Flughafen Wien AG

welcome and good afternoon ladies and gentlemen welcome to our conference call to have here 2024 numbers of vienna airport thank you for interest in our company with me traditionally uh joint ceo and cfo gunter offner and in a second Also, joint CEO and COO Julian Jaeger will join. I started already the recording of the conference call. A replay will be available very soon after this session on our homepage. And I hand over to Mr. Ofner, followed then by the remarks of Mr. Jaeger and the graphic topics. And we have to hold the traditional Q&A then after our presentation.

Mr. Ofner, please continue.

Yeah, good afternoon and a warm welcome. We have today published our earnings for the first six months of 2024. And it's my pleasure to give you the details, especially in regard of the financial results. So revenue went up by 14% to 488 million. And EBITDA went up from 177 in the first six months of last year to 205 this year, a plus of 15%. interesting and also sustainable. We see positive financial results of 8.5 million as we have repaid our EIB loan last year. We have no additional interest payments. And therefore, we'll see, at least in the coming years, a positive financial result. If you look at our net cash position, it's roughly 350 million. And the average interest rate actually is somewhere So, this provides for good positive results here. So, putting all together, we saw net profit for the period of 108.4 million. after controlling interest 97, so a plus of 31% compared with last year. The reasons are more or less all over the board, so it's higher. traffic and passenger volume it's also growth in all other areas of our company and it's supported as pointed out by a positive financial result so for the full year we see a steady and slight but steady improvement of our expectations if we look at the expenses you see that expenses for consumables and purchased services are seven percent lower than last year this is reflecting uh lower energy prices and also an effect of our own production of electricity. Personal expenses clearly are up 13%, which is partly due higher collective agreements, but also of the growing number of employees. So it's roughly a plus of 7% compared to last year and is triggered by additional traffic and all the operational challenges. Other operating expenses went up 29.5%. Here you see rising maintenance costs and also a surge in other operating expenses, higher incentives and also increase in third-party services. What is very fine is that our EBITDA margin is slightly higher than it was last year with 42%. And EBIT margin is substantially better, 26% compared to 28.4%. Depreciation and amortization is more or less good. uh the same as last year a very slightly increasing number of 66 million all that sums up in our cash flow development 178.3 million it's a little bit less than last year especially due to the fact that Some incentives have been paid out earlier than in the previous period. Free cash flow went up from 45 to 104. And CapEx, as announced, is gearing up. So from 28 million to 83. net liquidity slightly below last year and that is due to the fact that we paid with 118 million the highest dividend ever in the history of the company this is also slightly affecting the equity position but we will fill up it again in the second half of 2024. So equity ratio is slightly below last year, but finally we should end up above the figures of 2023. Besides these financials, some remarks to our investments so the biggest investment right now ongoing is our south extension building but we are also concentrating on increasing our ability to produce electricity on our own from photovoltaics so we added another plant And we will now be able to produce roughly 46 million kilowatt hours per year. And this is accompanied by the fact that we have done a lot for improving our energy efficiency. So we are a CO2 neutral operating airport since last year and we will follow this path also in the coming years. What in any case will be necessary is due to the fact that also Austria now has an overflow of PV electricity that we will most likely next year or 26 invest in a storage plant because this is the only way to fully utilize our PV production for our own needs. What is the most economical way to use it. A very important issue also, especially for the airlines, is that beginning from 2025, sustainable aviation fuels have to be added to the kerosine. And we think it will be possible to do it for the first step. But to meet the goals that are necessary starting from 2030, there is a big lack on investment in producing production facilities. And I'm pretty sure that under the current regulatory framework of the European Union, this regulation will not work. So there are a lot of changes necessary to provide for an incentivized framework that investors are really ready to invest in big production facilities. to provide the amount that is necessary at reasonable cost. And this is a big challenge for the airlines, but for the aviation industry as a whole. And I think a lot of discussion will be necessary, especially on European level, to create a level playing field for all participants and to incentivize investing in production facilities. If we then follow up with our financial guidance, our revenue for the full year will be above 1 billion EBITDA, above 400 million group net profit, clearly above 220 million. and capex at 200 million or around 200 million so in accordance with traffic improvements we will we will see also slightly better financial results finally so that's from my side for now and i hand over to oh sorry if you look at our share price you see that we reached an all-time high at 54 euros right now, which equals a market capitalization of 4.5 billion. So for the first time, we surpassed Fraport with our market cap. That's from my side, and I hand over to Julian.

Thank you, Günter. Good afternoon, ladies and gentlemen. I would like to start with the traffic development. I think you're aware of our H1 figures. In Vienna, we were 1.9% below 2019. Malta, a stunning 25% above 2019 and growth of 18% above last year. In Vienna, we grew roughly by 8% over last year, and Kosice, our smallest subsidiary, with a plus of 9.5% versus last year, and 23% over 2019. So overall, the group is above 2019. July was very strong as well, and particularly it was strong in Vienna with plus 5.7 and plus 5.1% versus 2019. Malta again standing 19% versus 19, and Kosice 36% versus 19. So overall a very strong development. And given this development, We are now sure that we will surpass the 30 million. I can tell you that in August the situation was pretty similar than in July. So every day more than 100,000 passengers and July was an absolute record of monthly traffic overall. August is very strong as well. So we are quite optimistic and I would like to come to talk about our guidance now instead of later. If you ask me today what's my best guess for the full year results, I feel quite comfortable that our passenger numbers could surpass 31 million passengers. The big question mark, and this is highlighted here in our chart later on as well, is obviously the Middle East. So given that the geopolitical tensions don't grow, I would be optimistic to surpass the 31 million. Given the difficult situation overall, we felt more comfortable to improve our guidance just slightly to above 30 million. If everything goes as it looks today, I would be comfortable and optimistic that we will surpass the 31 million passengers, but we will see that at the later stage. Going a bit into detail in Vienna, I think positive is still that the flight movements are below 2019. If you look at July, plus 5% passenger growth, minus 9% flight movements. What is very important as well is the strong cargo development, plus 17%. versus 2023 in H1 plus 25% in July versus last year and 10% above 2019. This is mainly e-commerce to a certain extent as well, or mainly Chinese e-commerce, just to give you an idea. Budapest doubled their cargo figures this year and this is due to the interpretation of Hungarian customs and their flexibility. So we are profiting from this effect as well and it's really good to see that the cargo is already quite significantly above 2019. Seed load factor is on a record level in July as well, even above last year's very, very strong figures and 4.6 percentage points above 2019. So overall, a very strong development. If we look at the regions, Western Europe, which includes Southern Europe, very strong. I think the weakest markets are still Germany and Zurich. Very strong markets are Italy, Spain, Turkey, Greece. Eastern Europe is growing as well, plus 6.5% versus last year, but obviously due to the geopolitical situation, not as fast growing as Western Europe. Middle East is decreasing quite significantly versus last year. That's obviously Tel Aviv, Amman, mainly Tehran. Far East is growing plus 11%. But to be honest, not to the extent I would wish to see it growing. China is slower recovering than we expected. And North America is on a healthy 5% growth rate versus last year. There are no major changes in the airline mix. Lufthansa Group, 50%, low-cost carrier, 30%. So I think this is quite a steady development and a healthy development, I would say. Austrian growing 6% above 2023, Ryanair 8%, Wizz Air 1.4%. Wizz Air is obviously handicapped a bit with the situation regarding the engines, but looking forward, I'm quite optimistic that Wizz Air will grow their presence in Vienna 25, 26. We had good discussions regarding a base for XLR, so we hope that that decision will be taken this year and then it depends when they will get the XLR. And it was even said publicly on the media that the intention is to fly mainly probably towards India from Vienna. Overall, the other airlines are doing well as well. So overall, a quite positive picture. What is positive for us that ANA resumed their three-weekly flights from Tokyo Haneda on the 2nd of August. Hanan resumed their flights from Shenzhen. Unfortunately, China Eastern didn't get approval to fly Shanghai from the Austrian authorities. Arabia will return in winter, Sky Express will start in winter to Athens, so overall, yeah, I think a healthy outlook, as I said, if everything goes normal, even with a winter which is not as strong, obviously, we should definitely surpass the 30 million if everything goes normal and we continue on the current path, we should surpass the 31 million passengers. Risk, as I said, is mainly the Middle East conflict. Talking a bit about the segment results, Biggest segment is airport. Here we saw very healthy revenue increase. Obviously, what was very supportive for the whole company was the change in the law during the pandemic that we allowed until 2026 to grow our airport charges with inflation. This will end in 2026, so with 1st of January next year. It will be the last time that we increase by inflation. We expect an increase of more than 3%, so probably something between 3% and 4%. What I have to be transparent about as well, when the formula kicks in again in 2026, we will have to reduce probably about the same percentage, then we will increase in 2025. So overall, 2025, 2026, we should see a flat development, but 2025, we will definitely be allowed to increase our charges by inflation. Overall revenue plus 17%, EBITDA plus 18%, EBIT plus 31%, so very positive development. Looking to the handling and security services, positive development as well, but I expect a significantly stronger second half of the year. So we should increase our results in this segment until the end of the year, I would roughly say by 50%. So we had an EBIT last year, 15 million, and it should be roughly 9 million this year. But obviously, with relative small numbers, there's a high uncertainty here in this segment, or a higher uncertainty than in the other segments. because little numbers can make quite a difference. Overall, you can see here the improvement in cargo handling plus 22%. This reflects the traffic development, security services plus 16%. We had significantly less deicing. This obviously hurt us in the handling segment. Overall, a positive EBIT of 2.3 million, and for the full year, we expect a further improvement. Retail and properties. Increases throughout 50% of this segment is centre management and hospitality, 18% is rentals, parking is 32%, all of them increased, plus 9%, plus 10%, plus 13%. EBITDA went up 10%, EBIT 12%, so obviously I think a healthy development. We opened just a couple of weeks ago the expanded duty-free offering in Terminal 2, so this should improve our sales in the second half of this year. There were some smaller F&B units as well which opened in recent weeks, so I expect even healthier second half of the year, I think, Rentals and parking are doing very well as well. And overall, we've got a very stable and strong EBITDA margin of 49% in this segment. Yeah, Malta is obviously more and more the star segment. External revenue plus 20%, EBIT plus 25%. Extraordinary strong growth. And I think from a strategic perspective, the most important development this year was the long-term solution for the old Air Malta, which turns into KN Malta Airlines. We've got a very strong Ryanair there, 50% market share, very substantial and further appetite for growth. But the solution for KM Malta, which was reached in an agreement between the government of Malta and the European Commission is, I think, on the long run, a very important development for Malta. Overall, I think the main challenge there will be to handle this huge influx of passengers. Therefore, you will see more spending on Capex this year, up to 28 million euros, additional office building, a new hotel, terminal expansion, PV, and an expansion of the apron to cater for more aircraft stands. So those are the main projects to promote in the future. Yeah, that's it from our end. Thanks a lot for your interest, and we're looking forward for your questions and the discussion.

Thank you a lot. Let's move to the Q&A session. Already registering. First rank here. Carlos, please shoot.

Hi, hello everyone. Thank you for the presentation and for taking my questions. Just two quick ones from my side. The first one is related to traffic. In the presentation, you mentioned, and I quote, an emerging recovery of business travel. So I was wondering if you could tell us what it stands now compared to 2019. What is the current split between leisure and corporate travel in Vienna? And what do you expect here for the future? And my second question is on the capital structure. Just because infra funds like IFM tend to only stake for a 10-year period and then sell it. However, IFM has acquired more shares throughout the year. So what's your view here? Do you think that at least a partial divestment could be expected?

Thank you.

I would start with the first question. I mean, we don't have hard figures on the split of leisure and business traffic, because we just do surveys, but we don't know for sure. Our estimates and what our surveys say is that we have roughly a 70-30 split, so we've got 70% leisure and 30% business. Overall, business is still below 2019, and this is something we feel very strongly on the German and on the Swiss Switzerland routes. So I think what we see is that we have a higher fluctuation of passenger throughout the year that we have. week Tuesdays, week Thursdays, week Wednesdays, mainly in the shoulder season, and we see an extremely strong summer. I mean, in summer now, there's no major difference anymore between a Tuesday and a Friday. The difference is probably 10%, and in the shoulder season, it might be 20%, 25%. So, business traffic is recovering long haul. It's not really recovering towards Asia, definitely not towards China. And what the airlines and Austrian Airlines says that they assume that business traffic for them is still 20% below 2019. But it's more than made up by the additional leisure traffic. And that's what you see in our results.

