Flughafen Wien AG
VSE:FLU
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Ladies and gentlemen, welcome to our conference call for the results of the first 9 months 2020 of Vienna Airport. Today's presentation will be held as usual by our Board members, Mr. Gunther Ofner and Mr. Julian Jager.
The presentation will be followed by a Q&A session where you will be given the opportunity to ask your questions. [Operator Instructions] The call will be recorded and will be available on our website shortly. The slides of the presentation that will be held now are also available on our website under Presentations.
And now I would like to hand over to our CFO, Mr. Ofner. Please go ahead, sir.
Yes, good afternoon to all of you. I will present you the main figures of our 1 to 3 quarter 2020. And we see ongoing problems in regard of COVID-19 travel restrictions and high infection rates, which is very pressing on air traveling. So for the first 9 months, we saw a decline of passengers in Vienna of 70.7% and in the Group of 71.2%. And for the rest of the year, I think we cannot be very optimistic that we will see a recovery soon.
Revenue decreased to EUR 277 million, minus EUR 56.9 million. And EBITDA is at EUR 62.3 million. That is down 80% compared to last year. EBIT, clearly, after depreciation and financial results, is in the negative territory of EUR 43.6 million. And finally, net profit at minus EUR 41.3 million.
Despite these effects, I think that we can really see now light at the end of the tunnel. This is due to the fact that now 2 companies presented successful vaccines. And the expectation is that beginning from January for specific vulnerable groups, the rollout of vaccinations can start in the first month of 2021, at least in the second quarter of 2021.
From service, we know that right now, more than 50% of the population of Austria would be willing to go to be vaccinated. So maybe that after the final results of an EMA acceptance for this vaccine is available, these numbers can even go higher. And what we know from the European Union, which ordered the respective vaccines for the member countries, there will be sufficient portions of vaccines available so that everybody who wants to get it can get it before summer of 2021.
Saying this, I think we have to continue our strategy of high cost discipline until we see increasing traffic numbers again. And we are also severely supported by the Austrian government, especially in regard of short work program. Also, it is limited for now up to the 31st of March 2021. I'm absolutely sure that there will be a consecutive program, especially for those parts of the economy and branches that are affected so severely as it is the case with airports, airlines and tourism.
Saying that, I think the outlook for full year 2020 should be not a surprise for you. From our side, we see no liquidity problems at all. So we are more than securely on the way in regard of liquidity. And even if the crisis would take much longer than it is expected now, we would not come into any kind of troubles in regard of our liquidity.
In consideration of our already implemented and planned cost savings measures, they are working as planned. And in the view of the current traffic figures, which has been falling again in the last days as incurred by very high infection rates, I think that we will end up with an EBITDA in the range of EUR 55 million to EUR 60 million. And the net profit for the period before noncontrolling interests could end up between EUR 75 million and EUR 78 million in the minus, which shows that also the situation is very heavy, and we have not seen a crisis of the magnitude so far. We can well digest that and can look for new things to come in the following years.
You'll see the detailed figures in the next slide. In regard of revenue of EBITDA of EBIT financial results at minus 11. And therefore, earnings before tax, minus 54.6. Net profit for the period, 41.3. So we already could deduct the expected loss for 2020 from the taxes we paid in 2019. And this is especially supportive for our liquidity position. After non-controlling interests, we are at minus 40.1.
If you look at our cost program, you see that all over the board, consumables and services used minus 30, personnel expenses minus 31.4, other operating expenses minus 55. We are on the way to reach the goals out set. And we will see, as now traffic numbers are going down, that the use of the short work program will increase. So we don't get the full load of the negative side of lower passenger numbers into our profit and loss account, but we can -- certain part of it outweighed by getting a higher percentage from our personnel costs reimbursed from the short work program.
Depreciation and amortization rose slightly and we had an extraordinary impairment for the preliminary work done for the renovation of our Pier East, which is obsolete now due to the COVID crisis and was, therefore, written off in the third quarter and which clearly was negatively influencing overall results.
Our net debt position increased slightly from last year, EUR 81 million to EUR 161 million this year, mainly in line with CapEx spendings, and those spendings will significantly be lower for next year and '22, even '23. So the initial plans for terminal enlargement and renovation has been pushed further down the road, and we will see how things are evolving, if and to what extent they will be revised.
