CPH interim report: Minimal traffic and a loss before tax of DKK 436 million

The first quarter of 2021 ended with a loss before tax of DKK 436 million. At DKK 189 million, revenue was down by 75.2% relative to the first quarter of 2020, in which January and February were normal months.

CPH is thus still in the midst of the worst crisis in recent history. Operating at less than 10% of normal capacity, we are still relying on borrowed funds to keep the airport running from month to month.

"The necessary costs of maintaining operations far exceed our income. In the first quarter of the year, we had to draw a further DKK 500 million on our credit facilities. This was necessary because our principal responsibility is to keep Denmark's gateway to the world open even in times of very limited passenger traffic and, not least, for air cargo traffic," says Copenhagen Airport CEO Thomas Woldbye.

Cash funds available - investments on hold
Thanks to good relations with our lenders, CPH is in the process of negotiating an extension of the DKK 6 billion credit facilities agreement, which was entered into in May 2020 as well as an extension of the current loan covenant waiver agreement with existing lenders. It is expected that an extension of up to 18 months will be agreed on satisfactory terms.

"During a serious crisis, liquidity is key. The credit facilities agreement with our lenders saw us through 2020, as we had to draw down just under DKK 1.4 billion," says Thomas Woldbye.

CPH has executed a significant cost‐cutting programme for the operating costs, including job sharing and redundancies. As announced in the 2020 Annual Report, this has resulted in an annual saving of approximately DKK 500 million.

Before the coronavirus crisis struck, CPH invested some DKK 2 billion annually in developing the airport. As part of last year's extensive measures to cut CPH's cash outflow, the investment programme was reassessed and reduced by DKK 800 million in 2020.

"We have put many investments on hold. These adjustments continue in 2021, and investments previously planned for the period 2020‐2022 will be reduced by a total of more than DKK 2 billion," says Thomas Woldbye.

The road to a healthy business
The aviation industry is still on its knees, and as many as 10,000 jobs have been lost in and around Copenhagen Airport. The airlines' programmes offer many options for travelling this summer, but everything depends on the vaccines, the future EU COVID status certificate, infection trends, airport restrictions and the new reopening plan for the entire industry.

"It is crucial that traffic and passengers begin to return soon if we are to stay competitive, remain able to invest in the airport's green transition, facilitate access to Denmark, and also remain an attractive Q1 announcement 2021 investment for our owners. It is not possible for us to save our way out of the crisis. We need to get traffic moving again," Thomas Woldbye emphasises.

Battle for the hub
CPH's ambition to be Northern Europe's leading international aviation hub remains intact. However, competition for that position has intensified significantly during the coronavirus crisis.

"Our closest competitors, for example in Scandinavia and Germany, have received large sums in government support for development. That is not possible for us in Denmark. We are very appreciative of the government support packages received, e.g. salary compensation. However, in comparison with our neighbouring countries, the Danish support packages are relatively limited, so we have had to draw on our own credit facilities," explains Thomas Woldbye.

In 2020, CPH received a total of DKK 348 million in government compensation packages. Despite this, CPH reported a loss before tax for the year of DKK 828 million.

"We believe that we will emerge stronger from the crisis with significantly higher operating efficiency, more digitalisation and an efficient infrastructure that will make it attractive for airlines to continue to choose CPH," says Thomas Woldbye.

SAS is by far the largest airline at Copenhagen Airport, accounting for about a third of the traffic.

"SAS has indicated that the company intends to consolidate its business at CPH," stresses Thomas Woldbye.

Outlook
Global aviation continues to face significant uncertainty from the ongoing COVID‐19 pandemic as well as other factors such as economic uncertainty and climate change.

Given the structural unpredictability that the coronavirus crisis has created for air travel in Denmark and worldwide, and the significant uncertainty pertaining to the duration of the crisis, it is not possible at present to provide a realistic assessment of the outlook for CPH.

CPH will therefore assess and adjust the level of operating costs and investments on an ongoing basis and inform the market as and when relevant.