Where everything takes off

Transcription

1 Where everything takes off Key Highlights

2 Message from the CEO 2014 was the best year ever for Budapest Airport in terms of passenger traffic growth and improvement of service quality as well. This short sentence speaks for itself, but it does not reflect the daily effort made by our people and our partners to turn Budapest Airport into the best March connecting Budapest with Baku and further to the East with Central Asia and the Far East. airport in the CEE region. In fact this has also happened as Budapest Airport won the prestigious Skytrax Best Airport in Eastern Europe title in 2014 and also 2015 awarded on the basis of feedback from our passengers. The impressive results and improvements mentioned above may also have contributed to the successful These acknowledgements do not come by chance they reflect long years of focused performance. Of course, many other factors lie behind the record passenger traffic of (7.5 % growth over 2013) and Air Traffic Movements. The arrival of new airlines and the opening of many new destinations marked 2014 for us at the airport and by the same token for the Hungarian tourism industry. It would be highly unjust to pick out just a few as there were lots of newcomers and our existing partners have contributed to this growth too. completion of the refinancing of the loan facilities of Budapest Airport which has been completed in September 2014 and has won a series of financial awards in the category of European transport-related financing deals a clear indicator of the stability, transparency, and the good prospects of the airport operating company. We are de- termined to stay on Air Serbia was amongst the first with the start of daily track and follow the road leading to new achievements. service between Belgrade and Budapest, a route that was missing since Our largest airport partner Wizz Air brought an additional aircraft (their 8th) to increase frequency on high-density routes like London Luton, There is no better way to really see our performance than coming to Budapest as a passenger and you are indeed more than welcome to do so! Moscow Vnukovo or Istanbul Sabiha Gökcen Airport. Turkish carrier Pegasus Airlines also launched its flight between Budapest and Istanbul as of mid-july, and Transavia France started its service to Paris Orly. By the end of October we had regular wide-body flights again with the arrival of Emirates of Dubai. Daily flights by their Jost Lammers, CEO Budapest Airport A aircraft from the Persian Gulf region represent another turning point in the history of Budapest Airport was marked not only by increasing passenger traffic but also by the arrival of a new cargo service provider from the beginning of the year. With the strongly increasing business ties of Hungary and the government s Opening to the East policy, the arrival of Azerbaijan s Silk Way West airlines to Budapest came as a natural development. The first Boeing F freighter aircraft was greeted at the airport in early 2 3

3 Highlights of 2014 October Budapest Airport created a strategic partnership with Future FM regarding its Airport Facility Management (AFM) subsidiary. March A new Azerbaijani cargo airline Silk Way West starts regular cargo flights between The airport sold 75 percent of its share in AFM to Hungarian Future FM a dedicated facility management provider. The new owner takes over operation as of 1st January Baku and Budapest with Boeing F aircraft. The Azeri carrier operates The first direct Dubai-Budapest daily flight of Emirates was cel- regular flights between China, the Far ebrated at the end of the month. After long years of preparations, November January East and Central Asia and connects May July the Gulf carrier started daily service to Budapest with an Airbus A brand new inflatable hangar was A brand new 10-kV third power supply these areas to Europe Budapest Airport starts major refurbish- Budapest Airport finished the reconstruc- A 330 wide body jet. The new flight is erected for Lufthansa Technik Buda- line and a transformer sub-station was through Buda- ment works on the airfield including both tion of the General Aviation Terminal not only a connec- tion to pest at the airport. The new facility inaugurated in the town of Vecsés pest, Frank- runways. The total cost of the project is (GAT) by the end of July and together the Persian Gulf and enables Lufthansa Technik to service neighboring the airport. The new sta- furt and EUR 2.7 million and the project was com- with Celebi Ground Handling opened a the Middle more aircraft during the winter peak tion connecting the airport to a third, in- London. pleted before the main summer tourist new business lounge in it. The schedule East but months of maintenance. The EUR 2 dependent power supply line increas- By the season began. Both runway surfaces and was tight since all the works had to be also signifi- million project helped Lufthansa es operational safety of the airport and end of lighting systems were repaired, and, as a completed in time before the Formula cantly cuts Technik Budapest this winter to adds to the two existing electric power the year consequence major reconstruction works 1 team arrivals at the GAT by the end of flight time contract 12 Norwegian Boeing 737- supplies from Budapest city. Silk Way are not necessary during the next ten July. between 800 aircraft to be refurbished with an West changed years. Budapest and the in-flight Wi-Fi system. its aircraft to larger Boeing due to increased market demand. Highlights Far East, China and Australia. February BUD recognizes the performance of key airline and airport partners in 2013 for their role in keeping the airport on the right track. This is reflected not only in increas- April A new airline, Air Serbia was celebrated September Budapest Airport hosted the Freighters and Belly Cargo World Conference in the Hungarian Capital. Conference ing passenger numbers but also in con- on the delegates could convince themselves stantly increasing quality standards of first day of of the logistical advantages of the air- airport service recognized in the quar- the month port and the development potential of terly ASQ survey results. starting a daily June August Budapest Airport with regards to air service between Buda- Budapest Airport cargo. the capital of Serbia and pest Airport cele- started a commercial campaign series to December Hungary. After major reorganization and brated the 10th anniversary of Wizz Air promote Hungarian products in Sky- The 9 millionth passenger was cele- involvement of professional investor operations in Hungary with signing a Court. The so-called trinity promotion brated on 17th December in SkyCourt Etihad to Air Serbia the national carrier lease agreement to build a line mainte- where the airport, the Hungarian produc- with flowers and a brass band orches- started flights to Belgrade with an ATR-42 nance hangar for the low cost carrier. Wizz er and Heinemann Duty Free join forces tra. The lucky winner was a young aircraft. This new service offers a series of Air will take over the new facility in proved to be extremely successful and Hungarian family arriving with Brus- transfer opportunities to important des- Wizz Air has increased its fleet to eight air- has led to double-digit increases in sales sels Airlines from Brussels. This event tinations in the Balkans. craft in Budapest in June due to tasting and discounted price pro- also marked that Budapest Airport is motions in the given month. Different in for a record-breaking year in Hungarian wines, spirits and sweets were By the end of the year the passenger promoted every month until November. number was best ever: 9,155,