Clearly, also, free cash flow was negative in this period. Equity position still is very strong at an equity ratio of 60.7%. What gives us, I think, all the room to maneuver, we think, is necessary. If you look at our share price, it went up by roughly 35% in the last days, following the expectations of vaccines available. It was down at roughly EUR 20 or even slightly below. It now went up to EUR 26 million and somewhere around EUR 26 million. So I think that this development is parallel to the expectations that vaccinations will bring major relief for the whole industry.
And I think that we will see that this will be the case later down in '21. We are concentrating through service our employees and our customers for healthy traveling. And we were among the first airports worldwide starting with PCR testing at the airport. We are still in this program. In the peak, we had roughly 1,300 tests per day. Now we are at 600 to 700 per day. And still, the PCR is the gold standard for traveling. And unfortunately, it's not exactly in all countries or is mixed with quarantine necessities, but still is the accepted standard for testing.
But in addition to that, we, together with Austrian, started also quick tests and I think they could be a very important step to ensure flights where you are not at all infected. Our new office park went into operation, and we are now trying to fill it. In any case, the situation is not helpful, but we see a very substantial interest of many companies who are now in negotiations. And I hope that throughout '21, we will surpass at least 2/3 of the space rented. Also, our conference center and the co-working space is already operational, but also depressed, unfortunately, by the pandemic situation. But what we see is that people are very enthusiastic about the conference facilities and all the features that are possible there.
I think after all, we are very well equipped to master this COVID-19 crisis. And we will be on the positive side if things restart. So we are prepared. And we did a lot of homework in regard of all aspects for the recovery, especially also from our cooperation with Plug&Play. So digitalization will play a very major role in the recovery of our industry, and we want to be part of that development and want to contribute that things get more smoothly done in the travel industry in the years to come than it has been the case recently.
So last but not least, our guidance. I already mentioned it and that's from my side. And I hand over to Julian Jager.
Good afternoon, ladies and gentlemen. I will continue with the traffic results, a bit of an outlook in terms of traffic, and the segment results.
In Q1 to 3, we saw a reduction in Vienna in terms of passenger numbers by minus 70%, Malta minus 72% and Kosice Airport minus 82%. Overall, it was a reduction of minus 71% to 8.7 million passengers. Traffic in Vienna was down to 7 million, minus 70%. Flight movements, I think this is important, a reduction of 60%, which means the load factor went down to 60%. Obviously, in Q3, on its own, it was significantly lower. And unfortunately, in recent weeks, it went even further down.
You can see that Lufthansa Group, on Slide 12, has a market share of 48%, the low-cost carriers roughly 32%. Essentially, you see a major reduction all across the board. I mean, with -- and Lauda and Ryanair, not as much as the others because they were still, in relative terms, growing. But obviously, overall, it's a very significant reduction all across the board.
October was a decrease by 86%, down to 400,000 passengers, which is really difficult. Seat load factor 44%. Cargo was down minus 26%. Within cargo, we saw a very significant shift, obviously, from belly cargo to cargo only. Road feeder service had reduction as well. We see that the major airlines like Lufthansa concentrating their cargo traffic in Frankfurt. So that's why the road feeder service has a reduction as well. But overall, cargo is doing relatively okay.
After the recovery in August and partly in September, we saw again a very significant downward trend, which was enforced now in November with the second lockdown, which essentially all of Europe or most of Europe, but definitely Austria, is in.
October in Malta, everything very, very similar, minus 84% in passenger in terms of passenger numbers, Kosice minus 84% in terms of passenger numbers. So we are pretty much, in the whole group, in a very similar situation. October and November then -- or the first 10 days in November, even worse. We saw a reduction by 91% in November. Flight movement, minus 74%. So really, we look at a very, very difficult time now until Christmas, maybe Christmas might increase passenger numbers a little bit, but I don't think that until then we will see any significant improvement of the situation. And I think even the first quarter of next year, we'll not see a significant improvement.
