AENA S.M.E., S.A. 16 November 2022
Aena has presented its Strategic Plan for the 2022-2026 period today, at an event led by its Chairman and CEO, Mr. Maurici Lucena, and the two Managing Directors: Mr. Javier Marín, Managing Director, Airports, and Mrs. María José Cuenda, Managing Director, Commercial and Real Estate.
Pre-COVID-19 traffic recovery sooner than expected
Aena expects to recover the pre-pandemic traffic levels in 2024(about 275 million passengers), ahead of initial estimates; the number of travellers in its network in Spain is expected to be around 300 million by the end of the period covered by the Plan. This recovery is already underway and, as Mr. Lucena has highlighted, is taking place across the Aena network without the operational problems severely impacting other European airports where recovery figures are also lower.
Mr. Lucena has stated that "this growing traffic will be managed at a quality levels that have successfully been delivered through the challenging summer 2022".
He has also added that "the recovery has been more robust than at our peers (…) Spain and its airports have performed well. The disruption has partially been driven by the operational problems suffered in the sector in Europe. Such performance is attributable not only to Aena's work but also to the Spanish labour (…) and transport law and the role as Spain as a tourist engine that have managed to developed coordination tools that have been key to solve the problems that have arisen through the pandemic and its effects".
Increase in the dividend for 2022
Such traffic recovery will allow to resume dividend payments. Aena's board will propose to the Shareholders' meeting a dividend payment based on an 80% pay-out over the entire period of the Strategic Planexcluding the effects of the Seventh Final Provision (DF7).Thus, the dividend proposed for 2022 will be increased by an additional €1.37 per share over the resulting profit at the end of the fiscal year.
"Aena's dividend will remain the most attractive in the industry", the Chairman said.
A boost to the commercial business
Aena expects the commercial revenue per passenger to increase in 2026 by at least 12% compared to 2019, a figure estimated based on inflation forecasts peaking during 2022-2023 and then aligning with the central banks' targets. The total revenue from this business would increase by more than 23%. In recent months, aggregate sales of commercial lines have already exceeded the 2019 levels and, further to recent contracts already awarded, the 2023 Minimum Annual Guaranteed Rents (MAGs) are 13% higher than those of 2019, while, by 2026, the MAG are set to improve by up to 65%.
Further to the abovementioned initial results, the estimated growth figures will likely increase even further with the outcome of the very large tenders being launched during the Strategic Plan; such as the Duty-Free Shops tender, the largest in the world, with a very attractive procurement strategy with more commercial area, boosting competition and longer-term contracts.
The above recovery of traffic and the commercial business performance are forecasted in a context of global and industry risks, among which the Chairman has highlighted the following: first, geopolitical risks, such as the invasion of Ukraine, which is impacting the economy; second, purely macroeconomic risks, such as rising interest rates, general inflation increases and energy prices; and third, industry-specific risks, such as structural changes in the cost base. Despite the above circumstances, "Aena will continue to be the undisputable leader in operational efficiency and safety in its industry", Mr. Lucena said. Examples of actions already implemented for cost control purposes are the contracts with third parties that have already been secured for the coming years. Aena has already signed 85% of these contracts for 2023, 60% for 2024 and 55% for 2025. In addition, a significant factor in this area will be the cost of energy, which will be mitigated in the medium term through Aena's Photovoltaic Plan. This project, which requires an investment of €350 million for solar farms in the airport network, already has access and connection to the network for 52% of its needs.
Environmental sustainability, cross-divisional growth factor
The Photovoltaic Plan is an example that demonstrates the environmental sustainability is crucial to the future of the industry and that Aena has key projects in place in this regard. Aena is the first Spanish company and one of the few in the world to report annually to its Shareholders' Meeting on the performance of its Climate Action Plan (CAP) under the Aena's Sustainability Strategy.
The CAP entails an investment of €550 million from 2021 to 2030 and its goals are ambitious: to achieve carbon neutrality by 2026 and net zero emissions at all airports in the network by 2040, which means achieving the global commitment of the industry 10 years earlier.
Aena also regards the concept of "sustainability" to a broader scope, the social aspect, with actions that continuously contribute to the creation of value together with employees and communities. Regarding the support of research and education, R&D&I and technology transfer will be bolstered in areas related to sustainable transformation of air transport. It is also remarkable the development of social projects in the communities close to airports and, from the perspective of internal social responsibility, the most relevant initiatives are the promotion of diversity and inclusion among its staff-with the launch of a new equality plan-and the career development for the recruitment and retention of talent.