4 Airport completes award-winning refinancing Together with its financial advisor, Rothschild, BUD approached over 65 financial institutions in the market- In spite of difficult conditions, Budapest Airport suc- point of concern for all involved and many lenders testing phase drilling it down to a final group of 19 cessfully achieved its market-based refinancing at the were passing on the Budapest Airport loan to their senior and junior lenders. Headline terms for the end of September Budapest Airport could refi- restructuring teams, explained Ingo Ludwig. Next market-based refinancing were: nance all of its existing bank loans with new and exist- to the high leverage, the refinancing process was ing banks in the amount of EUR 1.1 billion senior debt and also burdened by a long-term interest rate swap with EUR 1.05 billion of 5.25 year senior bank facilities, EUR 300 million junior debt. The refinancing was well a negative market value of around EUR 250 million. maturing at the end of 2019 oversubscribed and the new loan agreements run for a EUR 300 million of 6.25 year junior debt, maturing at period of more than five years. The financial and economic crisis had hit Hungary the end of 2020 and part of the junior debt originat- hard. The country missed its original ambitious ing from shareholders This is really a great success for the Airport, said growth targets and on top of that in 2009 the Hun- Extension of EUR 1.1 billion interest rate swap arrange- Ingo Ludwig, Chief Financial Officer and Deputy garian GDP decreased by 6.7%. This also translated ments, including a EUR 770 million off-market swap, CEO of the Airport and responsible for the refinanc- into more or less zero passenger growth for the air- a EUR 132 million reverse swap and a new EUR 142 ing project. Yet, when we started the project in late port from 2007 to 2012 and, while the airport was million on-market swap 2012, it seemed anything but certain that the exist- nicely recovering in 2011, it was hit hard again by the ing facilities could be refinanced he adds, when re- collapse of national airline Malév in February The stretched leverage refinancing represented membering initial considerations to refinance the These factors caused many lenders to lose confi- senior leverage of 7.2 times EBITDA and 9.2 times loan package that was taken out in 2007 to finance dence and become more cautious. Special bank tax- incorporating the junior debt. The lending consor- the acquisition of the airport from the British BAA es and the forced currency exchange for loans made tium includes existing lenders rolling or upsizing which had taken it over from the Hungarian govern- in Swiss Francs to Forint at a fixed rate implied huge their participation in the senior loan like SMBC, ment only one year before. Completed just before losses for the banks, which added to the negative Unicredit, Crédit Agricole, HSH Nordbank and ING the 2008 financial crisis, the transaction was distin- sentiment. Nevertheless, management worked in- as well as new senior lenders such as RBC, Natixis gration of a new holding company into the existing guished by high leverage (with debt to EBITDA of tensively during this period to mitigate the lack of and Deutsche Bank. Out of the group of senior lend- shareholder structure of Budapest Airport. The shares more than 16 times) and optimistic passenger passenger growth and collapse of Malév, substan- ers several lenders acted also as swap counter par- of the new company were pledged to the new Senior growth projections. At the end of 2012 the leverage tially improving the profitability and cash flow gen- ties. On the junior loan key investors were Park B lenders. was still 11 times, while the market level for financ- eration of the company by increasing EBITDA from Square, Macquarie and Deutsche Bank, who partic- ing of comparable assets was between five to seven EUR 83 million in 2007 to EUR 115 million in 2012 ipated both in the senior and junior financing as well A key element of the successful refinancing was the times at this point. This overleverage was a major (+39%). as the swap. cooperation with the Hungarian state. Budapest Airport management approached the state-owned hold- The successful refinancing is a great success for the airport and provides a stable platform for future growth The refinancing was also recognized by the industry by winning a total of four internationally recognized deal of the year awards by specialist finance magazines Project Finance International, Global Transport ing company MNV quite early in the process and held various meetings with MNV and the ministries to keep them in the loop. Budapest Airport ensured that the financing structure was in line with the privatization While preparing for the refinancing, it became to consider it as part of an overall market-based refi- Finance, IJ Global as well as emeafinance. contracts, particularly with respect to leverage and quickly evident through discussions with the lend- nancing of the existing facilities. This structured solu- interest service ratios. The Hungarian state was very ers that the thirty-strong bank consortium was quite tion enabled BUD to: As is typical with diversified financing structures, the cooperative throughout the lengthy process and in polarized. Ingo Ludwig describes it as While half of rights and obligations of each specific group were the end approved the transaction. the bank consortium liked the asset and was very Provide an exit for some existing senior lenders while integrated into the financing contracts and the in- supportive of a refinancing, the other half was very allowing others to participate in the new financing tercreditor agreement. Budapest Airport, supported The successful and oversubscribed refinancing is of keen to exit rather sooner than later. Many banks in Significantly delever the company allowing BUD to by their financial advisor Rothschild, worked with a course a great acknowledgement of our work and the the latter group had effectively left the project and in- achieve a market-based refinancing of the senior debt total of six different law firms. One key challenge trust that the lenders place in the management of frastructure financing market for good, thus making Restructure, roll and partially break the existing inter- was the implementation of a completely new security Budapest Airport, summarized Ingo Ludwig. But discussions with the consortium quite challenging. As est rate swaps structure that considers the difference in rankings be- more importantly the new financing provide us with negotiations continued into late 2013, BUD s trading Get consent of the Hungarian State and an extension tween Senior A and Senior B lenders. This requirement, a stable platform to further drive the growth and Ingo Ludwig (Chief Financial continued to improve while at the same time the ju- of the direct agreement between the Hungarian State from the lenders themselves, was fulfilled via the inte- profitability of the business. Officer and Deputy CEO) nior debt market developed favorably enabling BUD and the lenders 6 7

5 Report 2014 Aviation business Passengers The annual passenger traffic hit a record high of 9.2 million passengers in 2014, ,155,961 8,520,880 8,504,020 8,920,653 which exceeded the 2013 figure by 7.5%. After the market consolidation during the Aircraft Movements past 2 years, 2014 saw a significant expansion of airline capacity and passenger traffic. In comparison with Budapest ,682 83,830 87, ,949 Airport s 7.5% traffic growth the EU average growth was only 5.3% in Cargo Volume The Hungarian capital airport handled a total of 9,155,961 departing and arriving passengers which was even higher than in the last year of Malév operation. However, the and Vueling. In addition, existing airlines development Business Unit Property ,987 92,112 93, ,595 aircraft movements, i.e. the number of take offs and land- was driven by either frequency or capacity increases or ings, did not show a similar recovery as it remained at the level of 86,682 movements, which is still an improvement launch of new routes. The most important development was demonstrated by Wizz Air with their 8th based aircraft Property revenues increased by 2.9% in 2014 driven by new tenants as well as new facilities built and Air traffic performance compared with 2013 (+3.4%) but remained far below 2011 starting to operate from April 2014 and providing addition- rented at the airport. These include the new DHL Airlines: 38 scheduled airlines operated in 2014 movements by 26.8%. This confirms the trend of airlines al capacity either to new destinations such as Kutaisi, and logistics center (new facility and new tenant) as efforts to increase efficiency via load factor improvements and deploying larger aircraft. Alicante or increasing frequencies on existing routes such as Barcelona, Moscow or Istanbul. In the meantime many well as a spare parts facility and inflatable hangar for Lufthansa Technik (new facilities). The DHL logis- 7 Low-cost 7 other airlines increased traffic e.g. Norwegian (new flight tics center is also the first development of the Airport 31 Full-service The above record traffic was achieved by attracting new airlines to BUD, such as Emirates flying to Dubai from to London Gatwick), Turkish Airlines (frequency increase), Jet2.com (new flight to Leeds) and El-Al through the Business Park on the southern edge of the airport. The new building comprises 3,000 square meters 31 October 2014 or new flights by Pegasus, Transavia France launch of its own low-cost subsidiary UP. of office space, 7,800 square meters of warehouse space and 5,700 square meters of maneuvering Consumer and landside business space. Destinations: airports 74 cities 35 countries Revenues in the consumer and landside business improved by 2.7% compared with The consumer business continued to benefit from the increased retail and food & beverage offering after completion of SkyCourt and the refurbishment of the terminal areas T2A and T2B in Altogether, the airport currently offers more than 50 stores and catering outlets on a total area of around 6,300 square meters. In 2014 additional new outlets were opened, such as Victoria`s Secret and Vodafone saw the first full year of operation of the improved curbside and car park access system as well as the online booking system contributing to a substantial increase of landside business revenues. 8 9

