Aéroports de Paris – 2020 Financial results marked by the Covid-19 pandemic
Financial release
17 February 2021 Aéroports de Paris SA
2020 Financial results marked by the Covid-19 pandemicGroupe ADP 2020 full-year results1Groupe ADP traffic2: decrease by -60.4%3, at 96.3 million passengers (excluding traffic at Istanbul Atatürk and excluding GMR Airports platforms in 2019);Paris Aéroport traffic (Paris-Charles de Gaulle and Paris-Orly): -69.4% at 33.1 million passengers;Consolidated revenue down by -54.5%, at 2,137 million, due to the important impact of the Covid-19 pandemic on the revenue from aviation and retail activities in Paris as well as from TAV Airports and AIG on the international level;Positive EBITDA4 at +€168 million, down by -€1,604 million (-90.5%), due to the sharp decline in revenue, partially offset by the implementation of an operational and financial optimization plan undertaken throughout the group (decrease in the total operating expenses by €1,023 million, mainly under the drive of the optimization plan implemented for €668 million, within the €650 to €700 million announced range5, and the remainder being linked to the effects of the decline in activity);Impairment of assets6 for an amount of €378 million (in NRAG), with an impact of €423 million on the operating income from ordinary activities (before tax);Operating income from ordinary activities at -€1,123 million, down by -€2,217 million;Net result attributable to the Group at -€1,169 million, down by -€1,757 million.These figures take into account the full consolidation of Société de Distribution Aéroportuaire and of Relay@ADP results since April 2019.Groupe ADP has accounted the results of the GMR Airports group using the equity method at 24.99% between March and June 2020 and at 49% from July 2020 (on the stake acquisition in GMR Airports, see the press releases of 20 and 26 February, and 7 July 2020).Sales in airside shops divided by the number of departing passengers (Sales/PAX).The method for calculating net financial debt was changed between 2019 and 2020. In 2020, the applied method is as follows: “gross debt less fair value hedging assets, cash and cash equivalents and restricted cash”, while for 2019 the applied method was as follows: “gross debt less receivables and current accounts with equity affiliates, fair value hedging assets, cash and cash equivalents and restricted cash”. By way of comparison, net financial debt at 31 December 2019, shown on page 5 of the press release of 10 February 2020 on the 2019 annual results, amounted to €5,254 million.Augustin de Romanet, Chairman and CEO, stated:“The year 2020 was marked by the Covid-19 pandemic with a strong impact on all of the group’s activities from March onwards. Groupe ADP’s total traffic amounted to 96.3 million of passengers over 2020, down by 60.4% compared to 2019, taking into account the integration of GMR Airports’ traffic since March, in which the stake acquisition opens the way to a new industrial partnership, growth driver for the future. Paris Aéroport traffic amounted to 33.1 million passengers, down by 69.4%. The group managed to maintain a positive EBITDA at 168 million euros thanks to the effects of an optimization plan implemented throughout the group. Net result attributable to the Group stands at -1,169 million euros, down by 1,757 million euros, mainly due to the significant decline in revenue and to impairments. Groupe ADP succeeded in improving its quality of service, its extra-financial rating and in preserving its sales per passenger in Parisian shops. Since August, the group has stabilized its cash position at a high level, enabling it to confidently consider the year 2021. It is pursuing its financial stabilization plan, in particular by implementing a collective mutually agreed termination agreement signed on December 9th, 2020. It anticipates a return to the 2019 traffic level in Paris between 2024 and 2027. Groupe ADP confirms its guidance of a net financial debt/EBITDA ratio between 6x and 7x by the end of 2022, enabling it to lay ground for a new development dynamic in France and abroad.”Update on the situation related to the Covid-19 pandemicAir transport was abruptly interrupted between the months of April to June 2020 as a result of the containment measures and borders closures decided by most countries in the world to limit the spread of the Covid-19 pandemic. The recovery of traffic has been chaotic since then and is following the pace of the lifting of mobility restrictions measures applicable in each country. Air travel has been impacted by a resurgence of the pandemic since November.Over the year 