Annual Report 2009 The LFV Group. Swedish Airports and Air Navigation Services

Transcription

1 Annual Report 2009 The LFV Group Swedish Airports and Air Navigation Services

2 This is LFV THE LFV GROUP consists of the State enterprise (Luftfartsverket) and its subsidiaries and associated companies. During 2009, LFV operated 16 airports and was responsible for air navigation services in Sweden. LFV reported sales of SEK 6.2 billion during Its operating profit was SEK 338 M. At year-end, the number of employees was 4,042. OUR MISSION is to generate added value for our customers and promote air travel by operating cost-effective, safe and well managed airports and air navigation services. OUR VISION is that our customers shall single out LFV s airports and air navigation services as a good example when it comes to cost-effectiveness, safety and functionality. During 2009, a total of 27,096,078 passengers travelled through our airports, where 242,618 landings took place. OUR REVENUE comes predominantly from charges attributable to air traffic at our airports and from traffic that passes through Sweden s airspace. Our other revenue comes from airport shops, parking spaces, conference facilities, restaurants and so on. Shops, restaurants and the like are run by tenants and business partners, while parking spaces are mainly run under LFV s own auspices. Contents Contents front flap This is LFV 1 The year in brief 2 Important events 3 Comments of the Director General 4-5 LFV s airports 6-11 LFV s Air Navigation Services LFV s environmental work LFV s employees Comments on income statements 20 Income statements 21 Comments on balance sheets and funds statements 22 Funds statements 23 Balance sheets Notes Overview of consolidated accounts Proposed dividend 38 Auditors Report 39 Board of Directors and Auditors 40 Group Management 41 Multi-year overview Definitions 43 Ten-year summary 44 Addresses back flap > LFV 2009 < This is LFV and Contents

3 LFV s AIRPORTS ATS UNITS CONTROL CENTRES LFV HEAD OFFICE, NORRKÖPING AIRPORTS (16) Stockholm Division Stockholm-Arlanda Stockholm-Bromma Group Airports Division Göteborg Landvetter Jönköping Karlstad Kiruna Luleå 3 Malmö Ronneby 3 Skellefteå Sundsvall Härnösand Umeå Visby Ängelholm Helsingborg Örnsköldsvik Åre Östersund AIR NAVIGATION SERVICES Air Navigation Services Division ATS UNITS 1 (38) Stockholm-Arlanda Arvidsjaur Borlänge Stockholm-Bromma Gällivare Halmstad Jönköping Kalmar Karlsborg Karlstad Kiruna Kristianstad Göteborg Landvetter Ljungbyhed Luleå 3 Malmen/Linköping Malmö Norrköping Ronneby 3 Saab/Linköping Skavsta/Nyköping Skellefteå Sundsvall Härnösand Såtenäs Säve/Göteborg Söderhamn Trollhättan Umeå Uppsala Vidsel Visby Västerås Växjö Ängelholm Helsingborg Örebro Örnsköldsvik Östgöta kontrollcentral Åre Östersund CONTROL CENTRES 2 (2) Malmö Stockholm-Arlanda 1 LFV provides local air traffic control services at 38 airports. 2 Air traffic control centres are responsible for air traffic management in airspace outside airport areas. 3 LFV is responsible for civil aviation at the airport through an agreement with the Swedish Armed Forces. This is LFV > LFV 2009 < 1

4 The year in brief HIGHLIGHTS Operating revenue, 2009, SEK M Air traffic (000) Number of landings Number of passengers 27,096 30,264 Cargo and mail forwarded (tonnes) Financial data (SEK M) Income statement Operating revenue 6,191 6,394 Operating expenses -5,856-5,998 1 Profit from holdings in associated companies 4 0 Operating profit Financial income Financial expenses Profit after financial items Income tax and tax equivalent 8-18 Minority share -7-8 Profit for the year Balance sheet Fixed assets 11,968 11,977 Current assets 1,252 1,470 Equity 2,905 2,968 Long-term liabilities, provisions and deferred taxes etc. 8,872 8,953 Current liabilities 1,444 1,526 Total assets 13,220 13,447 Miscellaneous Capital spending 923 1,037 Financial ratios, % Equity/assets ratio Return on equity (after income tax and tax equivalent) Return on capital employed Return on total assets 3 3 Staff Number of full-time equivalent employees 3,374 3,342 1 Including a write-down of SEK -353 M on fixed assets at the six airports which, according to the decision of the Swedish Parliament, are not proposed as part of the national basic airport infrastructure. Passengers (millions) Civil aviation revenue 4,074 Commercial revenue 2,037 Other operating revenue 80 Operating expenses and profit, 2009, SEK M Operating profit 338 Depreciation/amortisation 1,176 Staff expenses 2,405 Various external expenses 2, Number of passengers and airspace movements, International passengers Domestic passengers Other airspace movements Overflights of Swedish airspace Movements (thousands) BOARD OF DIRECTORS LFV Group Internal Auditing Director General DG's office Group staff units Stockholm Division Group Airports Division Air Navigation Services Division LFV Holding AB Internal service units 2 > LFV 2009 < The year in brief

