Annual Report & Accounts 2023

Chairman’s Statement

Dr Paul Golby CBE FREng

We exist to ensure the skies are a safe and efficient environment for aviation. Our priority from the start of the year was to support the safe return of air traffic as Covid travel restrictions were lifted. This was achieved by ensuring we retained the skills, capability and capacity during Covid so that we would not impair the recovery of aviation post-pandemic and by careful planning and preparation.  The Board has been pleased with the company’s safety performance, which has been consistently good throughout the year. Our customers have acknowledged this, as indicated by the strong scores they gave for our safety and operational performance in a recent customer surface.

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CEO’s Review

Martin Rolfe FRAeS

It was a welcome relief to see air traffic volumes recover strongly last summer following the lifting of Covid restrictions in March 2022. Over the course of the year, we handled 2.26m flights in the year, or 87% of pre-pandemic levels (2022: 1.29m flights). It became clear early last summer that pent-up demand after two years of lockdowns would buoy the industry’s recovery, despite inflationary pressures and geopolitical risks.

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Key statistics

Key statistics for the year ending 31 March 2023:

2.26m
total flights handled
87%
increase in volume of flights
148.5m
pre-tax profit
56,317tonnes
savings of CO2
145m
of bonds issued

The Highlights

  • Result: The group reported a profit of £148.5m (2022: £8.7m, after refinancing costs of £41.7m). As for the prior year, the result includes our assessment of the regulatory allowances still to be determined by the CAA for the 2020-22 Covid period shortfall between flight income and costs incurred.  
  • Price control: In October, the CAA published its initial proposals for NERL’s next price control (NR23: 2023 to 2027). While the CAA recognises the challenge we faced during Covid, we are concerned about material elements of their proposal. We have reiterated the importance of a price control with appropriate resources and risk mitigations to deliver the NR23 plan, critical to the service customers require now and, in the future, which NERL has proposed. The CAA’s decision is expected later in summer 2023.  
  • Retrospective reconciliation: For the scale of the regulatory allowances outstanding, we expect the CAA will require their recovery over 10 years from 2023, as we also proposed, to ensure affordable charges as the sector recovers after Covid. The outstanding regulatory allowances account for the significant difference between our results and our cash flows since Covid.  
  • Funding: This year, we completed the refinancing which commenced during Covid with the issue of a further £145m of bonds, repayable in 2033.  
  • Traffic levels: Flights recovered strongly after the lifting of travel restrictions last summer and stabilised at an average 87% of pre-pandemic levels for the year. Overall, we handled 2.26 million flights (2022: 1.29m) in the year.  
  • Airprox: There were no risk-bearing airprox attributed to our operation during the financial year 
  • Sustainability: We received a 3Di (flight efficiency) score of 26.0 for calendar year 2022 (CY 2021: 22.8) against the regulator’s allowance of 27.3. Our net zero target was validated by the Science-based Target initiative. 
  • Airspace modernisation: We implemented Free Route Airspace over Southwest England and Wales, one of the busiest intersections for international flights 
  • Airports: In October, we took over the air traffic control and engineering contract at Gatwick Airport after a smooth transition from the previous provider.  
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