10.8.2010
CPH: H1 growth in spite of ash cloud

A 5.7% increase in passenger numbers provided a strong H1 performance at Copenhagen Airports (CPH). The growth continued to be driven by a major increase in the number of domestic passengers, and additional transfer and internationally departing passengers. Based on the strong traffic growth CPH has revised its profit forecast for the full year.

The total increase in passenger numbers of 5.7% in H1 2010 would have been higher had Copenhagen Airport not been closed for approximately six days in April due to the Icelandic ash cloud. CPH initiated a number of operational measures to reduce the financial loss including moving essential maintenance to daytime and large parts of the airport completely shut down in order to save electricity and reduce the need for manpower.  Without the ash cloud, growth in departing passengers would have been approximately 9.5%. The increase in passenger numbers resulted in a revenue increase of 12.5%. Profit before tax increased to DKK 480.6 million.

“The economic recovery means that passengers have returned sooner after the financial crisis than most industry commentators had expected. So although Copenhagen Airport was closed for almost six days in April because of the ash cloud from the volcanic eruption in Iceland, we still generated strong growth in H1. However, the industry’s financial challenges are far from over, and we therefore continue to focus on our costs,” said Brian Petersen, CEO of Copenhagen Airports.

New intercontinental routes generating growth
The traffic growth was driven by a further strengthening of the routes offered by low-cost carriers out of Copenhagen and by growth on the intercontinental routes, which was due, in part, to the opening of three new long-haul routes from Copenhagen to Doha, New York JFK and Toronto respectively.

Shopping centre revenue decreased, which was due to changes in contract conditions on several speciality stores in the last quarter of 2009 and temporary closing of two food and beverage units. This was partly offset by the increase in passenger numbers and by increasing spend per passenger, which had a positive effect on revenue from the shopping center. Furthermore, new outlets were introduced such as “JOE & THE JUICE” at Nytorv, representing a step forward in the development towards greater product and price differentiation as set out in our 2009 annual report.

The parking product was re-launched on 28th April with new prices, product groups and an extensive marketing campaign. The initial results of the campaign have been positive particularly in long term leisure parking.

CPH refinances loan
On 29 June 2010 CPH, re-visited the US Private Placement (USPP) market and successfully completed a note issuance of DKK 1.7 billion equivalent. The Senior Unsecured Notes were issued in three series; USD 100 million due in 2018, USD 147 million due in 2020 and GBP 23 million due in 2020. The proceeds were used to repay existing bank debt and cancel existing bank commitments maturing in March 2012.

“This has substantially reduced CPH’s re-financing risk and dependency on the bank loan market, and the new debt secures CPH a stable and relatively long-term source of funding on satisfactory terms and conditions,” said Per Madsen, CFO of Copenhagen Airports.

Maintains high investment level
CPH maintains its high investment level. CPH’s new low-cost facility will open in late 2010 and will generate even more low-cost traffic to Copenhagen Airport, giving passengers access to more cheap tickets to even more destinations and strengthening Copenhagen Airport’s position in the international competition.

In addition, CPH is committed under the 5½-year charges agreement signed with the airlines in the autumn of 2009 to invest more than DKK 2.6 billion during the period 1 October 2009 until 30 March 2015, of which approximately DKK 500 million in 2010, in infrastructure expansion and improvement.

CPH plans to sell its investment in ITA
In H1, CPH signed an agreement to sell its 49% aggregate investment in the Mexican airport company Inversiones y Técnicas Aeroportuarias, S.A. de C.V. (“ITA”) to CPH’s local Mexican partner, Fernando Chico Pardo. The Mexican Competition authorities have approved the purchase agreement, but the divestment is subject to approval of the purchase agreement by the Mexican Ministry of Communications and Transport. The divestment will therefore not be recognised in the financial statements until after regulatory approval, expected in Q3 2010. This is expected to generate a profit before tax of up to DKK 350 million based on the closing rate.

Forecast revised
The total number of passengers is expected to increase based on the anticipated traffic programme for 2010 and the growth in H1 2010.

Based on the strong traffic performance and despite the impact of the Icelandic ash cloud the final outlook for 2010 is revised. Profit before tax is now expected to be slightly higher than in 2009, when excluding one-off items. The revised outlook is based on a continued recovery in the world economy.