5 Important events Sharp decrease in air traffic Throughout 2009, the recession had a major impact on travel at LFV s airports and in Swedish airspace. The total number of passengers fell by 10%. Domestic travel fell slightly less than international travel. The number of flights in Swedish airspace decreased by 11% but military traffic increased slightly. The second half of the year showed a somewhat more stable trend than in the first half. The number of landings decreased by 10%. Lower operating profit Despite the sharp decline in air traffic, restrictive spending, rapid adjustments and continued commercial initiatives enabled LFV to generate an operating profit of SEK 338 million. This is lower than the preceding year but should still be considered positive given that revenue fell significantly during the year. Price reduction bolsters airlines At the beginning of the year, LFV introduced a reduction in charges intended to bolster airlines, which have been hard hit by the recession. The reduction, which targeted Stockholm-Arlanda, Stockholm- Bromma and Göteborg Landvetter Airport, resulted in lower costs for airline customers of about SEK 40 million. Decision on new structure for LFV During the year, a decision was taken that will change the structure of LFV in The Swedish Parliament decided that, starting in April 2010, airport operations are to be run as a State-owned limited liability company while air navigation services will continue to be run as a State enterprise. During 2009, LFV planned for the transfer of Jönköping Airport to the Municipality of Jönköping, which will take over the airport beginning in LFV also worked actively during the year to find primarily municipal and regional owners for the five other airports that LFV will be handing over in These airports are Karlstad, Ängelholm Helsingborg, Sundsvall Härnösand, Skellefteå and Örnsköldsvik Airport. LFV continues to reduce its carbon dioxide emissions LFV s carbon dioxide emissions continued to fall in Continued investments in a large number of energy-efficient solutions helped to reduce carbon dioxide emissions from LFV s operations by 3% compared to the preceding year. LFV runs an energy project whose objective is to cut LFV s carbon dioxide emissions in half between 2005 and The project looks like it will meet this ambitious target, which is being achieved primarily by reducing consumption of electricity and heating by a third and increasing the share of non-fossil fuel energy sources in its operations. During the year, a few of LFV s airports joined a European collaborative effort to help further reduce the environmental impact of airports. LFV s Air Navigation Services instrumental in European development efforts LFV s Air Navigation Services Division (ANS) played an instrumental role in a number of international projects aimed in part at creating straighter, faster, safer and more environmentally friendly flight paths, where more consideration is given to actual aviation needs and less to national borders. During 2009, LFV formed NUAC HB with Denmark s Naviair, which will help create integrated air traffic management in Swedish and Danish airspace by taking over operation of the Swedish and Danish control centres. ANS is also carrying out projects to handle the planned deregulation of the air traffic management services that operate at and in the vicinity of the airport in a cost-effective manner. Regional collaboration important with declining traffic LFV s work to develop regional collaboration with communities where airports are operated continued during the year. These ventures have focused largely on improving flight connections, increasing tourism, events and new operations, and expanding the passenger base. This kind of collaboration has helped to maintain good air connections at a number of LFV s airports, which was especially important given the decrease in total passengers during the year. Efforts to make travel experiences smoother During 2009, LFV continued to focus on efforts to create a smoother travel experience for passengers. At Stockholm- Arlanda Airport, a new security screening checkpoint and a new tax- and dutyfree shop were inaugurated. At Göteborg Landvetter Airport, a new arrival terminal was opened, creating faster and more efficient flows for passengers. At a number of LFV s other airports as well, measures were implemented to create smoother flows and an improved range of services for passengers, airlines and tenants. Surveys conducted on a regular basis indicate generally higher customer satisfaction during the year. LFV awarded environmental honours during the year In 2009, LFV was awarded the Swedish Energy Prize for Arlanda Energi s work to reduce the energy use and environmental impact of Stockholm-Arlanda Airport. That airport, together with Stockholm- Bromma Airport, was also accredited at the highest level in a European programme that grades the climate change impact of airports. At the end of the year, Malmö Airport received Region Skåne s special prize, Guldträdet ( Gold Tree ), for its environmental efforts. Important events > LFV 2009 < 3

6 Division of LFV and turning airport operations into a limited liability company Comments of the Director General LFV posted a loss of SEK 34 million in Earnings were adversely affected by substantial nonrecurring expenses. Adjusting for that, earnings were positive. Naturally, the downturn in air traffic had a negative impact on earnings. LFV has sizeable fixed costs so our sensitivity to volume changes is considerable. Despite a 10% decrease in traffic, LFV managed to deliver a good underlying performance. We can be proud of this, which was achieved by creating a more flexible organisation and heightened cost-consciousness. Revenue fell by 3% to SEK 6.2 billion. The main reason was decreased traffic and fewer passengers. But a temporary reduction in airport charges also contributed. With continued lower charges and other market stimulus measures, we hope to help generate growth in Close regional collaboration is an important condition for creating more air connections and developing inbound tourism. Stockholm-Bromma is the only LFV airport where the number of passengers increased in Without exception, the six airports that will no longer be part of the national basic airport infrastructure showed substantial declines. Turning airport operations into a limited liability company On December 3, the Swedish Parliament accepted the Government s proposal to divide LFV and convert its airport operations into a limited liability company. Dividing LFV is logical given the different business conditions that apply to air navigation services and to the airports. Management teams and boards can thus focus on their own core activities, something that is clearly needed as aviation faces major challenges with weak traffic growth and poor profitability. Internationally, air navigation services and airports are generally run in separate organisations. Air traffic control tower services will soon be subject to competition, which is another reason for the division. Given the advantages this can bring to both buyers and sellers, it is better to have air navigation services independent of the airports. A limited liability company creates advantages through greater clarity in the division of responsibilities between the owner, board and management team. It allows for a faster decision-making process, facilitates cooperation with other parties, and provides a system of regulations for companies working in a commercial environment. The Airport Commission proposed this division and conversion to a limited liability company in October 2007, so there has been time to prepare. But a great deal remains to be done to ensure that the new company can begin functioning on April 1, The Government appointed County Governor Ingemar Skogö, also LFV s Chairman of the Board, as special investigator to prepare for the establishment of the new airport company. The company is expected to have revenue of roughly SEK 4.5 billion and some 2,500 employees. Efficiency-raising measures A new organisation with a consolidated airports division came into being on January 1, This and other efficiency-raising measures, like the establishment of LFV Energi and a change in IT operations, together with commercial revenue should lead to an improvement in earnings of about SEK 400 million by The State enterprise LFV lives on The Air Navigation Services Division (ANS) will continue to operate as a State enterprise. Its main operations are not subject to competition so LFV, which dates back to 1947, will live on. The investigator for LFV s remaining operations, with ANS as the main component, is DG Nils Gunnar Billinger, formerly DG of the Swedish Civil Aviation Authority. It is estimated that the State enterprise will have revenue of SEK 2 billion and some 1,300 employees. Charges for air traffic management are largely based on actual costs but revenue does not currently cover costs. An efficiency-raising programme is under way which will save over SEK 300 million by International collaboration is growing in importance. During the year, an agreement was reached between Denmark and Sweden on a functional airspace block. A joint organisation, NUAC, is being formed to oversee air traffic management in upper airspace. A large number of activities are run under the framework of the Single European Sky initiative. Sweden plays a leading role in the collaboration on a functional airspace block that includes seven northern and central European countries. 4 > LFV 2009 < Comments of the Director General