Our outlook for 2020, which is the basis of our guidance, which Gunther presented a couple of minutes ago, is something between EUR 7.6 million and EUR 7.8 million. Yes, essentially, I think the important thing is and after these very depressive and depressing numbers, I think the important news of the last 2 weeks was that there are 2 producers who claim to have high-quality vaccine. And it seems that already this year, this should be available definitely until the first quarter of next year. So I think this gives us some reason to be optimistic for next year.
Again, I'm not too optimistic for the first half of next year. I think Easter is probably too early in the end of March. And we should see then in Q2 a certain recovery. But I think the big -- or the important point for us will be next summer. And summer not starting with the IATA summer, but summer starting with the school holidays in July. I think we should be in summer north of 50% of 2019. And if we are and have more than 50,000 passengers a day in July, August, September, I think then we are on the right track.
So I think -- and I'm optimistic definitely for the intercontinental traffic. I think in terms of the intra-European traffic, capacity will be available on very short notice. The aircraft are available, crews are available, fuel is still relatively cheap. So I'm optimistic in this respect. I think long-haul traffic will take a bit longer to recover. I think we will see probably in the next -- in the second half of next year, probably 1 or 2 quarters later, we will see some excellent months for the airlines in terms of yield on long-haul traffic. I think in terms of long-haul traffic, it will take 6 to 12 months longer until capacity catches up with the increasing demand we expect to have next year. So in this respect, I think there should be some good months for the airlines ahead as well.
And I think if we manage to get more than 50% of traffic in the second half of next year, I think then we can be reasonably optimistic for '22 and '23 to reach 70%, 80% of the 2019 traffic. And to be perfectly honest, if we get to the 2019 levels, then in 2024, 2026, is not that material anymore to me. One thing you have to have in mind as well is that 2019 was for us an absolute record year. We grew by close to 30% between 2017 and '19. So already, 70% or 80% of 2019 would be a major achievement for us.
So again, despite of the really bad numbers right now, I think there's some room for optimism for the second half of next year and then the years to come. Apart from the vaccine, I think the one reason why we are cautiously optimistic for the future is our test phase in terms of antigen tests. We started with Austrian 3 weeks ago to test passengers on the Austrian flights to Berlin. We started now last week with mandatory testing on the Austrian flights to Hamburg. And the process works very well.
I think what we need is a European travel protocol, a testing protocol where the European Union sets out standards for all Europe, or the member states agree to a common testing protocol. I think sooner or later, those antigen quick tests will replace the PCR tests and will replace quarantine. And I think the most important thing for the travel industry, for tourism industry and for the aviation industries and opening up of the intra-European borders which were erected in the last few months.
So I think if we would have a regime with mandatory quick tests before you board a flight, I think this could bring a certain relief in the first 6 months of next year. And then we hope in the second half of next year, the vaccine kicks in. The process works very well. Every passenger gets the result between 10 and 15 minutes. So we assure that definitely for the passenger numbers we're expecting for the next 9 months, we would be in a position to roll this out for all flights if there is some benefit out of this in terms of reduction in the areas to travel.
In terms of investment, the modernization of Terminal 2 is being continued. All other projects are obviously on hold. So I think Terminal 2 is very well on track. I think it will be a major improvement in terms of quality. It's not clear yet when we will actually take terminal 2 into operation, probably by the end of 2021, maybe in 2022. That depends largely, obviously, on traffic.
We will have a central security area. We will have a new VIP lounge. We will have additional capacity in terms of baggage reclaim, although this is probably something we will not [ need that ] urgently in 2021, but we hope that we will make ample use of it in the years to come.
Yes. To finish off with a few words regarding the segment results. The Airport segment was obviously very hard hit due to the passenger decline, external revenue minus 62%, EBITDA minus 82% and the EBIT of minus EUR 40 million. You can see that essentially, aircraft related fees and passenger related fees were down by minus 66%, infrastructure minus 41%. In the Handling and Security services, we've got a lower revenue due to the reduction in flights and passengers. The external revenue went down by 43% to EUR 68 million. EBITDA already negative with minus EUR 13 million, EBIT minus EUR 20 million. We decreased the staff expenses there by 35%. And the only area which does relatively well is cargo, you can see here that the reduction in cargo revenue was minus 17%. So this is an area, even for the next months, we think the figures will be significantly better than in the overall segment.
