London's Heathrow said a passenger cap decision after it struggled to cope with a rebound in travel had delivered a marked improvement in punctuality and baggage handling.

The airport capped the number of passenger departures at 100,000 a day earlier this month to limit queues, baggage delays and cancellations, to the consternation of some airlines.

It said on Tuesday the decision had stabilised its operations, but it was still struggling with a lack of ground handlers.

Heathrow said the number of people employed in ground handling had fallen sharply during the pandemic, as airlines cut costs. It estimated that airline ground handlers were at around 70% of pre-pandemic levels and said there had been no increase since January.

The airport said its first-half adjusted loss before tax reduced by £466 million (€549 million) to £321 million as a result of higher passenger numbers, but said it was still struggling with a lack of ground handlers.

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It does not expect to pay a dividend in 2022.

"Airline ground handler performance has been much more stable since the cap came into effect, and we have seen a marked improvement in punctuality and baggage performance," it said.

Emirates, the world's biggest operator of long-haul jets, initially rejected demands to reduce capacity at the airport before it added another Dubai service from Heathrow's London rival Gatwick. 

+Additional reporting Reuters