27.4.2009
CPH reduces costs as a result of fall in earnings

The performance of CPH in Q1 2009 was adversely affected by the economic situation. Fewer passengers, higher operating costs due to restructuring and a significant loss on receivables resulted in both lower revenue and earnings. In spite of the difficult times for the aviation industry as a whole, CPH posted a profit before tax of DKK 110.4 million, which, however, represented a significant fall compared with performance in Q1 2008.

“The Sterling bankruptcy, SAS’s new strategy and the economic situation in general had an adverse impact on CPH’s Q1 performance. In spite of the negative market sentiment, we still report a profit thanks to our tight cost management and our strong competitive position in the European airport market,” said Brian Petersen, CEO of Copenhagen Airports.

Organisation adjusted
In order to be able to maintain a high level of capital expenditure, CPH demonstrated responsibility in Q1 2009 by adjusting costs to the lower level of earnings so as to ensure that the airport will emerge from the current crisis even stronger than before.  This meant, among other things, that CPH had to make 74 employees redundant.

“We had hoped that the downturn in passenger numbers would stop, and that the 80 positions eliminated in the autumn of 2008 would have been enough but, given the continuing downward trend in passenger numbers, we have had to terminate 74 employees. The falling traffic is being felt especially in the part of the organisation with direct passenger contact. We have had to take that into consideration. We have cut costs throughout the organisation, but, unfortunately, we were unable to avoid job losses,” said Brian Petersen.

Limited fall
The number of passengers dropped by 16.2% whilst revenue dropped by 6.9% to DKK 655.2 million. The opening of a number of new shops and restaurants in the shopping centre in late 2008 limited the fall in revenue.

Operating costs rose by 17.6% partly due to provisions and redundancy payments; and external costs rose as a result of costs for the service scheme for persons with reduced mobility (PRMs) and bad debt provisions.

Higher costs
EBITDA was adversely affected by the fall in passenger numbers, higher external costs due to bad debt provisions and increased staff costs due to restructuring costs.

Profit before tax was down by 52% which, in addition to the factors above, was due to higher financial expenses. CPH’s interest expenses increased as a result of a higher debt level, an increase in the average portfolio interest rate and increased costs due to a recently completed refinancing.

Continued high level of capital expenditure
As a consequence of the substantial decline in the number of passengers in Q1 2009, CPH is seeking to adapt the level of its capital expenses to the current economic situation. However, the airport intends to maintain a high level of capital investments for the convenience of both airlines and passengers.

CPH is not prepared to speculate as to when traffic growth will recover and still expects that 2009 will generally be a difficult year with an overall fall in traffic, which will also have an adverse impact on revenue.