Good News from the DAA

An Udaras

DAA Delivers Solid 2011 Performance
May 25, 2012

DAA Delivers Solid Financial Performance As Overall Passenger Traffic Grows

Dublin Airport Authority (DAA) produced a resilient financial performance last year, as total traffic at its Irish airports returned to growth and profits from its overseas operations increased.

“In the context of a weak economy, both in Ireland and our key overseas travel markets, the Group had a satisfactory financial performance last year,” said DAA Chairman Pádraig Ó Ríordáin.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 9% to €160 million in 2011, boosted by improved aeronautical revenue and a continued focus on cost reduction.

Turnover was effectively flat during the year at €557 million, while Group profit declined by 9% to €30 million, due to the impact of higher interest and depreciation charges.

Costs were reduced by 1% to €275 million, despite the inclusion of a full year’s operation of the award-winning Terminal 2 facility at Dublin Airport for the first time. DAA has reduced its total costs by 11% since 2008 through prudent management of both its payroll and non-pay costs.

“We doubled terminal and boarding gate capacity at Dublin and simultaneously reduced our overall costs to 2005 levels, which is a significant achievement,” according to Mr Ó Ríordáin. “We will continue to take further steps to reduce our cost base,” he added.

DAA’s net debt was reduced by €30 million to €735 million in 2011 and the company redeemed or repurchased €300 million worth of its bonds during the year. “We have a strong liquidity position and are funded until 2018 based on current requirements,” according to Mr Ó Ríordáin.

Total passenger numbers at Dublin, Cork and Shannon airports increased by 1% last year to 22.7 million, as international traffic grew by 2%. Domestic air travel within Ireland continued to experience significant declines.

Dublin Airport welcomed 18.7 million passengers during 2011, a 2% increase on the previous year. Passenger numbers in Cork declined by 3% to 2.4 million, while passenger numbers at Shannon declined by 7% to 1.6 million. International passengers at Dublin and Cork increased by 3% last year.

DAA provided €14 million worth of incentives to support its airline customers in the development of new routes and additional business at the three airports during the year. More than 30 airlines grew their business at Dublin Airport in 2011 and they were rewarded with a €1.5 million rebate on airport charges under an incentive scheme to encourage growth in passenger numbers. A similar incentive scheme is in place at Dublin, Cork and Shannon airports for this year.

Overall passenger numbers for 2012 are likely to be in line with last year or could show some modest growth, according to DAA’s Interim Chief Executive Oliver Cussen.

He said new routes would add one million additional seats this year, with a number of airline customers showing good growth in the Irish market. “This new business is essential for our airports, as it offsets traffic lost through airline closures and capacity reductions,” according to Mr Cussen. “Our airline customers are adding 17 new routes this year at Dublin, Cork and Shannon airports and we have extra capacity on 34 existing services.”

Terminal 2 had a very successful first full year of operation during 2011, Mr Cussen said. “The transfer of operations to T2 was completed without any disruption to passengers or airlines, in marked contrast to some other recent and planned terminal openings. T2 is already helping to win additional business for Ireland with the advent of new long-haul and short-haul routes.”

T2 handled more than eight million passengers in 2011 and will welcome more than 8.5 million passengers this year. “In passenger terms T2 is about the same size as Birmingham Airport, which is the UK’s seventh largest airport,” Mr Cussen said.

The overseas arm of DAA’s ARI subsidiary, which operates in 12 countries, recorded strong underlying sales growth during the year. ARI’s overseas business made profits of €32 million last year, a 69% increase on the previous 12 months. Profits were boosted by disposals and continued strong returns from its investment in Düsseldorf Airport, but the retail business also saw good growth in India and North America during 2011.

ARI, which is currently bidding for the duty free contract at Los Angeles International Airport (LAX), will open its first Chinese outlets later this year at the new Kunming Changshui International Airport in south-west China.

Great to see Terminal 2 doing so well, interesting comparison with Birmingham Airport. Good to see positive news from the state owned company then the usual anti DAA red top/tabloid garbage. Also interesting to see drop off in domestic travel flights within Ireland. I imagine much of this is down to removal of PSO route support and ever increasing national roads infrastructure.

DAA Annual Report 2011

Turbine

Profits are down 9%, revenue is flat, interest charges are up, debt is still extremely high at €750 million, passenger numbers are down at Cork & Shannon while growth at Dublin is pretty much flat.

What's good about this?

An Udaras

Good news in relation to numbers going through T2 and difference it's made to congestion in T1. This is a benefit that most passengers feel.

lord lucan

Turbine wrote: »

Profits are down 9%, revenue is flat, interest charges are up, debt is still extremely high at €750 million, passenger numbers are down at Cork & Shannon while growth at Dublin is pretty much flat.

What's good about this?

I'm figuring he means given the current climate that it's probably better than expected. The drop in domestic numbers has been somewhat offset by the jump in numbers to the Middle East(and onwards)with EK.

Interesting about the costs being back to 2005 levels. The Cost Reduction Programme has reduced the payroll bill considerably and is still ongoing at various levels of the company. Should make for a much leaner company down the line.

T2 has made the travelling experience much more pleasant for people travelling out of both terminals. T1 is a much more pleasant place to depart from than it used to be. I used to loathe the initial experience,check-in/security,at T1 but now its a breeze with only some congestion at peak times. I'll still never get used to the walk to Pier D though!

Turbine

I don't see what the travelling experience going through T2 has to do with the DAA's financial results, which are terrible, no matter what way you look at them or what spin the DAA try to put on them.

