Heathrow’s new biggest shareholder backs airport expansion

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Heathrow’s incoming largest shareholder has thrown its weight behind expanding the UK’s largest airport, and said it would back management if it tried to build a third runway.

French private equity group Ardian agreed to buy a 23 per cent stake in Heathrow in June, part of a £3.3bn shake-up in ownership at the airport which also saw Saudi Arabia’s sovereign wealth fund buy a stake.

With the deal expected to complete before the end of next month, Ardian’s head of infrastructure Mathias Burghardt told the Financial Times that Heathrow needed to grow in the coming years.

“Growth is in our DNA. We don’t invest in companies, or in infrastructure if they don’t have a growth plan,” he said. 

Heathrow’s chief executive Thomas Woldboye is within months expected to announce the airport’s first expansion plan since the pandemic, which will prioritise small-scale improvements to increase passenger numbers.

But the only way to significantly increase capacity would be to build a new runway, a politically contentious topic that has remained unresolved for decades. Prime Minister Sir Keir Starmer’s cabinet is split over whether to back a third runway, the FT reported this month.

Burghardt backed Woldboye’s plan, and said he would then support a third runway if there was “consensus” behind it.

“The first thing is to grow the airport within the existing footprint, and then . . . how can we ensure growth beyond the existing footprint?”

“If management designs growth, which could be a third runway . . . and if there is consensus, first with the government, but beyond that, other stakeholders, we certainly will support it for sure,” he said. 

But amid rising concerns about the difficulty of decarbonising aviation, Burghardt said any plans would be contingent on a credible plan to lower emissions. 

“Companies which are not prepared for that will really have problems in the future, and that will limit their growth,” he said. 

Asked whether Ardian would be willing to part-fund any big expansion — Heathrow’s third runway project was costed at about £14bn in 2019 — he replied: “Without being specific to Heathrow, our job is always to put [in] more money . . . the more capex, the more growth.”

Ardian’s deal for a stake in Heathrow was followed this month by the Canadian pension investor PSP’s acquisition of the operator of Aberdeen, Glasgow and Southampton airports for £1.5bn, marking the latest investment in the British travel sector following the pandemic.

Burghardt said that while travel had rebounded since the pandemic, it remained “difficult to say what is normal” as the mix of passengers had shifted since video meetings had replaced some business trips.

He also said that the UK remained an attractive market for investment, even amid fears that struggles at Britain’s largest water utility Thames Water would deter private funds from backing other UK infrastructure.

“We’ve been investing in the UK for a period of years,” he said. “I really believe the UK has demonstrated the strength of its institutions.”

However, he said that when Ardian sold its stake in the UK’s Anglian Water in 2014 the firm was “not convinced regulatory dynamics would evolve positively” in that sector, but that when it came to Heathrow and the airport sector “we believed that the existing regulation is a good regulation overall”.