Ferrovial rubbing its hands ahead of possible Heathrow airport extension

Passengers at Heathrow's Terminal 5.Passengers at Heathrow's Terminal 5.

Athough the project to build a third runway has caused division in the government, the Heathrow airport extension is now more feasible after the result of the June 23 referendum. Brexit has made it necessary to open up new routes to increase the UK’s connections with other continents. The construction of a third runway would allow the number of annual flights to grow from 480,000 to 740,000. And Spanish services and infrastructure operator Ferrovial owns a 25% stake in the airport.

Bankinter analysts highlight three areas where the Heathrow extension could benefit the company:

(i) It could participate in the construction of the third runway.

(ii) The airport extension would increase its regulated assets’ base (currently 15.007 M.GBP), allowing for a hike in airport charges.

(iii) The rise in the number of passengers would drive an increase in commercial revenues, in profits and also in the dividends Ferrovial receives (59 million euros in H1’16), which are hedged against the euro/pound exchange rate.

*Image: Flickr/Curt Smith