London,
05
July
2018
|
08:03
Europe/London

MAG delivers another year of strong growth

MAG, the UK’s leading airport group, today reports its audited full-year results for the period 1st April 2017 – 31st March 2018.

Highlights

  • Seventh consecutive year of growth in Adjusted EBITDA (+5.8% to £358.8m), driven by a 6.7% increase in passenger numbers to 58.9m.

  • Manchester Airport consolidated its position as a European top 20 airport with the breadth and diversity of its 70+ airlines and 220+ destinations driving passenger growth of 6.5% to 27.9m. Long haul growth has been a highlight, with the Hong Kong route increased to daily frequency, and new routes announced to Mumbai, Seattle and Addis Ababa. Additionally, Manchester is now ranked 6th in Europe for passengers travelling direct to the USA.

  • London Stansted Airport passenger numbers rose 7.4% to 26.1m this year. Stansted is the fastest growing major airport in the UK and now handles 7.6m more passengers per year than when MAG acquired it in 2013. New services were announced to New York, Toronto, Boston and Washington DC, together with daily flights by Emirates to Dubai providing convenient onward connections to 150 worldwide destinations.

  • East Midlands Airport continues to play a key role in the thriving “Midlands Engine”. The airport is the country’s busiest airport for ‘pure cargo’ aircraft and saw tonnage increase by 9.7% to 358,000 tonnes. Passenger numbers were also up 3.8% to 4.9m.

MAG is also preparing its business for continued future growth:

  • Manchester Airport’s Transformation Programme (MANTP) got underway in July 2017, with £150 million invested in new facilities during the year. Local firms are benefiting from the investment with 79% of spend going to firms within 35 miles of the airport. The new facilities will enable Manchester Airport to capitalise on the spare capacity available on its two full-length runways.

  • London Stansted Airport submitted a planning application to raise the limit on the number of passengers it is permitted to serve from 35m per year to 43m, without increasing the currently permitted number of flights or agreed noise footprint.

  • Stansted also started work on the initial phase of an investment programme that will deliver enhanced facilities including new check-in desks, additional aircraft stands and expanded retail facilities.

  • MAG has the top two major UK airports for annual passenger growth: Manchester (+6.5%) and London Stansted (+7.4%).

  • MAG’s three airports contributed £7.1 billion in economic activity to the UK economy in FY 2017, an increase of 15% on the previous financial year. In the last year alone, 5,000 jobs were created at our airports and in their supply chains, in industries including construction, tourism and transport, and those involved in global import and exports.

  • MAG’s Property division generated a total income for the Group of £44.4m, boosted by increased interest in the Airport City Manchester site. MAG has a pipeline of hotels at Airport City North, which will deliver over 1,100 new rooms in a £180m hotel district. Meanwhile, 51,000 sq ft of office space was let to e-commerce business The Hut Group. Elsewhere, Hampton by Hilton opened its largest ever property at London Stansted Airport and two significant air freight companies moved into property at East Midlands Airport, West Atlantic and Heavyweight Air Express.

  • MAG’s own technology and e-commerce business, MAG-O, focused on building a single online platform that will enable passengers to buy car parking, fast track, lounge and retail in one seamless online transaction.

  • MAG’s American business, MAG USA, has continued to grow, with four Escape Lounges now open, and a fifth recently announced at Greenville-Spartanburg Airport, North Carolina. The business is expecting to announce more airport partnerships in lounges and car parking in due course.

  • MAG sees the combination of the current market environment and the available runway capacity at its three UK airports as an opportunity to build and strengthen its business further. The Group continues to make substantial investments in transforming its major airports to equip them to handle future growth. As Britain prepares to exit the European Union, MAG is confident that it has the right strategy to deliver on its full potential.

Key Financials

 

12 months ended 31 March 2018 (£m)

12 months ended 31 March 2017 (£m)**

Change (%)

Passenger numbers (m)

58.9

55.2

6.7

Revenue

818.1

742.7***

10.2

Adjusted EBITDA*

358.8

339.2

5.6

Result from operations

206.8

195.8

6.0

Adjusted cash generated from operations

337.4

324.4

4.0

Total dividends – FY18

166.0

140.9

17.8

 

 

 

 

Passengers

12 months ended 31 March 2018 (m)

12 months ended 31 March 2017 (m)**

Change (%)

Manchester

27.9

26.2

6.5

London Stansted

26.1

24.3

7.4

East Midlands

4.9

4.7

4.3

Total*

58.9

55.2

6.7

MAG Chief Executive, Charlie Cornish
“Manchester and London Stansted are the two largest UK airports with significant runway capacity and our investment will allow us to meet continued demand for aviation growth both in and out of the UK."
MAG Chief Executive, Charlie Cornish

MAG Chief Executive, Charlie Cornish, said: “The world class connectivity that our airports are delivering will ensure that MAG continues to play a leading role in powering the UK economy.

