Copenhagen Airport increases its earnings
Copenhagen Airport ended 2023 with a pre-tax profit of DKK 398 million. Although the financial statements reflect that the airport is recovering from the COVID-19 pandemic, Copenhagen Airport is still burdened by debt accumulated during that period.
Travelers are returning after the COVID-19 pandemic, 26.8 million passengers travelled through the airport in 2023. This is an increase of 21% compared to the previous year, but still only 88% of the 2019 level - the year before the pandemic. Total revenue amounted to DKK 4.1 billion, which is an increase of 15 percent compared to 2022, but a decrease of 7% compared to 2019.
"We are experiencing a continuing increase in the desire to travel. Passengers returned in higher numbers in 2023, and the terminals are busy. On the busiest days of the year, more than 100,000 passengers passed through the airport to travel to or from one of the 321 direct routes that exist between Copenhagen and 164 destinations around the world. Despite the progress, we are still not at the level of 2019. 12% of our passengers are still missing – and we feel that," says CEO Christian Poulsen.
The aviation industry is still globally challenged by the war between Ukraine and Russia. The closure of Russian airspace for European airlines has made it difficult to attract new and more routes and passengers to Asia, as airlines are forced to fly either south or north of Russia.
Satisfactory result – after the circumstances
"We are ending the year with a relatively satisfactory result. But at the same time, we are in a situation where we carry a large debt that we need to reduce. The crisis has resulted in a debt level that puts pressure on our finances. Additionally, it has become significantly more expensive to operate the airport. We are experiencing a general rise in prices, increased expenses for salaries, and a number of new legal requirements we need to meet," says Christian Poulsen.
The year's aeronautical revenue from air traffic amounted to DKK 2.2 billion, an increase of 18% compared to 2022, but a decrease of 9% compared to 2019.
The earnings in the non-aeronautical part of the business, including the shopping centre, rentals, parking and hotels, are crucial to Copenhagen Airport's ability to invest. In 2023, revenue amounted to DKK 1.9 billion, an increase of 12% compared to 2022 but 3%t below 2019 levels.
"It is a challenge that we need to invest while also reducing debt. We have several necessary and costly investments in order to ensure that we continue to be an attractive airport for passengers, airlines, and for Denmark in the future. It is crucial for our country to have a well-functioning international airport with good connections to the world," says Christian Poulsen.
Framework conditions in place
In 2023, two crucial framework conditions were secured for Copenhagen Airport. In August, the airport and airlines concluded a new commercial charges agreement regarding the charges that airlines pay to use runways, terminals, and services.
"We negotiated a good, joint agreement with the largest airlines in the airport. Now, both the airlines and us have ensured predictability in our businesses in the coming years. The fees are the foundation of our economy and our ability to invest in the future of the airport, the green transition, and maintaining our position as an international traffic hub," says Christian Poulsen.
In December, the Danish parliament adopted a new legislative framework for Copenhagen Airport. The law allows the airport to release an area within the airport's existing area to develop the airport and, for example, build stands that are suitable for new and modern aircraft types.
"The new legislative framework gives us the opportunity to maintain our position as an important traffic hub in Northern Europe. It is important that we continue to deliver efficient operations and remain attractive to both airlines and passengers - otherwise, Denmark will lose ground to the countries surrounding us," says Christian Poulsen.
Developing for the future
Copenhagen Airport is in the process of renovating and expanding Terminal 3, and this is the airport's largest investment in recent times. The expansion of the terminal area is expected to be completed in 2028.
"We must continue to ensure that we remain an efficient airport and that we are attractive to airlines and passengers. That is why we are creating more space. We are expanding the baggage reclaim to double its size, building a larger passport control and expanding the terminal area for passengers with lounges, new dining options and shops. It is important that we maintain our position as a Northern European traffic hub with direct flight connections. This is crucial for the region's economic development and for promoting trade and tourism in Denmark," says Christian Poulsen.
Expectations for 2024
Revenue is expected to grow at around 20% in 2024, primarily driven by the charges effective from 1 January 2024 and an increase in passenger numbers. CPH expects approximately 29 million passengers in 2024. However, expectations for the financial result are uncertain because of the ongoing geopolitical and macroeconomic effects. Any deterioration in these factors could negatively impact travel sentiment and CPH’s financial outlook.
If the number of passengers reaches around 29 million, the pre-tax result is expected to be between DKK 1.15 billion and DKK 1.35 billion. Passenger growth will have a positive impact, while higher operating costs compared to 2023 will have a negative impact. The higher operating costs are primarily expected to be due to increased passenger-related activities, legal requirements, wage increases and inflation.