London City Airport receives a crucial financial boost to address challenges in business travel recovery.
- Canadian and Kuwaiti investors contribute £130m to reduce the airport’s debt amid lingering post-pandemic impacts.
- Passenger numbers at London City Airport remain 20% below pre-Covid levels, highlighting a slow recovery.
- The UK government’s decision to block expanded weekend services constrains the airport’s growth potential.
- Despite setbacks, London City Airport shows a shift towards leisure travel, now constituting 60% of total passengers.
In a significant move, London City Airport has secured a £130 million investment from a consortium of Canadian pension funds, including AIMCo, OMERS, and the Ontario Teachers’ Pension Plan, as well as Kuwait’s Wren House. This financial injection is aimed at reducing the airport’s debt, paying interest, and bolstering its cash reserves. Such measures are essential as the airport enters discussions to refinance over £700 million in loans due by March 2026.
The airport, which traditionally relies on corporate travel, has struggled to keep pace with larger hubs like Heathrow. In 2023, London City Airport welcomed 3.4 million passengers, a drop from 5.1 million in 2019. Despite expectations for passenger numbers to grow to 4 million in 2024, this still represents a 20% decrease from pre-pandemic levels. Such figures underscore the slow recovery process and the challenges that persist for an airport heavily dependent on business travel.
Compounding these challenges, the UK government’s decision to block the airport’s efforts to expand weekend services has hindered its ability to maximize the raised annual passenger cap from 6.5 million to 9 million. The spokesperson from London City Airport noted the difficulties in reaching this new limit without the ability to add more weekend flights. Expanding operations during weekends is seen as pivotal for attracting additional passengers to meet the increased cap.
Leisure travel, however, has emerged as a growing segment for London City Airport, now making up 60% of its passenger traffic. This evolution highlights a shift in the airport’s demographic as it adapts to changing travel trends post-pandemic. The airport remains a profitable entity with longstanding support from its investors, who maintain a long-term vision for its growth and adaptation in a challenging market environment. The recent funding surge is another step in its evolving ownership landscape, which has included notable transactions such as a £2 billion acquisition by a Canadian-led consortium back in 2016.
London City Airport’s strategic financial maneuvering highlights its resilience amid ongoing recovery challenges.
