Heathrow Airport has announced the largest ever private sector capital investment in the UK’s transport network, with plans for a £2.3 billion accelerated investment and upgrade program over the next two years.
The announcement comes just days after Saudi Arabia completed a £950 million investment to acquire a 15% stake in Heathrow’s holding company through its sovereign wealth fund, the Public Investment Fund.
The government-owned fund has made several significant investments in the UK in recent years, buying up shares in upmarket retailer Selfridges and taking a controlling stake in Newcastle United Football Club.
Heathrow said on Wednesday that it intends to use the investment to make significant improvements across its passenger terminals, such as upgrading its problem-prone baggage delivery system and upgrading other systems to improve on-time departures.
Saudi Arabia acquired its stake in Heathrow’s holding company from the Spanish construction conglomerate Ferrovial, which decided to sell all of its shares in the West London airport earlier this year.
Ferrovial became the majority shareholder in Heathrow in 2006 in the hope that plans for a controversial third runway would be approved and that the company would be able to cash in on the massive building project.
Despite securing parliamentary approval for the runway in 2018, the project remains little more than a pipe dream, and airport boss Thomas Woldbye said earlier this week that it needed a ‘clear steer’ from the government that the runway would be approved before it spends any more money on the project.
Unfortunately, many of Heathrow’s biggest investment and improvement projects are tied to the third runway being approved.
If Heathrow does win planning permission for the runway, the plan is to demolish the aging Terminal 3 and double the size of Terminal 2 which opened in 2014. A series of ‘toaster rack’ satellite terminals would then be built between Terminal 2 and Terminal 5, with an underground train connecting the two terminals and all piers for the first time.
The British government says that the third runway will only be approved if Heathrow can prove it will deliver economic growth, and that’s exactly what this latest investment is designed to prove.
“Heathrow is the UK’s gateway to the world, and ultimately, the country’s gateway to growth,” Woldbye said on Wednesday.
“Today’s announcement confirms that we will continue to invest more than £1bn of private sector cash each year into the airport to deliver facilities our airlines and passengers want, while boosting the UK economy and creating opportunities for businesses up and down the country.”