2020, Groupe ADP7 passenger traffic has been down by -60.4% compared to the same period in 2019.Traffic at Paris Aéroport is down by -69.4% in 2020 compared to 2019, with 33.1 million passengers welcomed, compared with 108 million passengers over 2019. Aircraft movements at Paris Aéroport are down by -58.8% in 2020 compared to 2019. At Paris-Charles de Gaulle and Paris-Orly, the platforms have adapted their infrastructures as of March onwards by closing or opening terminals according to the evolution of commercial passenger traffic.Regarding Groupe ADP’s international platforms, many airports have been closed to passenger traffic and many domestic and/or international flights have been suspended between March and June 2020 (see page 14 for the details).u Operational and financial optimization planOver 2020, Groupe ADP has engaged a major operational and financial optimization plan with an objective of reduction of the group’s current expenses for the year 2020 by €650 million to €700 million in total8. This objective has been reached for the year 2020 with a total reduction of €668 million in current expenses, including €423 million for ADP SA (of which €84 million related to the closure of infrastructures and €118.5 million related to partial activity measures in France resulting from the decline in activity and to infrastructure closures), €107 million for TAV Airports and €89 million for the retail subsidiaries in Paris.Regarding the 2020 investments9, they amounted to €689 million for Paris (including €463 million on the regulated scope), down by -€486 million compared to what was planned for the year 202010 following the termination of the 2016-2020 Economic Regulation Agreement11. In addition, the major projects (BD link and junction of the satellites of terminal 1 at Paris-Charles de Gaulle, international departure zone at Paris-Orly) were continued to avoid the additional costs that a suspension of works would have incurred. For TAV Airports, investments amounted to €83 million and for AIG to €8 million.Regarding the investments for 2021 and 2022, investments in Paris are estimated between €500 and €600 million per year, including a very large part of maintenance.u Situation in ParisSupport measures have been granted by Groupe ADP in favor of its customers, service providers and suppliers for an amount of approximately €50 million for the year 2020.Retail activities have been considerably reduced in 2020 as from mid-March onwards by the implementation of the sanitary measures and the two periods of confinement. The activity has therefore only been conducted on a reduced number of terminals. Apart from the two periods of confinement and activity restrictions, a limited number of shops were able to reopen and thus gradually follow the recovery of traffic (see page 9 for further details).Aéroports de Paris has signed12 with the representative trade unions a collective mutually agreed termination agreement. This agreement, which has been approved by the State on December 17th, 2020, sets to 1,150 the maximum number of voluntary departures, of which 700 will not be replaced. This measure added to other plans being considered at the group level, had a net impact of €208 million on the 2020 operating income including a provision reversal for employee benefit obligation for €105 million. It will have, for Aéroports de Paris, a structural cost-cutting effect of around €30 million in 2021 and of €60 million in 2022 (full-year effect).In addition, information and consultation with the Social and Economic Committee of Aéroports de Paris SA has been initiated in order to adapt the employment contracts and standards applicable to Aéroports de Paris’ employees.u Situation abroadIn the context of the Covid-19 crisis, exceptional impairments on some fully consolidated or equity-accounted international assets have been recorded as of December 31st, 2020 with an overall impact of -€299 million on the net result attributable to the Group.Due to the decrease in traffic linked to the Covid-19 pandemic as well as its unfavorable economic consequences, discussions have been initiated with the involved counterparties (concessionary authorities, banks) in order to guarantee the financial and operational sustainability of some of these assets, notably by requesting extensions to the duration of the concessions. Regarding TAV Airports, two-year extensions of the concessions were granted on February 15th, 2021 for the airports of Ankara, Antalya, Bodrum, Gazipasa and Izmir, while the concession fees due for these airports in 2022 will be settled in 2024. As scheduled, TAV Airports has received