Heathrow Airport Holdings Limited’s defined benefit pension deficit swung from a £28m surplus to a £39m deficit in six months, according to its half-year report.

The £67m swing took place between 31 December 2018 and 30 June 2019.

Despite the increasing deficit, Heathrow paid its ultimate shareholders £200m in dividends during this period, due to the company’s “continued strong performance”, but only paid £25m in pension contributions, including £12m in deficit repair contributions.

Although the scheme deficit increased by £67m, the company management believed that “the scheme has no significant plan specific or concentration risks”.

The firm’s DB scheme, the BAA Pensions Scheme, fell into deficit primarily because it incurred actuarial losses of £77m, which it said was attributable to a “decrease in the net discount rate of 0.55 per cent over the six months”.

A Heathrow spokesperson said: "Heathrow’s pension scheme is 99.1 per cent funded. The deficit highlighted is due to fluctuations in interest rates and not an underlying underpayment into the scheme – the scheme was in surplus at the end of last year.

"We are fully committed to the scheme and make substantial cash contributions every year – including £25m already this year and over £500m over the past five years. We retain the full confidence of the scheme’s trustees.”

The BAA Pension Scheme assets increased by £404m over the six months, to £4.27bn, while its liabilities increased by £471m to £4.31bn.

The company’s overall pension scheme net deficit increased to £71m.

Heathrow’s half-year report also revealed that the scheme was funded at 99.1 per cent, down from 100.7 per cent in December 2018.

The scheme closed to new members in June 2008.

In the report, Heathrow chief executive officer, John Holland-Kaye, said: "2019 is shaping up to be a strong year for Heathrow - our colleagues are delivering an excellent service to passengers, we're investing millions to improve the airport and secure new skilled jobs for the future and we've set out our plans to expand Britain's hub airport sustainably and affordably.”

Share Story: