BUD: a key driver of development & tourism in Hungary

Transcription

1 BUD: a key driver of development & tourism in Hungary Jost Lammers, CEO, Budapest Airport Presentation to the General Assembly of the Hungarian Hotel and Restaurant Association, Debrecen, 13 November 2014

2 Content 1. Budapest Airport An Overview 2. European Financial & Debt Crisis & Malév collapse 3. Survival & Recovery The post-malév aera ( ) 4. Growth & Development BUD driving tourism growth in Hungary

3 Budapest Airport An Overview

4 Budapest Airport fast facts* Traffic figures 2013: 8.5 million passengers 83,830 Air Traffic Movements 92,112 tons of cargo Employees at BUD Group: 955 Employees of all companies at the airport: around 7,500 Total revenues (2013): EUR 247.6m Net profit after tax (2013): EUR -18.6m Taxes and salary contributions (2013)**: almost EUR 30,9m 75 year concession until end of 2080 *All figures are Airport Holding Kft. consolidated IFRS figures. ** Personal income taxes, local taxes, contributions on salaries, VAT (net payable)

5 The owners of Budapest Airport Zrt. 5,000% 20,167% % AviAlliance GmbH (Germany) % Malton Investment Pte Ltd (Government of Singapore Fund) 52,666% % Caisse de dépôt et placement du Québec (Canada) 22,167% 5% KfW IPEX-Bank GmbH (Germany) The Hungarian state left as 25%+1 shareholder of Budapest Airport Zrt. in July 2011, but still involved through Asset Management Contract Budapest Airport Zrt. is owned by consortium of international long-term investors with infrastructural background led by AviAlliance Since September 2013 AviAlliance is owned by PSP Investments, a Canadian pension fund Bringing best in class knowledge to the airport

6 Privatisation of Budapest Airport A success story for the Hungarian Government Including sale of 25%+1 share in 2011 HUF 585 billion received in proceeds Approx. HUF 100 billion (EUR 330m) in investments made by airport operator, Specific Development Commitments of 261 M EUR fulfilled in June 2012, confirmed by MNV in December 2012 Airport infrastructure transformed to modern best in class facility SkyCourt and T2 refurbishment Apron extension Hungarian Post and DHL facilities New security fence and technology Quality and security improvements Move from unclean to clean status (72/2010 EU Directive) Service Quality significantly improved (Best Eastern- European Airport Award 2014 from Skytrax)

7 2. European Financial & Debt Crisis & Malév collapse

8 PAX development ,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Other 627, , , , , , ,533 Low cost 2,196,541 2,205,651 2,071,880 1,967,412 2,202,323 2,284,574 4,382,687 Full service 2,194,876 2,333,121 2,432,568 2,366,812 2,468,358 2,984,812 3,399,962 Malév 3,248,103 3,430,029 3,332,693 3,324,789 3,026,183 3,220, ,838 PASSENGERS 8,266,677 8,597,137 8,443,053 8,095,367 8,190,089 8,920,653 8,504,020 Transfer 1,525,520 1,577,006 1,479,744 1,618,894 1,400,329 1,515, ,703 Transfer share % 18.45% 18.34% 17.53% 20.00% 17.10% 16.99% 1.74% Malév share % 39.3% 39.9% 39.5% 42.2% 37.9% 36.8% 2.9%

9 All commitments fulfilled despite significantly lower traffic Despite passenger numbers falling by 15-26% below expectations BUD fulfilled all commitments in the Asset Management Contract

10 BUD continues robust investments

11 Relative Importance of Malév 2011 PAX Aviation revenues 21% 62% 15% Malév O/D Malév transfer Others transfer Others O/D 64% 36% Malév Other carriers 2% ATM Non-aviation revenues * 23% 39% Malév Malév 61% Other carriers Other carriers 77% * excl. RÜK

12 3. Survival & Recovery The post-malév aera ( )

13 Crisis management at a glance Immediate Cost Saving Program triggered Challenges faced Actions Malév, the Hungarian national flag carrier and BUD s biggest partner went bankrupt BUD needs to write off approx. 12 Mio EUR bad debt Government introduces land tax hitting BUD by an extra tax burden of approx. 5,5 Mio EUR annually Stop investment program of approx. 35 Mio Euro Immediate initiation and execution of mass redundancy of 203 people Closure of Terminal 1 to apply oneroof operations: relocate all airlines, tenants to Terminal 2 as of end of May 2012 Opex savings and further optimizations in all areas

14 Traffic recovery post Malév Aviation development focus: Acquisition of new airlines to replace lost traffic Increase frequency / capacity on existing routes Push for reallocation of Malév s traffic rights as per bilateral agreements Volume incentive introduced to reward high performers