7 Investments for smoother travel Our investment needs over the next few years run about SEK one billion per year. This covers measures to make passenger flows easier and smoother as well as projects to preserve a high level of safety and security. In addition, there may be purely commercially motivated projects. During the year, an extension of the international arrival hall was added at Göteborg Landvetter Airport. It increases capacity and provides a new ergonomically designed baggage conveyor system. At Stockholm-Arlanda, Terminal 5 and Pier F were connected to increase commercial space. As a result, more efficient security checkpoint solutions were also introduced. Environmental work and energy saving One of our tasks is better public transport to the airports. There has been substantial progress in the work to involve all relevant parties in common efforts to bolster public transport to and from Stockholm-Arlanda. The high-speed Arlanda Express train, SL s bus and commuter train service and the Upptåget commuter train a growing number of participants are working towards the same goal. LFV also manages its own environmental project, which includes the aquifer at Stockholm-Arlanda, now fully operational and supplying heating after cooling the airport during the summer. These efforts are vital in conjunction with the work on the application for a new environmental permit that Stockholm-Arlanda will submit in Arlanda Energi was awarded the Swedish Energy Prize for efforts to reduce its energy consumption and environmental impact. Within the scope of its energy project, all of LFV s airports have worked systematically to reduce energy use. This has also yielded results, with emissions for LFV as a whole falling by more than one third over the past five years. The energy project has also been successful in encouraging many employees to think energy-efficiently in their everyday lives, both at work and at home. The solar heating unit at Malmö Airport won a prize, and the airport s efforts as a whole won the Guldträdet ( Gold Tree ) award from Region Skåne for its forward-looking environmental work. At Göteborg Landvetter, new environmental ponds are being constructed to clean the water that is discharged into the surroundings. Fewer State-owned airports The Government wants regions to increase their responsibility for transport infrastructure and decided in March that the national basic airport infrastructure would include ten State-owned airports. After the turn of the year, Jönköping Airport was transferred to municipal ownership, reducing the number of LFV s airports from what was once nineteen to fifteen. The sale of Skellefteå Airport will be carried out on March 31. There are on-going discussions on the sale of Karlstad, Sundsvall Härnösand, Ängelholm Helsingborg and Örnsköldsvik Airports. Lars Rekke, Director General Streamlining LFV During the first decade of the millennium, LFV underwent substantial changes. In 2005, the Swedish Aviation Safety Authority and the Public Sector and Aviation Department were separated from LFV to form the new public authority the Swedish Civil Aviation Authority (now part of the Swedish Transport Agency). The streamlining of State enterprises continues with the transformation of airport operations into a limited liability company. Airports and air traffic management have been included in the same organisation since These are new times, and I believe two new and more effective organisations will emerge. Despite the recession and difficult times, there is enthusiasm and commitment in the aviation world which inspires continued faith in the future. So I am confident in my outlook for the future of aviation, the airport company and LFV. Finally, I would like to extend warm thanks to all employees who worked for the best of the airport during the year. Comments of the Director General > LFV 2009 < 5

8 LFV s airports During 2009, LFV operated and improved 16 airports that were used by a total of 27 million passengers. Air travel in the world Air travel around the world experienced one of its greatest declines ever. In 2008, only air traffic in the US decreased, but in 2009 every part of the world except the Middle East and Latin America reported lower passenger numbers. According to Airports Council International (ACI), global air travel was down by about 3% in 2009; in comparison, global growth was zero in A number of major international airlines reduced capacity by 10 20% relative to During the year, the global recession and falling GDP had a major impact on air travel in the form of a sharp decline in demand. The US and Europe, where markets are comparatively mature, were especially hard hit by the recession. Still, the large number of airline bankruptcies that was predicted failed to materialise. Nonetheless, market shares between various airlines around the world shifted during the year. Air cargo around the world was hit even harder than passenger traffic by the recession and lower international trade during the year. According to ACI, international air cargo around the world fell a full 10% in Given that air cargo generates up to 30% of the value of goods in all global trade, this is a substantial decline. Air travel remains the safest form of public transport. However, the total number of casualties in the world was slightly higher than in the preceding year, which was a break in the positive trend that had been under way for a number of years. There was continued discussion during the year about the link between air travel and global climate change. In 2009, the international aviation industry agreed on global emissions targets for These entail cutting emissions by 1.5% per passenger kilometre by Subsequent emissions will not be allowed to increase so that emissions in 2050 will be at 50% of 2005 levels. The targets are to be achieved through a combination of technological development, more efficient methods of flying, new fuels and, to some extent, economic incentives. Airport structure LFV s airports throughout Sweden form a coherent system that provides passengers access to important business and leisure destinations. Stockholm-Arlanda Airport ties together Swedish domestic traffic, thereby among other things creating a larger passenger base for non-stop routes to other parts of the world. LFV s airport system is also essential to enable foreign visitors to fly to Sweden and onward within the country in a quick, reliable and efficient way. In order for this to work optimally, easy, quick flows are needed when passengers must change flights. There is a long-term trend towards air traffic increasing at larger airports while falling at smaller ones. LFV is thus working very actively to improve the range of flights at a number of small and mediumsized airports. Among the methods used were investments in inbound tourism in collaboration with local partners and attractive incentives for airlines to establish new routes. During 2008, the Swedish Parliament decided that LFV is to operate ten airports in the future. LFV transferred Jönköping Airport on January 1, During the year, LFV worked to bring about the local or regional takeover of the five other airports that are to be sold in Air traffic developments The number of passengers at LFV s airports decreased by 10% in International traffic fell by about the same amount as domestic traffic. The number of landings decreased by 10%. This is a sharp decline in historical terms which was caused by the recession. Traffic volume in the first half of the year was extremely weak whereas the situation was somewhat more stable in the second half. The sharp decline began as early as in the autumn of 2008, when a number of airlines reduced capacity, while businesses and leisure travellers cut back on travel. The decrease at LFV s airports was more substantial than generally in Europe. Throughout 2009, most airlines had significantly lower capacity than in preceding years. This resulted in a high occupancy rate for aircraft. Traffic to and from Stockholm- Bromma Airport increased in Despite generally weak demand for air travel, the Swedish aviation market was not hit by any major airline bankruptcies during the year, which is beneficial to both passengers and LFV. The trend in intercontinental traffic was more favourable than in other traffic during the year. This is due in part to a sharp increase in traffic to Iraq after a Passenger growth in 2009 compared to 2008 % Number of passengers in 2009 Millions The world Europe Sweden LFV 0 Copenhagen Airport Oslo Airport Stocholm Arlanda Airport Helsinki-Vantaa Airport Sources: ACI, Swedish Civil Aviation Authority, LFV International Domestic Total 6 > LFV 2009 < LFV s airports