Cost of materials fell by 40% year-on-year to EUR 3.7 million. Retail revenue decreased by 51%, external revenue EUR 58 million, EBITDA EUR 28 million and EBIT EUR 14.9 million. Parking was hard hit, center management and hospitality hard hit both, more than 60% reduction in revenue. Rentals did fairly well with a plus of 1.4%. And obviously, we hope that Office Park 4, as Gunther mentioned before, will add to the results here in the rental area soon.
Still, I think, even in terms of retail, there is some room for hope for the future. What we see right now is that, obviously, we don't have the high spending passengers from Asia, the Middle East, Russia. But what we saw in the last few months that low-cost carrier passengers and may other passengers spend more than they used to. So the spend went down because we are lacking the high spenders from China, Russia, Saudi Arabia. But we see that those people who travel spend on average more than they used to spend last year. And PRR did better than last year, but this was mainly because of minimum guarantees. So this is not really a reflection of the spend of passengers. Spend per head was, on average, down.
Still, I think -- and this will apply in terms of passenger numbers and spend -- I'm optimistic that when it's again possible to travel, we will see a big catch up, both in terms of passenger numbers and in terms of spend at the airport. I think people are very eager to travel again. People want to see the world. People feel, I think -- a lot of people feel pretty exhausted already. So also I'm optimistic that next year, we will see a major rebound in the aviation industry all over Europe.
Finally, Malta, hard hit as well, minus 67% in terms of revenue, EBITDA EUR 6.8 million, minus 86% and an EBIT of minus EUR 1.8 million. I think Malta is probably even in a bit better position to recover next year than we are, the reason being that they have a lower dependency on intercontinental traffic. I mean, our -- even our share of intercontinental traffic is, relative to bigger hubs, low, but obviously, Malta's is even lower. I think tourism destination, they've got good reason to be optimistic to bounce back next year.
Yes. That's it from my side. Thanks a lot for your attention, and now we are happy to take your questions.
[Operator Instructions] Okay. Please go ahead. The floor is yours.
Hello. It's Ruxandra Haradau-Doser with Kepler Cheuvreux. I have several questions, please. First, a clarification question. One with respect to the agreement between the Austrian government and Lufthansa [ in flights ] that Vienna will remain a hub of the Lufthansa Group for the next 10 years. And it will be transformed into a long-haul hub. What exactly does this mean? There are long-haul flights on Vienna even today. So do you expect the share of long haul flights to increase in the future?
Then there was a strong presence of low-cost carriers at Vienna airport before the crisis. How do you expect the share of low-cost carriers at Vienna airport to develop going forward? And what share of low-cost carriers at the airport do you expect to allow Austrian to operate profitably? So third, how do you think about [ patterns ] of incentives going forward? Do you think incentives have to be increased in order to make sure that all airlines that were at the airport before the crisis continue to operate at Vienna Airport? [ Or would you ] target rather a reduction in the incentives, given the weaker passenger flows?
And finally, considering your expectations on incentives next year, at what level of [ traffic ] would you expect to be breakeven on operating cash flow?
Maybe I start with incentives and low-cost carriers. I think, one, we don't think the share of intercontinental traffic from Austrian will grow in the future. I think there's a commitment from Lufthansa to the Austrian government that Vienna will remain a hub and Austrian will remain as a hub airline. But the plan is to reduce their long-haul aircraft from 12 to 9. And we hope that they will deliver good results in the coming years so that they increase the number of long-haul aircraft again. But for the immediate time after the crisis, they will have less long-haul capacity available than they have now.
In terms of incentives, what we've published already and what has been approved by the Austrian government is that we slash landing charges completely between April and the end of this year. What you have to know is the landing charges are only 20% of our overall charges. So this is already approved and done, and obviously is part of the guidance we gave you today.
We have 1 other incentive which we -- which is approved in the meantime as well. Every airline, which offers next year 75% of the capacity they had planned for 2019 will get EUR 2, EUR 3 or EUR 4 per departing passenger, depending if it's a continental, if it's a short haul, medium-haul or long-haul flight. I mean, according to how things stand today, I'm not sure how much money we will actually pay out with this incentive because, obviously, the threshold is pretty steep. And we don't intend to pay out any other incentives. So the old incentives still apply, but we don't want to increase incentives in any way apart from those which are approved already. And on the medium term, it's definitely our intention to reduce incentive levels again.