Comparing the passenger throughput of T2 to Birmingham Airport is irrelevant. What's relevant is the total passenger throughput of each of the DAA's airports, which is continuing to decline at Cork and Shannon. Granted the decline in passenger numbers at Dublin has stopped, but there's virtually no growth, which is what's needed in order to increase revenue in order to pay off the massive debt that's now hanging over the DAA. The cost of servicing this huge debt is increasing every year to the point now that any savings from cost reduction measures are being wiped out by increased interest charges, reducing overall profitability.

Put it this way. The travelling experience that you think is so great, won't be if the DAA fail to introduce initiatives that will increase revenue, and avoid any further cost-cutting in order to service their debt, which will inevitably impact customers.

IngazZagni

Ah don't you just love the positive spin from the DAA's own press release. Those tiny profits will barely make a dent in the massive debt bill. Yes of course it's a good thing that they are now making money but I'm tired of all this "everything's all rosy and grand" talk. At this rate it would take over 20 years to clear the current debt and that is ignoring future investments that will be made. But yes a step in the right direction.

As for T2. I like T2. I think it is a very nice and efficient terminal. However the only reason that the traffic levels are high is because they are charging the same amount in charges to use T2 as to use T1. Airlines made it clear that if charges would be higher they would stay in T1. In short everyone's fees went up and those that use T1 are basically subsidising those using T2.

lord lucan

Whilst they'll still have the debt of SNN to pay off,the best thing to happen to the DAA was for SNN to be taken off their hands. The savings made by having nothing to do with SNN will definitely help down the line. The DAA will also still have a revenue stream,albeit reasonably small,from SNN in the form of retail as ARI have the concession for SNN for another 10 years i believe.

Growth will come back at DUB,and with time to ORK too but its going to take time. No amount of incentives to airlines will help when people haven't got the money to travel. The country is in the ****ter,the results surprised me tbh as i expected worse given the way things are. Anecdotally i know most of my family and friends are travelling far less. Nothing to do with landing fees,tourist tax or the like but down to just not having the cash. That's going to hold back growth for the foreseeable future as there's no light at the end of the tunnel. Numbers travelling from continental europe have been holding reasonably steady but UK numbers are down. The UK market is very well served so i can't see much room for improvement until our relative economies pick up.

The T2 stuff is window dressing but puts into context for the general public how big an operation it is. Saying it handles 8M people a year doesn't register on most peoples radar but comparing it to a large airport in the UK does. The DAA are no different to any other company,they'll play up the positives and make light of the negatives. Their nemesis in aviation,FR,have been doing it for years,its standard practice.

An Udaras

Debt associated with strategic investment infrastructure such as Apron works, new terminal and piers along with a new road network all costs money its a reality of life. The DAA was mandated to undertake this development program by Government.

Yes its a reality that large debt exists but I'm confident the DAA has a plan in place to lower over next 20years or so..

Building terminals and updating the airfield are projects that deliver long term assets that will serve airport users well into the future.

I think the new terminal and road network along with improvements to the airfield have benefitted passengers.

It costs money to invest in the future and in Dublin they receive no state funding like other regional airports all finance is raised through charges etc...

Dublin Airport has dramatically improved its position in a major European-wide study of customer service standards at international airports.

In the most recent ACI study, for the third quarter of 2011, Dublin came fourth out of 28 European airports handling between 5 million and 25 million passengers per year. In the same study five years ago, Dublin Airport came 24th out of 25 European airports.


Link

The passengers experience has everything to do with the Annual Report, potential airport customers will avoid an airport cause of overcrowding, poor layout or poor facilities. DAA has invested in them at considerable cost and the rewards are beginning to be seen, I refer you the link above.

It will take 5-10 year before the full benefit of T2 is seen but if the first year of operation is anything to go by its at least positive.

Elessar

A €30 million profit in the height of probably the worst recession ever to hit the state is no small thing. Relatively speaking, Dublin Airport is doing very well.

T2 and the upgrade works are a 50 year investment designed to bring Dublin Airport well into the future. Yes debt is high but that will be paid off over a good number of years. Ireland will eventually come out of recession and return to growth and profits will be even better for the DAA.

Now if they would only address the numerous inequalities within the organisation and start treating their staff with a bit of respect.

LXFlyer

Turbine wrote: »

Profits are down 9%, revenue is flat, interest charges are up, debt is still extremely high at €750 million, passenger numbers are down at Cork & Shannon while growth at Dublin is pretty much flat.

What's good about this?

Earnings before interest, depreciation and tax are up by 9%. That frankly is the key figure in assessing a company's operational performance.

The interest and depreciation have presumably increased significantly as a result of the opening of Terminal 2 and other projects, which will have been expected, and will be a long term cost.

The debt is principally long term debt - matching the investment.

Therefore I would not share your negativity - the areas that can be impacted upon (day to day costs) are obviously being brought under control. A 9% rise in EBITDA in this climate with flat revenues is no mean achievement in any company.

Tenger

IngazZagni wrote: »

.....Those tiny profits will barely make a dent in the massive debt bill. Yes of course it's a good thing that they are now making money but I'm tired of all this "everything's all rosy and grand" talk. At this rate it would take over 20 years to clear the current debt and that is ignoring future investments that will be made. But yes a step in the right direction..........

I doubt that T2 was supposed to be paid off in under 5 years, it is the same as a mortgage. The DAA planned T2 as an infrastructure investment that would be paid off over 30 years.

The previous plan for EIDW 2035 shows a new parallel runway, a new ATC tower, a new Pier G about the size of Pier D (located where Hanger 1-3 are now) and a Pier F to add capacity to T2 (situated towards the Cargo ramp) Using the figures for Pier D (E200M) as a guide, these new piers may cost E300-400M, no idea what a new runway costs.

Delancey

DAA press release is garbage frankly - they are sinking under a mountain of debt and that has ( conveniently ) not rated a mention.