on February 16th 2021 the payment by the Turkish State airport authority (DHMI) of the remaining of the receivable related to the compensation due as a result from the early closure of Atatürk for an amount of 196 million euros.In particular, Groupe ADP, as a shareholder of Airport International Group (AIG), concessionary company of Amman airport in Jordan, may have to support said company in the form of a shareholder loan for an amount which is currently being evaluated, prior to a restructuring that is being discussed by the stakeholders.Regarding TAV Airports, restructurings are underway (refinancing, capital increase…) in Turkey (Bodrum, Izmir), Tunisia, and Saudi Arabia (Medina).Due to the deterioration of the traffic projection curve at Santiago airport, the shareholders have engaged discussions with the Chilean authorities in order to restore the economic balance of the project.The impairments take into account the current situation and prospects of these discussions. If they should not succeed, this could result in impairments and additional costs depending on the assets, estimated to a total of approximately €80 million. The group does not plan to provide financing to GMR Airports Ltd, which is not experiencing any particular difficulties in accessing credit.The financing contracts regarding the concessions operated notably by AIG, TAV Esenboga, TAV Macedonia, TAV Milas Bodrum, TAV Ege, TAV Tunisia and HAVAS, include early repayment clauses in the event of failure to comply with certain financial ratios. In the event of a persistent non-compliance, the lenders may impose conditions of default which may result in limited or no recourse regarding the shareholders. Contracts with such covenants amount to 12.4% of the group’s total debt at December 31st, 2020. To date, either the early repayment clauses in the event of failure to comply with certain financial ratios have been respected by the airport management companies, or the lenders have agreed to refrain from exercising their rights, with the exception of AIG and Tunisia. For the latter, their loans have been classified in current portion for a total amount of €568 million. In the case of AIG, a dialogue is maintained with the lenders and both parties are working to find a consensual solution. In the case of Tunisia, restructuring arrangements have been found and remain to be implemented.u Solid financial structure and strengthened liquidityGroupe ADP had a cash position of €3.5 billion as of December 31st, 2020, of which €0.6 billion was held by TAV Airports. Aéroports de Paris has perceived the proceeds of a bond issue on April 2nd, 2020 for an amount of €2.5 billion13 and of a second one on July 2nd, 2020 for an amount of €1.5 billion14.In addition, Aéroports de Paris received an exceptional cash advance from the French State in regard to airport tax for an amount of €121.8 million. This advance is intended to compensate for the loss of revenue resulting from the drop in airport tax revenues due to the collapse in traffic as a result of the health crisis.Given its available cash, the group does not anticipate any short-term liquidity difficulties. This cash position enables it both to meet its current needs and its financial commitments notably including the repayment of a bond debt for ADP SA in July 2021 for €400 million and the payment for Almaty, and to dispose of significant means to react and adapt in the current exceptional health and economic context.Given the confidence of the investors in the strength of its financial model and its long-term credit rating15, Groupe ADP does not anticipate any particular medium or long-term financing difficulties. u Trends for the groupTo date, the traffic assumption for Groupe ADP in 2021 stands between 45% and 55% of the 2019 group traffic16and the traffic assumption for Paris Aéroport between 35% and 45% of the 2019 Paris Aéroport traffic17.Under these conditions, the EBITDA / group revenue ratio is expected to stand between 18% and 23% in 2021.The annual investments in Paris for the 2021-2022 period are estimated between €500 and €600 million per year.In view of the company’s results over the year ended on December 31st, 2020, the Board of Directors has proposed to the next General Meeting of the Shareholders not to distribute a dividend for said year.Regarding the financial debt, Groupe ADP confirms the guidance18 of a net financial debt/EBITDA ratio between 6x and 7x by the end of 2022.Moreover, the group confirms that Paris Aéroport traffic may return to the level reached in 2019 between 2024 and 2027.
Groupe ADP’s 2020 full-year results2020 consolidated accounts