6 Financial Highlights Consolidated statement of financial position Consolidated income statement (in EUR `000) 31 December December 2013 ASSETS Non-current assets Property, plant and equipment 27, , Intangible assets 2,176,314 2,169,931 Derivative financial instruments 49, Other non-current assets 5 0, , 076 Total non-current assets 2,303,928 2,275,404 Current assets Inventories 1, , 49 6 Trade receivables 17, ,163 Cash and cash equivalents 112, , Other receivables 8, , Total current assets 139, ,050 Total assets 2,443,880 2,437,454 (in EUR `000) for the period ended 31 December 2014 for the period ended 31 December 2013 Revenue 26 5, , Raw materials and consumables ( 7 2, 7 11) (6 4, 741) used Utility expenses (6, 2 3 1) ( 7, 6 8 3) Employee benefit expense ( 19, 03 8) ( 17,9 3 6) Depreciation and amortization ( 1 8, 6 8 1) ( 2 0, 59 4) Other income, costs and expenses ( 2 5, 32 5 ) ( 2 5,9 2 9 ) Operating profit 123, ,935 Finance income 527 1, Finance costs ( 1 8 0, 27 2) ( 121, 249 ) Loss before income tax (56,073) (10,248) Income tax expense ( 3 1,9 17 ) (8,315) Loss for the period (87,990) (18,563) EQUITY 28, ,684 LIABILITIES Non-current liabilities Borrowings 1,9 6 8, , Derivative financial instruments 2 5 6, , 170 Other non-current liabilities 82, , 767 Total non-current liabilities 2,307, ,267 Current liabilities Trade payables 8, , Borrowings 7 3, 432 1, 27 8, Derivative financial instruments - 1 5,9 8 5 Income statement notes Revenues (in EUR `000) Aviation revenues 13 0, , 7 21 Fuel supply revenues 7 5, , 5 03 Rental revenues 52, , Other 7, ,9 37 Total 265, ,818 The reason of the increase in aviation revenues is increased flight and passenger numbers in Other current assets 26, , 426 Total current liabilities 108,205 1,330,503 Total liabilities 2,415,569 2,277,770 Total equity and liabilities 2,443,880 2,437,454 Statement of financial position notes Borrowings The Group refinanced its bank loans with expiration date of end of 2014 on 25 September As of 31 December 2014 the total amount of borrowings (both short and long term) consisted of EUR 765 million shareholder loans, EUR 1,100 million bank borrowings and EUR 177 million other borrowings

7 Raw materials and consumables used (in EUR `000) Outlook for 2015 Cost of fuel sale (70,542) (62,025) Other (2,169) (2,716) Total (72,711) (64,741) Finance costs The main reason of the increase in the accounted borrowing costs related to the refinancing of the senior bank borrowings of the Group. Income tax expense (in EUR `000) Current tax (4, 3 5 8) (4, ) Deferred tax ( 27, 5 59 ) ( 3, 74 0) Total (31,917) (8,315) The main reason of the increase in income tax expense is that in 2014 the Group realized a one-off effect on the revaluation of the deferred taxes due to the tax law change. Key figures Key figures Revenue (EUR `000) 265, ,818 Revenue excluding fuel supply (EUR `000) 189, ,315 EBITDA (EUR m) 142, ,709 Capex (EUR m) Debt (EUR m) 1,358 1,282 Cash (EUR m) Net debt (EUR m) 1,246 1,151 Budapest Airport foresees for 2015 the traffic to reach 10.1 million (+10.7 percent), with a moderate growth of movements by 5.7 percent. This growth will be driven among other things by the first full year of operation Top 10 airlines Wizz Air Ryanair Lufthansa easyjet KLM Norwegian British Airways Air France Germanwings Travel Service Top Ten Ranking of 2014 of Emirates, Wizz Air basing its ninth aircraft, and new airlines, for instance Iberia, Air Transat and Air China. Frequency increases are also expected (Pegasus to Istanbul, Transavia France to Paris). Top 10 destinations London Paris Brussels Frankfurt Amsterdam Munich Istanbul Rome M o s c o w Milan 12 13

8 Budapest Airport at a glance Budapest Airport is Hungary s largest international airport. Operations Terms of concession Ownership structure 100 percent privatization, duration until 2080, contract concluded 22 December 2005 Ownership structure: % AviAlliance, % Malton Investment Pte Ltd, % Caisse de dépôt et placement du Québec, 5 % KfW IPEX-Bank Technical Data Total area of airport Location Geographical coordinates Airport codes Terminal 1 1,515 hectares Budapest Ferihegy, 16 kilometers south-east of Budapest s city center N, O BUD (IATA), LHBP (ICAO) T1 (opened 1950, reconstructed 2005, but temporarily closed) Terminal 2 2A (opened 1985) 2B (opened 1998) SkyCourt (opened 2011 between 2A and 2B, the new large Terminal 2) Runways Runway 1 (13R-31L) 3,010 m Runway 2 (13L-31R) 3,707 m Passengers (in million) Aircraft Movements Cargo Volume (in tons) Revenues (in EUR m incl. fueling) ,682 83,830 89,987 92, Publisher: Budapest Airport Zrt., Communication, Tel.: , mihaly.hardy@bud.hu Status: October 2015