Economicand financial objectives: pre-COVID-19 EBITDA recovery expected in 2024-2025
The Chairman has highlighted the Aena's main economic and financial objectives for this period. One of them will be the recovery of 2019 levels of consolidated EBITDA between 2024 and 2025.
The EBITDA margin in Spain will also recover, expecting to reach a 55% margin in 2025. The sound financial performance over the coming years will allow the parent company to maintain a deleveraging trend until reaching a net debt/EBITDA ratio of c. 2x in 2026-better than the 2019 figures- which will further strengthen its financial solvency.
International activity: focused on Brazil and selective opportunities
Internationally, our current investment will contribute 10% of the EBITDA in 2026. Aena's aim is to incorporate further projects that could represent an additional 5% of the EBITDA in 2026. "The approach of the company will be selective with respect to these opportunities", concluded the Chairman.
Regarding Brazil, a strategic market where 20% of the country's traffic will be managed by Aena from 2023, the airport manager will continue to materialise the investments across the northeast group of airports and will integrate and transition the 11 airports awarded in August 2022. Concerning the most significant one, Congonhas in São Paulo-the second airport with the highest passenger traffic in Brazil-Aena has designed a very sophisticated technical project that will meet the safety and quality requirements defined by the Brazilian government while transforming the commercial offer.
"We consider that the recent operation in Brazil is magnificent", Mr. Lucena has explained.
Airport cities: more development in Madrid and activation at other airports
"Our expectations have been exceeded in terms of valuation and quality of the proposals received", Mr. Lucena summarised in relation to the project of the Adolfo Suárez Madrid-Barajas Airport City,in which the first 32 hectares have recently been awarded for logistics purposes, with a valuation of approximately €170 million. Additional 295 hectares are part of the Madrid development.
This project is therefore already a reality and a precedent that is expected to be followed in other airports, such as Josep Tarradellas Barcelona-El Prat Airport, where the first tenders are planned between 2024 and 2025 and a total of 151 hectares is available; or the Málaga-Costa del Sol, Sevilla and Valencia Airports, where the first tenders are planned between 2023 and 2024.
Link to Aena's Strategic Plan:
https://www.aena.es/en/shareholders-and-investors/general-information/companys-strategic-plan.html
Resumption of dividend distributions after the pandemic with an 80% pay-out excluding the effects of the DF7; resulting into a shareholder remuneration increase of an extra €1.37 per share in 2022
Recovery of 2019 consolidated EBITDA expected between 2024 and 2025
Number of passengers in Spain estimated to be around 300 million in 2026
Remaining as the market leader in terms of operational efficiency
Expected increase in commercial revenue per passenger of at least 12% in 2026 (23% total commercial revenues)
Assets outside Spain contributing 15% to the Group's EBITDA in 2026
The development of the Adolfo Suárez Madrid-Barajas Airport City moving forward. Additional projects in Barcelona, Málaga, Valencia and Seville under significant progress
Pre-COVID-19 traffic recovery sooner than expected
Aena expects to recover the pre-pandemic traffic levels in 2024(about 275 million passengers), ahead of initial estimates; the number of travellers in its network in Spain is expected to be around 300 million by the end of the period covered by the Plan. This recovery is already underway and, as Mr. Lucena has highlighted, is taking place across the Aena network without the operational problems severely impacting other European airports where recovery figures are also lower.
Mr. Lucena has stated that "this growing traffic will be managed at a quality levels that have successfully been delivered through the challenging summer 2022".
He has also added that "the recovery has been more robust than at our peers (…) Spain and its airports have performed well. The disruption has partially been driven by the operational problems suffered in the sector in Europe. Such performance is attributable not only to Aena's work but also to the Spanish labour (…) and transport law and the role as Spain as a tourist engine that have managed to developed coordination tools that have been key to solve the problems that have arisen through the pandemic and its effects".
Increase in the dividend for 2022
Such traffic recovery will allow to resume dividend payments. Aena's board will propose to the Shareholders' meeting a dividend payment based on an 80% pay-out over the entire period of the Strategic Planexcluding the effects of the Seventh Final Provision (DF7).Thus, the dividend proposed for 2022 will be increased by an additional €1.37 per share over the resulting profit at the end of the fiscal year.
"Aena's dividend will remain the most attractive in the industry", the Chairman said.
A boost to the commercial business
Aena expects the commercial revenue per passenger to increase in 2026 by at least 12% compared to 2019, a figure estimated based on inflation forecasts peaking during 2022-2023 and then aligning with the central banks' targets. The total revenue from this business would increase by more than 23%. In recent months, aggregate sales of commercial lines have already exceeded the 2019 levels and, further to recent contracts already awarded, the 2023 Minimum Annual Guaranteed Rents (MAGs) are 13% higher than those of 2019, while, by 2026, the MAG are set to improve by up to 65%.