9 Traffic trend at LFV s airports in 2009 Passengers Number Change from 2008 Landings Number Change from 2008 European traffic 14,059,280-11% European traffic 85,081-13% Rest of world 1,726,071-4% Rest of world 5,028 3% Total international 15,785,351-10% Total international 90,109-12% Domestic traffic 11,310,727-11% Domestic traffic 105,132-6% Total 27,096,078-10% Total scheduled and charter 195,241-9% Taxi flights and general aviation 47,377-11% Total 242,618-10% number of years of restrictions on air traffic to the country. Locally departing air charter traffic showed stable growth at a number of airports, in view of circumstances. This shows the strength of air charter as a local product but also the advantages of local airports in creating an easy, smooth travel experience. Regional collaboration For a number of years, LFV has been working closely with regional representatives in a coordinated effort to stimulate the growth of both its airports and the regions where they are located. All of LFV s airports have various forms of collaboration with local bodies. In a recession, these partnerships are important in maintaining good access even when demand decreases. In Gothenburg, there is close collaboration with Göteborg & Co., and in Skåne province collaboration with Region Skåne and others continued. Stockholm-Arlanda is working with the Municipality of Sigtuna and nearby landowners to launch Stockholm Airport City as an umbrella term for the region s development of land, properties and services. In Kiruna, air traffic is developed together with the organisation Swedish Lapland. There are also similar partnerships at other airports. Aside from better air connections, the objectives include improved relations with nearby residents, local business development and the creation of ground transport connections to each airport. Due to the varied conditions at the airports, this work can assume very different forms. These collaborative efforts are aimed in part at increasing the number of air connections. However, this need not entail new routes but may also involve events, new businesses and the like which increase capacity for existing routes. Important to provide attractive solutions to airlines Airlines do not primarily choose to serve a given airport. Instead, they want access to the region s potential passenger volume. Provided that the region can generate sufficient passenger or cargo volume, they require an airport with attractive conditions and an infrastructure that allows efficient, cost-effective processes for both airlines and passengers. During the year, LFV continued working intensively to meet the above requirements at all its airports. Regular surveys conducted at European airports indicate that customer value continued to improve at Stockholm-Arlanda Airport and Göteborg Landvetter Airport. While traffic decreased in 2009, long-term forecasts suggest a continued increase in international air traffic. In order to handle a growing number of international passengers, continuous improvements and adjustments are needed. Airlines, which have come under increasing financial pressure over the last two years in particular, require smooth, flexible and cost-effective processes. If LFV cannot meet these requirements, there is a major risk that airlines will move their capacity to another airport. During the year, LFV continued to focus its investments on measures to improve the airport experience for passengers, airlines and tenants. To speed up this work and increase the impact of its marketing efforts, LFV works largely in collaboration with regional bodies around each airport. Air cargo developments In recent years, major air carriers established large-scale operations, in particular at Stockholm-Arlanda Airport. However, in 2009, air cargo volume declined by 26%, which led to falling revenue for both cargo carriers and LFV. Nevertheless, most companies have made long-term investments, in many cases setting up their own offices at airports. Falling numbers are seen purely as an effect of the recession, and there are high hopes that volume will quickly increase once activity especially in the export-import sector increases. Growth in air cargo is usually a good indicator that the economy is about to pick up. At the beginning of the year, Korean Air Cargo started traffic on the Frankfurt Luleå Seoul route. Intermediate landings at Luleå mainly involve picking up fresh salmon from northern Norway. During the year, the logistics company TNT s new depot in Malmö was completed. The company previously opened its own buildings at Stockholm- Arlanda Airport and Göteborg Landvetter Airport to handle efficient reloading mainly between air and road transport. LFV owns 50% of NAP (Nordic Airport Properties), which develops cargo facilities at major airports. LFV s airports > LFV 2009 < 7

10 Airport charges per passenger and single journey, 2009 Air route Aircraft type Stockholm-Bromma to Göteborg Avro RJ 100 Göteborg Landvetter to London Boeing Stockholm-Arlanda to Copenhagen Boeing Cabin factor 70% 70% 70% Aircraft-related charges Passenger charge (SEK) Total Take-off, exhaust and noise charges plus terminal navigation charge (TNC). TNC covers costs of air navigation services at the airport and in its vicinity. The Swedish Civil Aviation Authority invoices SEK per departing passenger to cover such costs as security screening. Price reduction helps hard-pressed airlines As a result of the declining passenger base and financially pressed airlines, LFV decided on a temporary reduction in charges at the beginning of In March, prices were reduced to a level that meant about SEK 40 million in reduced costs for the airlines in The reduction applied to Stockholm-Arlanda, Stockholm-Bromma and Göteborg Landvetter. LFV has reduced prices for airlines by close to SEK 350 million since During 2009, LFV invested SEK 25 million to stimulate traffic growth. This was done through discounts for traffic to new destinations, bonuses for traffic growth and marketing support in conjunction with the establishment of new routes. LFV s strategy is also to cut airport charges or implement other marketing measures as soon as there is financial leeway. Airport operations products Earnings from airport operations products are negative. This means that revenue from airlines is too low to cover the costs of the airports. Most of this deficit is instead covered by commercial operations. Adjustments in operations and restrictions on capital spending have been introduced in recent years. This is necessary to enable LFV to achieve its owner s longterm return targets. It also means that LFV is well equipped to face the on-going recession. LFV s airports have their own programmes adapted to their own operations. Considering the spare capacity that is generally available to LFV s airports, capital spending will be limited and investments that directly help increase customer value will enjoy priority. In view of the weak growth in air traffic during the year, LFV limited some investments or put them on hold. For several years, LFV s four largest airports have had a programme to stimulate market growth. Opportunities have also been identified at its other airports to expand traffic by means of various stimulus measures. As a result, in 2009 LFV launched a risk-sharing model at Kiruna, Luleå, Umeå, Åre Östersund, Visby and Ronneby Airports. This involves LFV and the airline or travel operator making a joint investment and sharing revenue from new traffic. Commercial products The airports commercial products now make up 47% of LFV s revenue, and this percentage continues to rise. As in recent years, leasing of commercial space and land, retail activities and car parking at LFV s airports accounted for the bulk of commercial revenue in The market for commercial operations is constantly changing, driven by customer demands and market competition as well as the development of products and services. The customer is the focus of development work in LFV s commercial business, regardless of whether that customer is a tenant, a passenger or has some other relationship to the airport. At a time when traffic revenue is falling, it is even more critical to invest further in commercial activities. LFV thus continued its work to increase commercial revenue at its airports in 2009 despite the weak air traffic. It is a matter of continuing to develop new and old products, utilising a larger proportion of terminal areas where passengers spend time and attaching greater importance to commercial operations when airports are renovated. However, continued development of commercial products depends on an increase in traffic. At Stockholm-Arlanda Airport, a large share of the commercial development is done in collaboration med ASDC (Arlanda Schiphol Development Company AB), which is a company owned jointly with Amsterdam Airport Schiphol. The company is responsible for the commercial development of shops, restaurants and service establishments at the airport. In April, Stockholm-Arlanda s new Terminal 5 was inaugurated. The terminal houses a new security screening checkpoint, tax- and duty-free shop and other shops. During the year, the tax- and dutyfree shop was named one of the best newly opened airport shops in the world by DFNI, which is a global news and analysis company in travel retail. LFV continued with various advertising campaigns at its airports during the year. Its advertising sales fared better than advertising sales in Sweden in general during The airports outside Stockholm work on the basis of a business model called ABC. All work, all activities and all changes carried out at the airports are performed within the framework of this model. ABC, which has attracted great international attention, especially in 2009, with its focus on flexibility and lower costs, demonstrated its effectiveness in handling declining revenue. Since LFV s airports are gathering places for numerous business travellers, continued investments were made during the year to develop their conference 8 > LFV 2009 < LFV s airports

