CPH: Passenger growth provides basis for green ambitions
2018 was a busy year for Copenhagen Airport, which surpassed 30 million travellers for the first time in its history. The airport is now accelerating its climate ambitions, increasing the number of routes served, and expanding its buildings. These initiatives are detailed in the airport’s annual accounts for 2018.
More than 30.3 million passengers travelled through Copenhagen Airport in 2018, 1.1 million more than the total recorded in 2017. The growing passenger totals were accompanied by significant growth of the airport itself, powered by DKK 2.1 billion in investments in expansions and renovations.
CPH’s focus on attracting new air routes bore fruit in 2018, particularly with the introduction of important long-distance routes:
“In 2018, a number of airlines opened new routes to CPH. The routes to Hong Kong, Chengdu, Beijing and Amman have been especially instrumental, underscoring our strong position as the leading international airport in the Nordic region. Passenger volume on the more than 40 intercontinental routes increased by 11%, which clearly reflects the strong and growing market for long routes here at CPH,” says Thomas Woldbye, CEO of Copenhagen Airport, in connection with the announcement of the airport’s annual accounts for 2018.
Aviation between China and Copenhagen increased, with a nearly two-fold increase in total seats available compared to 2017:
“China holds enormous potential. There are millions of Chinese who want to visit Europe, and it is now easier for them to include Denmark in these visits. Furthermore, many Danish companies have extensive engagements in China, and trade between China and Denmark is growing. So it’s great to see that we succeeded in attracting so much more capacity on China routes in 2018,” says Thomas Woldbye.
A larger airport
But it was not only the number of routes that increased in 2018 – the airport’s terminals and buildings also expanded. Investments grew to just under DKK 2.1 billion, compared to DKK 1.5 billion in 2017.
“In the past 10 years, we have invested more than DKK 11 billion in expanding and developing the airport. In 2017, we increased the already high investment level to DKK 1.5 billion, and in 2018 we added another half billion. As a result of these investments, in 2018 we saw the opening of a significantly expanded security screening area, an elevated pedestrian walkway from the Metro station directly to SAS Fast Track and Security, and, not least, the expansion of the premises after the security screening area, which now has an additional 4,000 square metres of space for passengers, new restaurants and new shops. In 2018, we also decided to launch construction of the second phase of Pier E. The first phase will be completed in the summer of 2019, followed by completion of the second phase in 2020,” says Thomas Woldbye, who emphasises that the airport expects to maintain the high level of investment in 2019.
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Investments in Copenhagen Airport in the past 10 years (DKK million) |
||||||||||
|
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
Total |
|
603 |
798 |
797 |
1,133 |
948 |
950 |
1,193 |
1,071 |
1,517 |
2,079 |
11,089 |
Full focus on climate
CPH is part of the aviation industry, and thereby also part of the overall climate impact of air travel. Efforts to reduce CO2 emissions have been on the airport’s agenda for years – and CPH will further intensify these efforts in 2019:
“In 2018, we implemented energy saving measures totalling to 7.2 GWh. Since 2013, our energy savings amount to 30.8 GWh. As a result, CO2 emissions declined from 1.3 kg CO2 per passenger in 2013 to 0.96 kg in 2018 – a 26% decrease,” says Thomas Woldbye.
“International travellers arrive at an airport where growth and sustainability go hand in hand. In 2018, we continued our efforts to reduce the airport’s carbon emissions. Many energy-saving activities are underway, including a transition to LED lighting and the installation of a new ventilation system. In Magleby, we replaced a large and old gas boiler with a modern new hybrid system with an integrated heat pump, which will eventually provide heat using clean, green solar power,” says Thomas Woldbye, who also touches on the airport’s newly announced climate strategy:
The first major goal of our new climate strategy is eliminating all carbon emissions from the airport – including land traffic to and from the airport – by 2030 at the latest. From 2019 until we realise this goal, we will make the airport’s operations carbon-neutral by compensating for our emissions. We will uphold this policy until we reach our 2030 goal. We have a lot of progress to make, but in collaboration with the rest of the Danish aviation industry, we will take the lead in making Danish air travel climate-friendly,” says Thomas Woldbye.
Positive results and positive expectations
In April 2018, CPH reduced the airport charges paid by airlines by an average of 10%. This move was part of efforts to strengthen CPH as a hub for air traffic. The charge reduction was welcomed by the airlines that use the airport.
In 2018, CPH and the airlines negotiated a new charges agreement, which in 2019 was approved by the authorities. The new charges agreement further reduces rates by approximately 5%, while implementing several incentive structures to support growth and strengthen CPH as a hub:
“We’re pleased to have once again reached an agreement with the airlines on airport charges. The agreement runs for five years and provides some certainty regarding the financial framework, which is particularly important for realising our ambitious goals to continue expanding the airport,” explains Thomas Woldbye.
Passenger growth lays the foundation for a satisfactory result. Revenue increased by 0.1%. In the aeronautical business, revenue declined by 3.4% due to significantly reduced prices, while the non-aeronautical business increased by 5.5%. The group’s total revenue amounted to DKK 4,444.8 million. Profit before tax, excluding one-off items, amounted to DKK 1,451.5 million, corresponding to a decline of 12.7% compared to 2017, which is particularly due to the charge reduction implemented on 1 April 2018 and higher depreciation.
2019 expectations
CPH’s expected traffic programme for 2019 includes a number of new routes and expanded capacity. Passenger volume is therefore expected to grow in 2019, but this may be impacted by general economic developments, the decisions of airlines regarding routes and capacity, and isolated events in the aviation industry. Passenger growth is expected to have a positive impact on revenue, but the growth is more than offset by the major charge reduction of April 2018 and the new charges agreement that will take effect in April 2019.
Higher operating costs are expected in 2019, primarily due to the expected passenger growth, increased security screening requirements, and cost inflation. This will be partially offset by a continued focus on operating cost efficiency. Depreciation and financing costs are expected to remain at levels similar to those in 2018
Profit before tax in 2019 is expected to be in the range of DKK 1,250 million to 1,350 million excluding one-off items. EBITDA excluding one-off items is expected to be lower in 2019 than in 2018.
Depending on developments in the Brexit process, the profit before tax may be negatively impacted as a result of increased operating costs relating to operation of the airport’s passport controls, utilisation of capacity in Pier C, and the utilisation of aircraft stands.
Investments
CPH expects 2019 investments to remain at similar levels, in the range of DKK 1.8 billion to 2.1 billion, to accommodate the aims of the Expanding CPH growth plan. Investments include the expansion of Terminal 3, wide-body capacity expansions, the expansion of Pier E, establishing luggage handling facility west, new aircraft stands, and non-aeronautical investments.