15 85 scheduled destinations by 37 airlines in Summer

16 Traffic recovery benchmark BUD replaced the lost traffic up to 3 years faster than other airports MXP - summer seat capacity 83% BRU - summer seat capacity 68% National carrier National carrier +35 % Other +35 % Other year 0 year 1 year 2 year 3 year 4 year 0 year 1 year 2 year 3 year 4 ZRH - summer seat capacity 80% BUD - summer seat capacity S11-S13 85% +1% National carrier Other National carrier Other year 0 year 1 year 2 year 3 year 4 year 0 year 1 year 2 year 3 year 4

17 4. Growth & Development

18 Indicators for optimism GDP development Overall outbound air traffic demand will be stimulated by the Hungarian economic growth, inbound traffic by the European GDP development. 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Hungarian GDP forecast Hungarian GDP 1.7% 2.0% 2.2% 2.5% 2.3% Source: Business Plan GDP expectations just upgraded by several institutions to 2%.

19 Indicators for optimism EuroControl forecasts air traffic movements to grow by 4% IFR Flight Movement growth rate 6,00% 4,00% 2,00% 0,00% -2,00% EU27 CEE Hungary -4,00% -6,00% -8,00% * 2015* 2016* 2017* 2018* 2019* 2020* EU27 0,3% -7,2% 0,2% 2,6% -3,0% -1,6% 0,8% 2,3% 2,5% 2,0% 2,0% 2,4% 2,5% CEE 3,1% -5,2% 3,2% 2,7% -2,6% -0,6% 1,9% 2,8% 3,4% 2,9% 2,7% 3,2% 3,5% Hungary 1,1% -2,3% 2,4% -0,8% -4,5% 1,9% 3,7% 4,2% 3,9% 3,6% 3,2% 4,0% 4,3% Source: EUROCONTROL 7-year IFR Flight Movements and Service Units Forecast: *forecast

20 Indicators for optimism Budapest trips are great value for money, driven by excess hotel capacity and Forint exchange rates US based Trip Advisor names Budapest the least expensive destination in Europe Hotel occupancy rates Condé Nast rating of Budapest: Second Best City Worldwide NEWTON, Mass., June 13, 2012 /PRNewswire/ -- TripAdvisor, the world's largest travel site*, today announced TripIndex 2012 a cost comparison of accommodations and an evening out on the town for two people in popular tourist cities across the United States and throughout the world. The TripAdvisor TripIndex is based on the combined costs for two of a one-night stay in a four-star hotel, one cocktail per person, a two-course dinner with a bottle of wine, and round-trip taxi transportation (two journeys of two miles). The costs listed apply to the upcoming summer months (June 1 August 31, 2012). Global Travel Steals For U.S. travelers seeking a bargain European escape, Budapest, Hungary is the least expensive destination, with a total TripIndex cost of $194. Expensive Escapes The Big Apple narrowly edges Boston as the

21 Recently launched or announced new flights Emirates launched a daily flight to Dubai as of 27 October 2014 with an Airbus A type aircraft. The direct wide-body service offers 27 Business Class and 251 Economy Class seats. The new daily service to Budapest will provide a link to over 60 destinations in the Far East and Australasia, West Asia, Indian Ocean and the Middle East. Air Transat s new weekly Trans-Atlantic service will be routed Toronto - Montreal - Budapest with an Airbus A330 type aircraft from 17 June through 8 October The Scandinavian Airlines will start 4 weekly flights between Budapest and Stockholm (ARN) from 29 March The year round service will be operated with B /800 offering passengers onward connections to its network in Scandinavia. Vueling will launch 3 weekly flights to Barcelona and Rome Fiumicino in S15. The flights will grant connections to over 140 destinations. Aegean Airlines will add a 4th weekly frequency to its Athens-Budapest route as of S15.

22 Recently launched or announced new flights The Dutch low cost carrier Transavia is going to add 2 weekly flights (from weekly 4 to weekly 6) to the Budapest-Rotterdam (RTM) service from March Air France will add a 4th daily flights to Paris (CDG). The extra flight enables more and shorter connections via CDG to Caribbean and Asian destinations, and provides a better schedule to the business passengers. After taking over the Düsseldorf-Budapest service from Lufthansa in August 2014, Germanwings will operate with an A320 type aircraft instead of CRJ-900. Aer Lingus Budapest Dublin flight will offer new transatlantic connection possibilities to JFK and Boston due to the schedule change from W14, with pre-clearance also available in Dubin. Wizz Air will base their 9 th aircraft to BUD from March Wizz Air announced Lisbon(LIS) with 2 weekly services and Maastricht (MST) with 4 weekly flights commencing in mid-may 2015.