11 LFV s airports > LFV 2009 < 9

12 operations. LFV s Airport Conference and Event initiative has developed a number of overall concepts for airport conference facilities. Almost all of LFV s airports joined the concept in During the year, Arlanda Conference and Business Center was nominated Sweden s best dayconference facility. During the year, the Car Care concept was launched at five of LFV s smaller airports. This enables travellers to book various automotive care services, which are then performed while they are away. The car and keys are left at the airport upon departure, and the service is also available to people who are only travelling for the day. Car parking is an operation with the objective of reducing its market share in favour of public transport. This sets high demands for services and functions that appeal to a smaller market while maintaining revenue. Another venture involving vehicles has been undertaken at Göteborg Landvetter Airport. Porsche is the first company to set up operations at Airport City, which is the planned travel, business and retail centre that will be located between the airport terminal and highway 40. Porsche s premises will include a showroom, car care centre and 5,000 square metre secure parking facility. During 2009, LFV continued with work to develop external training programmes. At LFV, there is extensive knowledge about fire protection, cardiovascular rescue and a number of other subjects related to accidents and preventive work. This knowledge is now being offered to external customers in the form of certified training in several of the communities where LFV manages airport operations. Sweden s EU presidency had an impact on LFV s airports, where the reception at these airports was important in Sweden making a welcoming and professional first impression. In February, LFV took over apron handling services from SAS Ground Services at its airports in Kiruna, Luleå, Ronneby, Åre Östersund and Ängelholm Helsingborg. Apron handling services include loading and unloading of goods and baggage, refuelling and de-icing of aircraft. In part through its Basic Airport concept, LFV has good prospects for running this part of operations cost-effectively by taking advantage of synergies between various airport operations. Property development, in particular office space, hotels and parking, is an operation that many of LFV s airports are devoting increasing efforts to. Airports are an attractive market for both investors and tenants that rely on this link to the global market. ABC business model for LFV s airports outside Stockholm Attractive Airport A focus on making airports attractive meeting places and increasing non-aviation-related revenue. Basic Airport A focus on running as efficient an airport operation as possible, which among other things means that every employee has several different job assignments. Connecting Airport A focus on actively searching for collaborative and business partners in order to market regions and improve airline services. Commercial revenue by passenger Real estate products SEK 24 SEK 25 SEK 26 SEK 28 SEK 31 Car parking SEK 16 SEK 16 SEK 17 SEK 18 SEK 18 Ground handling SEK 6 SEK 6 SEK 6 SEK 6 SEK 8 Other commercial products SEK 14 SEK 17 SEK 16 SEK 18 SEK 18 SEK 59 SEK 63 SEK 65 SEK 70 SEK 75 Real estate products (SEK M) Car parking (SEK M) Ground handling (SEK M) Other commercial products (SEK M) ,709 1,863 1,968 2,128 2,037 Passengers (000) 28,837 29,601 30,113 30,263 27, > LFV 2009 < LFV s airports

13 Continued initiatives to ensure a smoother travel experience Smooth processes for passengers are an absolute necessity if LFV s airports are to grow and develop in the tough competition prevailing in the European aviation market. During 2009, LFV thus continued to focus on investments that create a smoother travel experience. At Stockholm-Arlanda Airport, the newly constructed security screening checkpoint in Terminal 5 creates faster flows. In international measurements carried out by the airport organisation ACI on a regular basis, waiting time is one of the factors in which Stockholm-Arlanda improved most in Efforts made to enhance hospitality at Stockholm-Arlanda yielded concrete results since friendliness and helpfulness among airport staff is one of the areas in which customer satisfaction increased significantly during the year. The opening of new shops is another factor contributing to higher satisfaction among passengers in Efforts to enhance hospitality have been so successful that other LFV airports and divisions introduced training in this area during the year. At Göteborg Landvetter Airport, a new arrival terminal was inaugurated early in the year. The objective is to create a faster and more comfortable flow for passengers. Since passenger volume generally fell during the year, most airports had ample capacity to handle passengers with their existing infrastructure. Stockholm- Bromma Airport is the only LFV airport where the number of passengers rose during the year. The airport s accessibility and quick, easy flows are well suited to the large share of business trips made to and from the airport. At Luleå Airport, tests were carried out during the spring to allow charter passengers to check in their baggage as much as a day ahead of departure in order to make the start of their trip smoother. In Malmö, airport access for vehicles was improved by adding a roundabout, which eliminated long queues that previously formed during peak traffic hours. LFV s airports have a well-developed system for providing personal assistance to individuals who for various reasons have reduced mobility. Airport statistics, 2009 PASSENGERS LANDINGS STAFF FINANCIAL DATA Total number Change Of which intl., number Change Total number Change Full-time equivalent number Capital spending SEK M Sales SEK M Operating profit SEK M Stockholm-Arlanda Airport 16,064, % 12,114, % 96, % , Göteborg Landvetter Airport 3,689, % 2,708, % 28, % Stockholm-Bromma Airport 1,972, % 155, % 31, % Malmö Airport 1,527, % 581, % 17, % Luleå Airport 954, % 58, % 8, % Umeå City Airport 815, % 34, % 10, % Ängelholm Helsingborg Airport 364, % % 6, % Åre Östersund Airport 330, % 14, % 4, % Visby Airport 304, % 13, % 9, % Sundsvall Härnösand Airport 248, % 19, % 6, % Skellefteå Airport 205, % 10, % 3, % Ronneby Airport 191, % % 4, % Kiruna Airport 186, % 3, % 2, % Örnsköldsvik Airport 91, % 3, % 1, % Karlstad Airport 86, % 42, % 3, % Jönköping Airport 62, % 24, % 6, % Including costs of a nonrecurring nature associated with the transfer of the airport from LFV to the municipality. LFV s airports > LFV 2009 < 11

