Interim Report of Copenhagen Airports A/S (CPH) for the Period 1 January – 30 June 2021
The Board of Directors has today approved the interim report for the period 1 January – 30 June 2021.
SUMMARY OF THE FIRST HALF OF 2021
Serving just 1.4 million passengers in the first half of 2021, a mere fraction of the H1 2019 figure of 14.4 million, Copenhagen Airports incurred a loss before tax of DKK 851 million for the period.
After winter and spring seasons with aviation travel heavily restricted and a loss of 90–95% of traffic, prospects began to brighten towards the end of the first half with early signs of passenger growth. In June, the decline in passenger numbers were a little lower at 82.6% relative to 2019, the last year of pre-pandemic normality.
CPH remains severely affected by the crisis, and operating costs continue to exceed income. Although passengers are slowly starting to return CPH is still a long way off from normal conditions and has had to draw a further DKK 300 million on the credit facilities in Q2.
Despite the steep plunge in revenue, which is down by 78.7%, equivalent to DKK 1,652 million, compared to 2019, CPH has an obligation to the Danish society to keep Denmark open for freight and passengers. That is expensive when the basis for operating has eroded, and as a result, the company’s debt grew by DKK 734 million in 2021 despite efforts to reduce costs and non-essential investments.
In times of crisis, liquidity is critical. In May, CPH negotiated an extension to its DKK 6 billion credit facility until August 2023. At the same time, an extension of the current temporary waiver on certain debt conditions was agreed with the existing lenders until end of 2022.
CPH has implemented a comprehensive cost-cutting programme, which included a work-sharing scheme and elimination more than 800 jobs. That produced annual savings of about DKK 500 million. The organisation is now leaner and more agile and therefore whilst CPH is rehiring, CPH is doing it recognising there continues to be uncertainty as to the future recovery. In step with passengers returning and aviation recovering, CPH will need to reemploy people. The first step was to recall everyone currently on the work-sharing scheme.
Before the pandemic, CPH invested some DKK 2 billion annually in developing the airport. As part of the extensive measures to cut costs in 2020, the entire investment programme was reassessed and reduced by DKK 800 million.
CPH has put on hold many projects planned for 2020–2022, which will produce expected savings of more than DKK 2 billion. As a result, the money currently being spent is mainly on security and maintenance and on developing Terminal 3 beyond security control, including a significant expansion of the baggage reclaim area which will be needed in the years ahead.
With most of Europe’s reopening, large parts of the route networks have been restored, albeit with fewer departures. CPH’s ambition to be northern Europe’s leading international aviation hub is intact, but competition for that position has intensified significantly during the COVID-19 crisis.
Despite living in a small country on the outskirts of Europe, Danes have for decades been accustomed to having many more travel options than otherwise warranted by the country’s size. As a result, CPH has provided opportunities to travel the world whether for leisure or business, and to attract tourism and investments to Denmark. This is by no means a given, and it is crucial for the airlines’ motivation to run a business in Denmark where passenger flows now seem to be recovering.
After the first six months of the year in which only one in three seats was sold, traffic accumulated in June and the load factor rose to 60%. CPH needs air traffic and earnings to accelerate as well as a flexible and efficient management of Corona efforts, if the airport is to stay competitive and attract routes to Denmark and if CPH is to retain its ability to invest for the green transition while still being a good investment for its owners.
- The number of passengers at Copenhagen Airport was 1.4 million in the first half of 2021, equivalent to a decrease of 72.5% compared to the same period in 2020 due to the effect of the COVID-19 pandemic. The number of locally departing passengers was 0.6 million (67.9% fewer than last year), while transfer passengers numbered 0.1 million (82.7% fewer than last year).
- Revenue amounted to DKK 447.9 million (2020: DKK 934.8 million), a 52.1% decline from last year.
- EBITDA was similarly affected and amounted to a loss of DKK 265.7 million (2020: profit of DKK 257.5 million), down DKK 523.2 million from last year.
- EBIT was a loss of DKK 771.1 million (2020: loss of DKK 162.7 million), corresponding to a decrease of DKK 608.4 million.
- Net financing costs amounted to DKK 79.7 million, which was DKK 14.5 million higher compared to the same period in 2020 due to higher committed credit facilities and recycling of amortised financial costs in 2021.
- The result before tax fell by DKK 622.9 million to a loss of DKK 850.8 million (2020: loss of DKK 227.9 million).
- Capital investments (excluding the contribution of the Comfort Hotel) were DKK 270.0 million in the first half of 2021 (2020: DKK 931.1 million). Investments included the expansion of Terminal 3, construction of a multi-storey car park, new baggage facilities, various IT systems, as well as miscellaneous improvement and maintenance work.
OUTLOOK FOR 2021
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.
Due to the structural unpredictability that COVID-19 has created for air travel in Denmark and worldwide, and the significant uncertainty about how long the situation will last, it is currently not possible to make a reasonable assessment of the financial outlook for CPH. There is still significant uncertainty as to how and when travel restrictions will be lifted, and it is therefore not possible to provide an outlook for passenger numbers, revenue, pre-tax result and total investments.
CPH will continuously assess and adjust the level of operating costs and investments and will advise the market as and when a meaningful outlook can be provided.
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