Further to the abovementioned initial results, the estimated growth figures will likely increase even further with the outcome of the very large tenders being launched during the Strategic Plan; such as the Duty-Free Shops tender, the largest in the world, with a very attractive procurement strategy with more commercial area, boosting competition and longer-term contracts.
The above recovery of traffic and the commercial business performance are forecasted in a context of global and industry risks, among which the Chairman has highlighted the following: first, geopolitical risks, such as the invasion of Ukraine, which is impacting the economy; second, purely macroeconomic risks, such as rising interest rates, general inflation increases and energy prices; and third, industry-specific risks, such as structural changes in the cost base. Despite the above circumstances, "Aena will continue to be the undisputable leader in operational efficiency and safety in its industry", Mr. Lucena said. Examples of actions already implemented for cost control purposes are the contracts with third parties that have already been secured for the coming years. Aena has already signed 85% of these contracts for 2023, 60% for 2024 and 55% for 2025. In addition, a significant factor in this area will be the cost of energy, which will be mitigated in the medium term through Aena's Photovoltaic Plan. This project, which requires an investment of €350 million for solar farms in the airport network, already has access and connection to the network for 52% of its needs.
Environmental sustainability, cross-divisional growth factor
The Photovoltaic Plan is an example that demonstrates the environmental sustainability is crucial to the future of the industry and that Aena has key projects in place in this regard. Aena is the first Spanish company and one of the few in the world to report annually to its Shareholders' Meeting on the performance of its Climate Action Plan (CAP) under the Aena's Sustainability Strategy.
The CAP entails an investment of €550 million from 2021 to 2030 and its goals are ambitious: to achieve carbon neutrality by 2026 and net zero emissions at all airports in the network by 2040, which means achieving the global commitment of the industry 10 years earlier.
Aena also regards the concept of "sustainability" to a broader scope, the social aspect, with actions that continuously contribute to the creation of value together with employees and communities. Regarding the support of research and education, R&D&I and technology transfer will be bolstered in areas related to sustainable transformation of air transport. It is also remarkable the development of social projects in the communities close to airports and, from the perspective of internal social responsibility, the most relevant initiatives are the promotion of diversity and inclusion among its staff-with the launch of a new equality plan-and the career development for the recruitment and retention of talent.
Economicand financial objectives: pre-COVID-19 EBITDA recovery expected in 2024-2025
The Chairman has highlighted the Aena's main economic and financial objectives for this period. One of them will be the recovery of 2019 levels of consolidated EBITDA between 2024 and 2025.
The EBITDA margin in Spain will also recover, expecting to reach a 55% margin in 2025. The sound financial performance over the coming years will allow the parent company to maintain a deleveraging trend until reaching a net debt/EBITDA ratio of c. 2x in 2026-better than the 2019 figures- which will further strengthen its financial solvency.
International activity: focused on Brazil and selective opportunities
Internationally, our current investment will contribute 10% of the EBITDA in 2026. Aena's aim is to incorporate further projects that could represent an additional 5% of the EBITDA in 2026. "The approach of the company will be selective with respect to these opportunities", concluded the Chairman.
Regarding Brazil, a strategic market where 20% of the country's traffic will be managed by Aena from 2023, the airport manager will continue to materialise the investments across the northeast group of airports and will integrate and transition the 11 airports awarded in August 2022. Concerning the most significant one, Congonhas in São Paulo-the second airport with the highest passenger traffic in Brazil-Aena has designed a very sophisticated technical project that will meet the safety and quality requirements defined by the Brazilian government while transforming the commercial offer.
"We consider that the recent operation in Brazil is magnificent", Mr. Lucena has explained.
Airport cities: more development in Madrid and activation at other airports
"Our expectations have been exceeded in terms of valuation and quality of the proposals received", Mr. Lucena summarised in relation to the project of the Adolfo Suárez Madrid-Barajas Airport City,in which the first 32 hectares have recently been awarded for logistics purposes, with a valuation of approximately €170 million. Additional 295 hectares are part of the Madrid development.
This project is therefore already a reality and a precedent that is expected to be followed in other airports, such as Josep Tarradellas Barcelona-El Prat Airport, where the first tenders are planned between 2024 and 2025 and a total of 151 hectares is available; or the Málaga-Costa del Sol, Sevilla and Valencia Airports, where the first tenders are planned between 2023 and 2024.
Link to Aena's Strategic Plan:
https://www.aena.es/en/shareholders-and-investors/general-information/companys-strategic-plan.html
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AENA SME SA published this content on 16 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2022 15:58:05 UTC.