14 LFV s air navigation services LFV s Air Navigation Services (ANS) is responsible for air traffic control at all airports in Sweden and in Swedish airspace. It is also responsible for ensuring that the information pilots need when planning their flights is available and is correct. In addition, the ANS Division participates in a number of international development projects. Air traffic trends The number of flights in Swedish airspace fell drastically during the year. The greatest decrease was in overflight traffic, which is traffic that neither takes off nor lands in Sweden. Overflight traffic had experienced the strongest growth in recent years. The decline in 2009 was due mainly to the global downturn in air traffic as a result of the recession. Sweden is one of the countries hardest hit by the drop in traffic in their airspace in terms of the number of airspace movements. Military air traffic, for which LFV also handles air traffic management, increased during the year. Safety is vital Aviation safety is the highest priority in the work of the ANS Division. Employees have a ready willingness to report incidents, and the number of such reports is increasing, which facilitates proactive work with aviation safety. LFV s ANS Division was not involved in any accidents or serious near-accidents during the year. There is a falling trend in the number of near-misses reported, which is a favourable development. The control centres in Stockholm and Malmö remain operationally stable. Thanks to these modern facilities, LFV can safely and efficiently handle increased air traffic in the coming years. LFV s ANS Division is certified in accordance with Single European Sky standards as well as ISO 9001:2000 quality management and ISO 14001:2004 environmental management standards. Focus on costs during the year The sharp downturn in air traffic reduced revenue from air navigation services. This means there is a need to quickly adjust costs for operations that will have a lower volume over the next few years. During the year, LFV initiated and implemented an action programme and development initiative that will make operations more efficient in various ways. The Government has announced that air traffic management services at and in the vicinity of airports will be deregulated in Sweden. This is another factor promoting greater efficiency in operations in order to successfully withstand external competition in the future. LFV s Air Navigation Services instrumental in international collaboration As a result of the EU s Single European Sky initiative and the EU regulations it has generated, extensive work is being carried out in a multinational coordinated development of air navigation services in Europe. To give an example, there are legal requirements for countries to introduce functional airspace blocks in which national borders should not be a restricting factor. Another example is a European policy for increased performance management in air navigation services and development of a harmonised European air navigation system. LFV has played an active and in many cases leading role in a number of these development projects. One example is NUAC HB, a joint company formed by LFV and Denmark s Naviair to operate control centres in Swedish airspace movements in 2009 compared to 2008 Stockholm, Malmö and Copenhagen. NUAC HB helps to create integrated crossborder air traffic management in Swedish and Danish airspace. Along with generating savings, this results in more efficient and effective air traffic management whereby airlines save fuel, environmental impact is reduced and passenger travel times are shortened. Other examples are LFV s participation in the work being carried out by several countries in northern Europe aimed at forming a functional airspace block not restricted by national borders. The ANS Division is also very active in a consortium of primarily northern European air navigation services that are part of the company SESAR Joint Undertaking (SESAR JU). This company is developing the European air traffic management system of the future in order to meet the European Commission s targets. The European Commission s objectives for the European air traffic management system by % higher capacity than in Improved aviation safety so that the number of accidents or near-accidents that air traffic management contributes to does not increase, regardless of the increase in air traffic. 10% lower environmental impact per flight compared to The cost per flight cut in half compared to Domestic International Overflights Total , , , ,886 Percentage of movments 23% 35% 42% , , , ,195 Percentage of movments 21% 36% 43% Euro/SU En route charges, 2009 Belgium Britain Germany Norway Netherlands Denmark France Sweden Greece Finland Average Source: EUROCONTROL 12 > LFV 2009 < LFV s air navigation services

15 More efficient flights in Sweden During the spring, a number of flights in Sweden were made straighter when a system was introduced allowing a free choice of flight paths at an altitude above 9,000 metres for some flights north of Gävle. The system will be developed in different phases over two years and when fully implemented in 2011 will result in savings to airlines of about SEK 1 million per day and significantly lower carbon dioxide emissions. The system is already estimated to have produced fuel savings and thus lower carbon dioxide emissions in LFV s investments in green flights continue. The focus is still on airport app roaches, with 28% of approaches at Stockholm-Arlanda in 2009 being green approaches, in which the aircraft glides down from its cruising altitude to landing. In an international perspective, LFV is far ahead in this field, and the aim is to have eight out of ten approaches performed as green approaches by Number of passengers 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Stockholm-Arlanda Airport Punctuality, domestic traffic, 2009 Departing passengers Arriving passengers Total number of passengers No delay Delay of min. Delay of min. Delay of >60 min. Number of passengers 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Stockholm-Arlanda Airport Punctuality, international traffic, 2009 Departing passengers Arriving passengers Total number of passengers No delay Delay of min. Delay of min. Delay of >60 min. LFV s air navigation services > LFV 2009 < 13

