Stock Exchange Announcement 2020
Copenhagen, 18 May 2020
The Board of Directors has today approved the interim report for the period 1 January – 31 March 2020.
Summary of the first three months of 2020
The coronavirus pandemic and its societal and economic consequences have evolved into a global economic crisis that has dramatically impacted the aviation industry. Many airlines and businesses involved in aviation are in a battle for survival. Before the pandemic, some 83,000 travellers passed through Copenhagen Airport on a daily basis. Today, that number is less than 900. The aviation crisis has a severe impact on Denmark, as the country relies on international connectivity, tourism and trade with the rest of the world.
As the spread of coronavirus continued and national borders across the world were closed in February and March, air traffic ground to a virtual halt during the last few weeks of the first quarter.
The standstill in March was so abrupt that CPH is reporting historically poor quarterly results despite near normal operations in January and February. Profit before tax, excluding one-off items, occurring in the first quarter was DKK 79.4 million (Q1 2019: DKK 258.4 million). That is a reduction of 69.3% compared to last year. Revenue amounted to DKK 764.3 million (2019: DKK 971.8 million), 21.4% lower year-on-year.
With virtually no air traffic during the months of April and May and the extensive uncertainty as to when the world will reopen, CPH is unable to provide guidance for the near future. However, 2020 will be a challenging and difficult year for the aviation industry.
Substantial cost and investment cuts
CPH is currently rolling out a comprehensive plan intended to preserve cash by reducing operating costs and postpone investments otherwise planned for the rest of 2020 for up to DKK 1.0 billion and to identify possible cuts and consequences for 2021.
Being categorised as critical infrastructure, the airport has an obligation to remain in operation even if that implies large daily operating losses. To address that situation, CPH has established substantial credit facilities to ensure CPH remains in operation during the upcoming period.
In addition, CPH is making use of the Danish government’s financial support packages. Effective from the second quarter, CPH will receive compensation for about one third of its current wage and salary costs through the Wage and salary costs compensation scheme. As a result, CPH has so far avoided redundancies. Instead, 2,200 of its 2,600 employees have been temporarily furloughed in a rotation scheme. Fulfilling the ambition of avoiding redundancies during the coronavirus crisis will depend on the depth and duration of the crisis as well as on the support measures provided by the government.
It is a condition, that CPH has no capital outflow, including dividends, or share buyback, in the financial year 2020 and 2021, to receive compensation of more than DKK 60 million for fixed costs.
In terms of liquidity, CPH is well prepared for the coming period. In May 2020, CPH entered a 2-year facilities agreement totalling DKK 6.0 billion with a club of banks. The new facility is a combination of a 2-year term loan of DKK 2.0 billion and a 2-year credit facility of DKK 4.0 billion. Simultaneously, CPH entered into waiver agreements with existing lenders, providing CPH relief form certain loan covenants until and including Q1 2021. The new facility and the waiver agreements ensures that CPH will continue to be able to meet its financial and investment commitments.
CPH creates jobs and welfare
Copenhagen Airport is home to some 1,000 companies and airlines that combined employ about 22,000 people within areas spanning from handling aircraft, baggage and passengers to catering as well as construction, maintenance and retail and restaurant services. Many of these businesses have had to dismiss staff. Most recently, SAS has announced redundancies of up to 1,700 employees in Denmark and on 20 April, the airline Norwegian announced that it is making redundant more than 600 Danish pilots and cabin crew. Over the years, CPH has worked closely with both SAS and Norwegian on route development. Before the crisis hit, the two airlines accounted for 51% of traffic at Copenhagen Airport.
According to data from Copenhagen Economics, the aviation industry contributes jobs and wealth creation in Denmark worth as much as DKK 100 billion, including DKK 30 billion through Copenhagen Airport alone.
Green transition not forgotten
Despite the crisis, Copenhagen Airport intends to continue seeking to work with our partners, the airlines, the public sector, NGOs and other parties to ensure that aviation of the future will be sustainable, and the entire Danish aviation industry will achieve climate neutrality by 2050.
CPH also intends, until further notice, to continue the climate strategy for Copenhagen Airport and aim for the targets of making its operations carbon-neutral and completely emissions-free by 2030. However, the pace in the crucial green transition will depend on how we get through the crisis. The more economic muscles CPH has, the greater strength CPH can put into the sustainable transition of aviation once the world reopens for trade, travel and air traffic.
Highlights of results
- Passenger numbers at Copenhagen Airport was 4.8 million in the first three months of 2020, which was 24.2% fewer than in the same period last year due to the coronavirus crisis. The number of locally departing passengers was 1.9 million (25.3% fewer than last year), and the number of transfer and transit passengers was 0.5 million (26.3% fewer than last year).
- Revenue amounted to DKK 764.3 million (2019: DKK 971.8 million), a 21.4% decline from last year, primarily due to the coronavirus crisis.
- The coronavirus crisis also had a major negative impact on EBITDA. EBITDA, excluding one-off items, amounted to DKK 320.2 million (2019: DKK 509.0 million), which was 37.1% less than last year. EBITDA amounted DKK 313.0 million (2019: DKK 506.8 million), corresponding to a 38.2% decline from last year.
- EBIT, excluding one-off items, was down by 61.5% to DKK 110.8 million (2019: DKK 287.5 million). EBIT fell by 63.7% to DKK 103.6 million (2019: DKK 285.3 million).
- Net financing costs increased by DKK 2.3 million compared to the same period of last year.
- Profit before tax, excluding one-off items, decreased by 69.3% to DKK 79.4 million (2019: DKK 258.4 million). Profit before tax decreased by 71.8% to DKK 72.2 million (2019: DKK 256.2 million).
- Capital investments were DKK 489.1 million in the first three months of 2020 (2019: DKK 549.0 million). Investments in the first quarter included the expansion of Terminal 3, the completion of Pier E, construction of a multi-storey car park, new baggage facilities, IT systems as well as miscellaneous improvement and maintenance work. All investments are now under review as noted above.
Outlook for 2020
Global aviation is under significant pressure from among other factors economic uncertainty, climate change and the recent coronavirus outbreak (COVID-19).
The coronavirus outbreak and its social and economic consequences have significantly reduced the number of flights - in terms of both holiday and business travel. Airlines have announced cancellations and have cut back on operations in line with declining demand.
Due to the extensive uncertainty the COVID-19 outbreak has caused for air travel in Denmark and the rest of the world and the ongoing uncertainty about the duration of the situation, it is currently not possible to provide a reasonable assessment of the financial impact caused by the coronavirus. Hence, it is not possible to provide guidance on revenue, profit before tax or total investments. CPH will publish expectations for 2020 and other material new information, when sufficient clarity becomes available.
The above is unchanged from the guidance provided in the publication of CPH's 2019 Annual Report on 3 March 2020.
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