Yeah, I can only refer to the developments in the last two years. So IFM has increased its shareholding. It was 39.9. It went up to 43.3 and is now at roughly 44%. And we have no new information about the intentions of IFM to stay or to change shareholdings. I mean, what in any case would be appreciated by us is that the free float would increase because this is Maybe one of the disadvantages of our shares right now that the free float is unfortunately limited to 6%.

Okay, understood. Thank you both.

Henry, please go ahead.

Yes, hi, good afternoon, everybody. First of all, congrats for surpassing Thraport in terms of market cap. But I have two questions from my side. The first one is on the sustainable aviation fuel regulation. It requires 20,000 tons per year in Austria. How much of total tons would that be in your rough estimate? And is there any operational risk behind if the target is not met? That was my first question. And the second question is, you talked about congested airspaces, especially in summer. Could this also be a bottleneck for further growth? I mean, a lot of airlines are expanding their reach to Vienna and want to go to Vienna. But maybe Eurocontroller, also controller saying no, we cannot handle any more planes coming in and out of Vienna in the future. So yeah, this is sort of the bottleneck for further growth for you.

Thank you. Starting with the SAF issue. So for us, it's no operational risk. If the goals are not met, there is a penalty for the airlines. But I think the first step should be met because it can be more or less provided with biological sources like used oil and things like that. for the next steps there is substantial production necessary in in areas outside europe and here i think is the problem with eu regulation and let's hope that the new commission and and the new parliament uh will will find a more pragmatic way how to to deal with that challenge

Regarding your second question, I think this is a misunderstanding. We don't have a particular problem in Vienna regarding airspace. It's a European problem. The most problematic air navigation service providers are Hungary right now. It's a real problem. But it's Germany, it's France. So I don't see anything which would in particular hamper growth perspective for Vienna. But I think it's overall a problem for European airspace. And there needs to be an improvement. So far, I wouldn't see that this is reducing the growth perspective. I think it's mainly a quality issue. I mean, we see now regularly... And this is due to the weather situation as well. Last year we were pretty lucky that there were not too many thunderstorms around the airport in Vienna and in the airspace around Vienna. This year we see many thunderstorms. So there are many days where the last wave is coming in one hour late, two hours late. And that obviously reduces the quality because the on-time performance is significantly weaker than it was last year. But I would not see that this is an issue in terms of growth in the future.

Okay. Thank you very much. Vladimir, the floor is yours now.

Yes. Hello. Good afternoon. Congratulations. Excellent set of figures. I would have two questions. Thank you. First one would be related to the incentives. You mentioned higher traffic related incentive payments. So how much were these payments in 24 first half versus first half last year? And then estimate maybe for the full year 24. And next question would be related to the third runway. Do you have any update for us? How is the current situation? What are the next estimated steps and timeframe?

Thank you.

I have to be more specific. We are mainly talking about marketing. The incentives are deducted directly from revenue. On the cost side, we have... various marketing agreements with different airlines. And there we see some increases. To be honest, I can't give you an exact figure now, but this is something we will give you later. And Mr. Mauer will get back to you on this one. And to your second question, there's no specific update. I mean, right now we are still in court regarding the decision of the administrative court in Austria that we have to finalize the runway three years earlier than initially thought. We are very optimistic that we will win this court case. We think that we would have to finish the runway in 2033, according to current legislation. But we will take a decision in 2025, early 2026, if we're actually going to build it. And this has not changed so far.

Okay, thank you very much. Are there any further questions? It does not seem to be the case today.

Vladimir, I will come back to you in a minute. And then I thank everybody joining this call. Again, for the interest in our company, for the Q&A. Have a good rest of the day. See you at the latest mid-November. Goodbye. Thank you. Bye-bye. Thank you. Bye-bye.

Bye, everyone. Bye-bye.