16 LFV s environmental work Thanks to systematic and ambitious environmental work, LFV has reduced its carbon dioxide emissions every year for the past six years. Environmental concern is integral to LFV s operations, and LFV s airports are examined regularly in compliance with the Swedish Environmental Code. Carbon dioxide emissions continue to decrease In LFV s own operations, emissions of fossil carbon dioxide have decreased by 37% compared to During 2009, these emissions totalled 9,632 tonnes. This means that emissions fell by 3% compared to LFV s target is to halve its atmospheric carbon dioxide emissions by 2010 compared to Starting with 2008, LFV s reporting of emissions is delimited somewhat differently from before. Carbon dioxide emissions from business travel and from heating energy produced, purchased or resold by LFV are included in the result. For most emission sources, other greenhouse gases as specified in the Kyoto Protocol are also included in the result for LFV s energy project growing During the autumn of 2007, LFV began its largest-ever technical project, an energy and environmental project aimed at reducing energy consumption and carbon dioxide emissions. LFV s carbon dioxide emissions are to be cut in half by the end of 2010, with 2005 as the base year. Since 2008, the project includes the entire LFV Group. While LFV makes money by reducing its energy use, the background to the project is climate change and an understanding that every company that contributes to the greenhouse effect must do everything that is practical and economically feasible to reduce its own carbon footprint. This target should be achieved primarily by reducing the use of electricity and heating by about a third. The main strategies for achieving the project target is to introduce new technology, optimise the systems that LFV uses and involve all of LFV s employees. Another important success factor will be to develop a strong environmental commitment among all the companies that have operations at or near LFV s airports. The work is being run by Arlanda Energi, which is a unit within LFV whose responsibilities include supplying energy at Stockholm-Arlanda Airport. During the year, Stockholm-Arlanda Airport inaugurated its aquifer heating and cooling system, which incorporates a natural aquifer immediately east of the airport. An aquifer is like a gigantic natural thermos. In the summer, cold water is pumped from the aquifer to supply the district cooling system. The returning water is then stored in the aquifer until winter, when the airport needs heating. The aquifer saves energy, heating and money. In November, Arlanda Energi was awarded the 2009 Swedish Energy Prize for its work to reduce Stockholm-Arlanda s energy use and environmental impact. LFV has set yearly sub-targets until In 2009, electricity and heating use increased by 11% and carbon dioxide emissions from energy use decreased by 15%. LFV thereby met its sub-target for LFV participating in European climate efforts During 2009, two of LFV s airports, Stockholm-Arlanda and Stockholm-Bromma, joined a European-wide programme to reduce the environmental impact of airports. At present, 31 European airports are taking part, and in 2010 all Swedish airports that operate under the auspices of the State will join the programme. The airport organisation ACID Europe and WSP Environment and Energy are behind the programme, which involves strict monitoring, inspection and approval of the work airports undertake to reduce their carbon footprint. Solar heating unit at Malmo Airport In September, a solar heating unit was inaugurated at Malmö Airport. The unit is part of the central heating plant built at the airport and also uses pellets and other biofuels for heating. The 2,000 square metre solar heating unit, which is the largest of its kind in the Nordic countries, will supply heating to the airport for much of the year. The unit was also named plant of the year by the Solar Energy Association of Sweden. Environmental permit for Stockholm-Arlanda Airport During 2009, LFV continued its work on an application for a new environmental permit for the airport. The application will be submitted in Emissions from airport operations have decreased in recent years while emissions from ground transport have increased. The airport has developed an action plan to reduce the carbon footprint of ground transport over the next few years. LFV is working on these issues with public transport operators and other stakeholders. Emissions from LFV s own operations 1 Year CO 2 [tonnes] NO X [tonnes] HC [tonnes] , , , , LFV s carbon dioxide emissions by source, 2009 Rescue service 3% Heating 14% Business travel 19% Vehicles and fuels 64% , Because of its commitment to climate neutrality, LFV applies a broader definition for calculating and reporting carbon dioxide emissions than for other emissions. In addition to direct emissions from LFV s own operations, carbon dioxide emissions include emissions from business travel and from heating energy produced and purchased as well as resold by LFV. In organisational terms, LFV s wholly-owned subsidiaries and the associated company Göteborg City Airport are included. 2 From fuel combustion. 14 > LFV 2009 < LFV s environmental work

17 LFV s ten environmental targets Green approaches shall make up at least 80% of all approaches at LFV s airports by 2012 At least 80% of flights in Swedish airspace shall be straight-line flights by 2012 LFV s carbon dioxide emissions shall be cut in half by 2010 LFV s energy consumption shall decrease by one third by 2010 By 2012, LFV shall use 70% renewable energy and fuel The noise impact of LFV s airports shall be limited By 2012, run-off water from LFV s airports shall be of good quality in compliance with the Swedish Environmental Protection Agency s assessment standards/eu Water Framework Directive At least 50% of travellers shall use public transport to get to Stockholm-Arlanda Airport by % of all taxis at Stockholm-Arlanda Airport and Göteborg Landvetter Airport shall be ecotaxis LFV shall move towards zero emissions of carbon dioxide by LFV s energy consumption by type, 2009 LFV s carbon dioxide emissions, LFV s total energy consumption, Oil 1% Biofuels 12% District heating 24% Electricity 63% Tonnes 20,000 16,000 12,000 8,000 4,000 MWh 180, , ,000 90,000 60,000 30, Electricity consumption Heating consumption LFV s environmental work > LFV 2009 < 15