In terms of market share of low-cost carriers, I mean, you see that now within the crisis, the [ Lufthansa ] share is still around 30%. I would not foresee a major increase of this percentage in the year to come. I'm sure Vienna is an extremely attractive tourism destination. I think we will attract again carriers from Asia, from North America. I think -- I'm really optimistic that Vienna will bounce back fairly quickly as one of the, I would say, 3 to 5 major tourism destinations in Europe. And therefore, I'm optimistic that we will have again, pretty soon, a vibrant variety of airlines operating out of Vienna.
Thank you very much. In terms of operating cash flow next year, at what levels of traffic do you expect to be breakeven?
I think we have to be breakeven in any case. So whatever comes, we will be breakeven, at least. But the details for that, we will publish once we have approved our budget for 2021. But you can expect that whatever comes, we will be at least at breakeven.
Okay. Any other questions, please?
This is Stephanie from RBC. Could you please specify what level of traffic you expect for next year compared to last year? So are you expecting something around 50% or -- and then you mentioned earlier in the call, you expected 2019 traffic to be back somewhere between 2024, '26. Can you just confirm that? And then in terms of CapEx for this year and next year, could you please let us know what you expect? And that is it for me.
I would start with the traffic figures. I mean, it's too early to make a concrete traffic projection for 2021. I think the experience of the last 7 months was that -- and I think this doesn't only apply to us, but for the whole industry, that expectations were always too optimistic. I hope that we've reached already the point where our projections are too pessimistic. I think this will happen -- either it happened already or will happen soon. What I said is that I expect definitely from summer onwards that we should be above 50% of the '19 figures. The first half is still a big question mark. And if it's going up then in summer to 60% or 70% or if it just reaches the 50% mark, it's simply too early to tell.
So we will come out with our forecast for 2021 traffic figures and our guidance in January. What I can confirm is that we expect 2019 levels somewhere between 24% and 26%.
Yes. And CapEx level for this year will be definitely below EUR 100 million. And the budget for next year now is prepared, but you can expect that it substantially goes further down as we have deleted the bigger projects. So it will be somewhere maybe at EUR 50 million or something like that.
Okay. Any further questions, please?
This is Vladimira Urbankova speaking from Erste Bank. Yes. So I would have 2 questions. First 1 would be related to your liquidity boost with EUR 100 million credit, short-term credit. Do you plan maybe to add more buffer or is it considered to be sufficient? Therefore, how long you can consider this as a safe position before you will tap more resources? And the next question would be regarding the Stage 8, all kind of supportive measures. What are the proportions, which is the magnitude of this stage supportive measures to your budget estimated this year? And yes, what we can expect also on the tax side, how much you will benefit this year? This would be my question for you.
Yes. Thank you, starting with your last question. We will deduct the loss of -- the expected loss of 2020 from the taxes paid in 2019. So when our guidance will become true, and let's assume we end up at 80, then we will deduct the respective sum from taxes paid in 2019. And as it is below the overall limit of EUR 35 million, we will be able to deduct it in full.
The state support of short work for 6 months, was around EUR 57 million. So for October, November, December, we are expecting, at least in average, the same sum. It should be even slightly higher, so somewhere EUR 10 million to EUR 11 million per month. In regard of our liquidity, I mean, we not really need this credit line because we have roughly EUR 130 million in deposits, which can be used whenever we need it. And we have another EUR 40 million in highly liquid securities.
So I mean even if the crisis would take 2 more years, it would not be any kind of challenge in regard of preserving our liquidity. So the buffer is very sufficient, and we are not looking for additional credit lines.
Okay. Thank you. Any other questions? Okay. I'll give you another couple of seconds as a final chance to ask your questions. Okay. So if there are not any questions left, then thank you very much, ladies and gentlemen, for your interest in today's call. We wish you all the best from Vienna Airport. Stay healthy and see you and hear you soon for our next call. Thank you very much, and goodbye.
Bye.