23 Focus for near future Frequency increases on Toronto route New transatlantic direct flight from the US Long haul operation to Asia Frequency increases to main hubs in order to grant better connections BUD actively looking for operator to the Balkan region More coverage to Southern France, North Italy

24 White spots are in focus for

25 Sufficient terminal capacity for upcoming years Requirement for terminal expansion capex earliest in 2019 m pax pa T m pax pa 14,0 12,0 T2 + BBG: 12.0m pax pa 10,0 8,0 6,0 4,0 2,0 0,0 Low Cost Charter Full Service year

26 Passenger Terminals Original terminal design In 2007 BUD planned to expand Terminals 2 by adding a central SkyCourt and two piers for highly efficient passenger operations. When difficulties with Malev became apparent, BUD suspended works on the piers.

27 BUD is a strong and reliable partner to the Hungarian Government Support the concept of Opening to the east Support to Aeroplex and MGH Cooperation with Ministry and Transport Authority on reviewing bi-lateral aviation agreements Excellent cooperation with various airport authorities (aviation, police, customs, fire brigade, health) Close cooperation with neighboring municipalities (District 18, Vecsés, Ecser) Strategic cooperation agreement with Budapest City in 2014 (joint projects on taxi service, UEFA 2020 application, City promotions) Historically close cooperation with National Tourism

28 Cargo development Cargo City Development of new cargo facilities next to Terminal 2 11,000 sqm warehouse and 5,000 sqm office space Replacing existing Cargo facilities located next to Terminal 1

29 Planned third party investments Hotel Office Park Airport Business Park Aircraft Maintenance

30 Budapest Airport - Hotel T2 Project Hotel Terminal 2 re-started after recovery from Malév bankruptcy 150 Rooms with 3 4 star category + extension option, conference and restaurant facilities, walking distance from T2 Development and Investment by Budapest Airport together with Hungarian Real estate developer as Joint venture partner Currently tender process for operator search (bids from all big international hotel chains received) Opening planed for end of 2016

31 Further cooperation is necessary The current legal framework impedes projects to be implemented with the involvement of third party investors. It is necessary to eliminate bureaucratic obstacles and to be able to grant land usage rights to third parties, with the written approval of MNV Zrt. The development of the surrounding infrastructure and of the transport network of the airport region are also important. The reconfiguration and the development of the airport express road is the number one priority in this.

32 The development of the airport is a regional and national interest Budapest Airport is the only significant international airport in the country The airport is a key driver of the regional economy The airport has a significant effect on GDP Budapest Airport indirectly ensures the livelihood of 10,000 families including nearly 5000 local residents. This is why we rely on the cooperation of all actors in the Hungarian political sphere.

33 5. BUD driving tourism growth in Hungary

34 BUD as a gateway to Hungary is a strong partner catalyzing tourism growth by Aviation development activities to provide the best possible worldwide connection to and from Hungary Continuous improvement of Airport Infrastructure and Services to provide for best first / last impressions (recognized with prestigious Skytrax Best Airport Eastern Europe Award in 2014) Close cooperation with the City of Budapest e.g. BUD supports the City s bid for the UEFA 2020 championship organization Close cooperation with the Hungarian National Tourism Office e.g. BUD actively supports the annual Winter Invitation campaign Active presence in travel exhibitions attracting target audience to travel to / from Budapest / Hungary Marketing Budapest as a destination abroad (e.g. City Pair campaign with Athens in 2014) BUD supports all initiatives to grow tourism and is fully open and committed to cooperate with all other stakeholders Joint and expanded marketing activities require more marketing funds and promotions in target markets

35 Closing Thank you!

36 Disclaimer The information in this document is confidential and may not be disclosed to any other person without Budapest Airport Zrt. s ( BUD ) prior written approval. BUD s prior written approval is not needed provided the disclosure of such information is required by law or by binding tax ruling. This document is a product of BUD. BUD has prepared this document based upon information that BUD believes to be reliable but BUD makes no representation or warranty, express or implied, that it is accurate, complete or up to date and accept no liability, other than for fraudulent misrepresentation, if it is not. Any proposed terms in this document are indicative only and remain subject to written contract. Nothing in this document shall constitute or form part of any legally binding agreement, or any offer to sell or the solicitation of any offer to buy anything. You are strongly advised to consult your own independent advisors on any legal, tax or accounting issues relating to the information included in this document. The disclosure of any matter or information in or by this document does not imply the existence of any warranty, representation, undertaking, indemnity or other obligation or commitment of BUD or its Affiliate. Accordingly, this disclosure does not extend the scope of the warranties, representations, undertakings, indemnities and other obligations or commitments of BUD or its Affiliate to be stipulated in the agreements the parties may sign in the future.