18 Increased travel via public transport to and from airports LFV continues to work to increase the percentage of people who use public transtransport to and from its airports. As emissions from LFV s own operations decrease, emissions from road transport to and from the airport take on even greater importance. An expanded number of biogas-fuelled buses, continued efforts to boost ecotaxis, opportunities to use renewable fuel and more effective information are examples of measures implemented during 2009 to promote better transport from an environmental perspective. Green flights LFV s extensive and highly publicised work on green approaches at Stockholm- Arlanda Airport continued throughout During the year, over 20,000 green approaches were carried out at Stockholm- Arlanda Airport, and testing on the method also began at Göteborg Landvetter Airport. To date, some sixty airlines have used the method, which essentially involves the aircraft gliding with minimal engine thrust to landing. Each green approach reduces carbon dioxide emissions by at least 150 kg compared to a traditional landing. LFV remains climate-neutral In recent years, LFV has implemented measures that have resulted in major reductions in greenhouse gas emissions from its operations. In spite of this, these operations emit a certain quantity of carbon dioxide each year. To take responsibility for these emissions, LFV buys verified emission rights (VERs), which result in equal reductions in emissions elsewhere in the world. International harmonisation reduces emissions LFV s Air Navigation Services Division takes part in a number of international collaborative efforts, in part to achieve EU targets. One of these targets is a 10% reduction in emissions per flight by 2020 through improvements in air traffic management. One way to do this is to form functional airspace blocks that allow for straighter flights. During the year, Sweden and Denmark created such a block, which will be expanded in the future to include other northern European countries. In CANSO, which is the global collaborative organisation for air navigation services, guidelines, benchmarking and other standards are developed to reduce environmental impact. LFV plays an active role in a number of these initiatives. During the year, LFV also continued its work on the Flight Efficiency Plan, through which European air navigation services are trying to reduce costs for airlines. This is done in part through new approach procedures and shorter, more optimal flight paths, which are also directly linked to less fuel consumption, lower emissions and less noise. Option to carbon-offset air travel Since 2007, passengers travelling to or from Stockholm-Arlanda Airport have the option of offsetting the emissions from their flight via LFV s website. There is also the option of offsetting the entire trip, including travel to and from the airport. Sustainable Airport Initiative During the year, the Norwegian airport operator Avinor and LFV, together with the independent classification society Det Norske Veritas, launched an initiative to develop a tool for measuring their airports work with sustainable development. Det Norske Veritas is developing the tool in order to ensure impartial assessment of work with sustainability and to identify where the airports should focus their efforts to improve operations. Sustainable development entails measuring factors such as environmental impact, economic well-being and social responsibility. The tool is based on the guidelines for ISO certification and the Global Reporting Initiative (GRI). Noise Noise is a relatively limited problem at a number of LFV s airports. This is largely due to the location of the airports. Thanks to quieter aircraft, changes in take-off and landing routes and noise insulation of 1.2 Emissions from LFV s own operations per passenger, LFV s consumption of anti-skid agents, Tonnes 3, ,500 2,000 CO 2 kg/pass NO X g/pass 1,500 1, CO 2 kg/passenger NO X g/passenger Urea, tonnes Acetate, tonnes Formiate, tonnes 16 > LFV 2009 < LFV s environmental work

19 some properties close to the airports, it has been possible to further reduce noise problems. Take-off charges include a differentiated charge based on the aircraft s noise rating and the airport s sensitivity to noise. LFV is testing various technical solutions to further reduce noise. These include curved approaches, which incorporate modern technology to navigate, to some extent, around the areas where noise exposure should be reduced. The technology involved is complex, but LFV conducted tests on a small scale together with other parties during the year. The work to develop this is extensive and will continue for a number of years to come. Water and chemicals The use of aircraft de-icing agents increased by 21%, while the use of antiskid agents decreased by 35% compared to A number of airports updated their control programmes with respect to the airport s impact on water. Studies began on the presence of the environmental toxin PFOS 3 in water, fish and sediment in a project co-financed by the Swedish Environmental Protection Agency and LFV. Up until the first half of 2008, PFOS was found in the fire extinguishing foam used by LFV in its fire-fighting exercises. In all, 9% of the chemical products used by LFV have been assessed from a workplace and environmental perspective. Aircraft-related emissions During the year, carbon dioxide emissions from the LTO (landing and take-off) cycle fell by 17%. The reduction is due mainly to the lower number of movements during the year but also to the better environmental performance of aircraft. Total LTO emissions decreased in Energy consumption During 2009, LFV increased its total energy consumption by 11%. Electricity, including heating, accounts for 63% of total energy use. Electricity consumption increased by 3% compared to During 2008, energy use fell. Energy use is affected to a large degree by the temperature during the winter, which varies from year to year. More information Further information on emissions from LFV s operations, LFV s environmental targets and future measures are presented on the LFV website. For more detailed information, see the websites of the various airports. Emissions during the LTO cycle from civil aviation at LFV s airports 1 Year CO 2 [ktonnes] NO X [tonnes] HC [tonnes] SO 2 [tonnes] LTO = Landing and take-off. The number of people exposed to different noise levels Airport 2 Number exposed to noise levels exceeding LAeq24h 30dB(A),indoors Number exposed to noise levels exceeding LAmax, 3 times/night 45dB(A), indoors Stockholm-Arlanda Airport Göteborg Landvetter Airport 75 Malmö Airport 0 50 Umeå City Airport 0 0 Sundsvall Härnösand Airport 0 0 Jönköping Airport 100 Stockholm-Bromma Airport Total The table shows the number of people exposed near airports with over 1,095 night-time movements (does not Include Stockholm-Bromma Airport). Stockholm-Bromma Airport is the one airport for which LFV did not achieve LAeq 30 db(a) indoors. 3 PFOS = Perfluorooctane sulfonate LFV s environmental work > LFV 2009 < 17

20 LFV s employees LFV must be an attractive employer with a positive image among current employees, potential employees, customers and suppliers. During the year, some 4,000 staff were employed at LFV. LFV s attractiveness as an employer During the year, LFV continued the task of positioning itself as an attractive employer. Activities have been undertaken to attract people with vocational skills as well as university training. LFV carried out various external marketing initiatives as well as assessments aimed at evalua ting its attractiveness relative to other companies. The employee survey conducted at the beginning of the year resulted in the identification of a number of areas for im provement. Management by objectives, communication and greater impact in the work for change now under way were a few of the areas noted. During the year, activities to improve operations in these areas were initiated. Management recruitment An analysis of management recruitment needs was performed and a succession plan established. LFV continued its management training programme as well as individually based management development. This is done mainly to ensure a long-term supply of managers, increase knowledge about change management and enhance business leadership at LFV. During the year, LFV, together with external consultants, developed a new assessment process. This includes an external assessment of how managers are developing in their leadership role and an external assessment when recruiting for various management positions. Talent management During 2009, LFV continued its efforts to identify future recruitment needs and develop talent management plans. The trainee programme run by LFV on a regular basis for a number of years continued. LFV also accepted new trainees to cover portions of its future competency needs. Staff resources The number of full-time equivalent employees increased, in part through the transfer of ground handling operations at several airports. During 2009, the number of full-time equivalent employees was 3,374 (3,342). Employee statistics, average full-time equivalent positions Change, % Group Airports Division 1,103 2, 3 1,040 6 Air Navigation Services Division 1,075 1,054 2 Stockholm Division Other units and subsidiaries Total 3,374 3, Including permanent and limited-time contract employees. 2 In organisational terms, LFV Teknik has been moved to the Group Airports Division. 3 Employees were taken over from SAS Ground Services in conjunction with the acquisition of ground handling operations. Age structure men/women, Men Women 18 > LFV 2009 < LFV s employees