debate in terms of performance. These are his words and not my words, and that is why I have no concern about my future. "But there are two seats to every team and I guess he needs to think who are those two drivers."
