Dr Paul Golby CBE FREng
The Covid-19 pandemic continued to have a significant impact on aviation and our operation. Our licence requires us to provide a service capable of meeting, on a continuing basis, any reasonable level of demand. While air traffic volumes improved on the prior year, the cash receipts received for this level of flights fell far below the cost of keeping airspace open and safe during the pandemic. Accordingly, our financial focus continued to be on our liquidity and continuing to limit expenditure to what was essential.
Martin Rolfe FRAeS
The aviation sector appears to be at something of an inflection point now with Covid. Air traffic volumes have grown strongly since the start of the 2022, albeit with considerable variability. While this has presented challenges across the sector, throughout the pandemic we have retained the essential skills to support the recovery in aviation. This was one of our key considerations when assessing available options for cost reductions in response to Covid which were necessary to protect our liquidity. Our focus throughout has been ensuring we could safely support traffic regeneration while continuing to protect our employees.
- Traffic: We handled 1.29m flights (2021: 661,000) as Covid travel restrictions lifted. Whilst a 95% increase on the prior year, this was still only equivalent to 50% of pre-pandemic volumes resulting in an operating cash outflow before capital investment and financing of £172.5m (2021: £264.5m outflow).
- Profit: The group reported a profit of £8.7m, after refinancing costs of £41.7m.
- Refinancing: We secured £1.6bn of funding by issuing £750m of unsecured bonds and agreeing £850m of new unsecured bank facilities. This enabled the repayment of more expensive secured bonds in place since 2003 and of existing bank borrowings.
- Digital towers: In December 2021, we acquired the remaining 50% of Searidge, a leader in digital towers and advanced airport solutions.
- Safety: We maintained our strong safety performance with no risk-bearing category A or B airprox attributed to our operation.
- Airspace: Following one of the biggest airspace changes undertaken, we removed long-established air routes over Scotland, freeing aircraft to choose a more direct flight path. We also amended Luton Airport arrival routes.
- Business Plan: Following an extensive consultation with stakeholders, we presented our business plan for the next five-year price control (NR23: 2023 to 2027) to the Civil Aviation Authority (CAA) for its review and decision later this year. It delivers a safe and resilient air traffic service at affordable prices to airspace users while ensuring NERL is able to finance its activities and provides capacity for flight volumes to grow back above 2019 levels during NR23 while enabling environmental and fuel benefits.
- Licence: The Secretary of State for Transport extended NERL’s licence notice period from 10 to 15 years.
- Airports: We extended our ATC and engineering contract with London Heathrow Airport by five years to 2030. We have also started the transition of Gatwick Airport’s contract, which we will operate from October 2022.