16.2.2009
CPH: 2008 performance as expected despite major changes

The downturn in the world economy, altered travel patterns, and bankruptcies and consolidation in the aviation industry had a strong impact on 2008 at Copenhagen Airports A/S (CPH). Especially the end of the year saw an adverse impact on results of operations, among other things as a result of the bankruptcy of Sterling. Nevertheless, Copenhagen Airport posted healthy results based on a strong competitive position in the European airport market. Like all major airports in Europe, CPH expects a decline in passenger numbers in 2009, which will presumably have a negative effect on revenue.

CPH revenues rose by 6.5% in 2008 to reach DKK 3,113 million, and operating profit was DKK 1.299 million, which is an increase of 1.1 percent compared to last year. Investments are expected to be on a very high level also in 2009. Passenger numbers increased by 0.6% to 21.5 million. The airport stands well prepared to face the future in spite of the current financial crisis.

The year began with growth
“Financial performance in 2008 was in line with expectations in spite of major challenges during the year. The year 2008 was a hard year for the industry, and CPH felt it, too. We began the year with traffic growth and increasing revenues, and we ended the year with a drop in passenger numbers and declining financial results. There is every indication that 2009 could be an even harder year,” said Brian Petersen, president and CEO of Copenhagen Airports A/S.

The trend of falling passenger numbers and declining revenues has affected the entire industry. If we look at the other major European airports CPH normally compares itself with, we see the same trend all over: traffic grew at the beginning of the year and dropped at year-end.

Growth is generated by low-cost traffic
Largely all growth at Copenhagen Airport since 2000 has been generated by the low-cost airlines. Nine years ago, the low-cost airlines had a market share of 1.5% of traffic at Copenhagen Airport; this has grown to about 14% today. For this reason, CPH is now focusing even more massively on developing facilities that meet the demands of these airlines.

“It is more important than ever that CPH is ready for the traffic changes we are seeing at the moment. The growth of the low-cost airlines is a clear indication that more and more passengers prefer to travel in a cheap and simple way: that's why we are launching our low-cost facility CPH SWIFT, which is scheduled to open next summer,” said Petersen. CPH SWIFT will cost approximately DKK 200 million.

A high level of capital investment
Copenhagen Airport also had a high level of investment in 2008, spending DKK 836.9 million on check-in facilities, gates, aircraft stands, baggage facilities, security, commercial projects and other service improvements for passengers. This brought the airport's investment to the highest level since the construction of Terminal 3 in the late 1990s.

Sterling’s bankruptcy
Sterling going bankrupt in late October 2008 had an adverse impact on CPH’s financial results, with a 0.5-1% post-bankruptcy drop in the number of passengers departing from the airport.

Moreover, CPH recognised a write-down of receivables as a result of the bankruptcy: the combined adverse impact on profit before tax was roughly DKK 70 million.

Outlook for 2009
Based on the expected traffic programme for 2009, CPH expects the total number of passengers to decrease. The recovery following Sterling’s bankruptcy is expected to have an adverse impact on passenger numbers for the first half of 2009, and the current financial crisis is expected to have an adverse impact on a full-year scale.

The fall in passenger numbers is expected to have a negative impact on revenue, and CPH expects profit before tax to be lower than in 2008, when excluding one-off items.

Continued high level of investment
Like last year, investments are expected to be on a very high level. In spite of the financial challenges in 2009, CPH has decided to invest a significant amount under a commercially flexible investment plan for the convenience of airlines and passengers.

The outlook for 2009 is considered to be more uncertain than normal due to the current financial crisis.