“Manchester and London Stansted are the two largest UK airports with significant runway capacity and our investment will allow us to meet continued demand for aviation growth both in and out of the UK.

“The Government’s support for airports looking to make the best use of existing capacity provides a clear framework for growth, and it is critical that it now matches its backing for Heathrow expansion with specific and practical proposals to improve rail access and maximise the potential of airports like Manchester, London Stansted and East Midlands.

“As the UK prepares to leave the EU, we are confident that the UK Government and the EU recognise the importance of providing confidence to passengers and airlines, and we welcome the commitment from both sides to putting in place a framework that will enable air services to continue post Brexit.

“Looking forward, our resilient foundations, healthy financial position and attractiveness of our UK airports will ensure that the business is well-placed to respond to any challenges that may be felt by the UK economy in the future and we continue to take a positive long-term view of our prospects for growth.”

Business Review

MAG has delivered its seventh year of growth, improving once again both passenger numbers and EBITDA, despite the challenges presented by Monarch entering administration in October 2017 and Ryanair cutting capacity from its winter schedule.

In the twelve months to 31 March 2018, MAG airports increased passenger numbers by 6.4% to 58.9m, driven by more long-haul destinations, and expanded short haul networks.

Manchester Airport celebrated its 80th birthday this year and consolidated its place in the top 20 European airports by posting year-on-year growth of 6.5% to serve 27.9m passengers. Manchester saw strong interest from airlines including Jet2.com, Ryanair, TUI, easyJet and Thomas Cook Airlines in taking the Summer 2018 slot capacity previously operated by Monarch.

Manchester saw significant growth on routes to America, the Middle East and Europe with the 20 routes for year on year growth included Muscat, Dubai, four American destinations (San Francisco, New York, Houston and Boston) and five German destinations (Berlin, Hamburg, Nuremburg, Frankfurt and Cologne Bonn). Other destinations that increased popularity this year included Hurghada (Egypt), Krakow and Naples.

A significant amount of progress was also made on delivering Manchester Airport’s Transformation Programme (MAN-TP), with the steel frame for one of the airport’s new piers completed in February and work progressing well on the extension of Terminal 2 and new car parks. The first new pier is due to open in April 2019, with the main terminal extension operational in 2020, meaning that passengers will soon be directly benefitting from MAG’s investment in Manchester.

When MAG acquired London Stansted Airport over five years ago it had significant untapped potential. Through our investment in the terminal, the signing of growth deals with existing airlines and the further expansion of its route network, the airport now has a much more vibrant range of airlines and destinations on offer. A key focus for the year has been to enhance the airport’s long haul offering and the commencement of Emirates, Primera Air and WOW air flights to Dubai, Toronto and the US East Coast have broadened this significantly.

Key European growth markets at London Stansted across the year included Istanbul (an additional 170,000 passengers flew to the Turkish capital from Stansted than in the previous year), Spain and the Canary Islands and Sofia.

Stansted also began work on the first phase of its £600m transformation programme with passengers already seeing improvements, including new check-in desks, food & drink outlets and more seating. Over the next 12 months MAG expects to begin the next phase of investment in new facilities next to the existing terminal, which will enhance the experience of arriving passengers at Stansted.

Stansted submitted a planning application to Uttlesford District Council to raise the limits on the number of passengers that the airport is permitted to serve from 35m passengers per year to 43m. This is achievable without increasing the currently permitted number of flights or the agreed noise footprint. Raising this planning cap will allow Stansted to work with airlines to plan for the future with certainty, create more choice and competition, and support 5,000 new jobs at the airport.

East Midlands Airport continues to play a dual role in the thriving ‘Midlands Engine’. By day it is a significant passenger airport with popular connections to holiday destinations and European cities. By night it is the UK’s busiest airport for ‘pure cargo’ aircraft and second only to Heathrow in terms of the total amount of cargo it handles every year. This year, total tonnage rose 9.8% to 358,477 tonnes and passengers numbers also rose 3.8% to 4.9m, driven by a new route to Girona, and the increased popularity of existing routes to Budapest, Naples, Reus, Tenerife and Malta.

MAG’s own technology and e-commerce business, MAG-O, exceeded its first full year targets. MAG-O insourced a number of digital capabilities across the course of the year (Marketing, Technology, Data Science, Sales) and now has a total of 100 full time staff. This year it focused on building a single online platform that will enable passengers to buy car parking, fast track, lounge and retail in one seamless online transaction.

Elsewhere, MAG Property has had a strong year, with a pipeline of hotels at Airport City North, Manchester, which will deliver 1,171 new rooms. Also at Manchester Airport, 56,000 sq ft of office space was let to e-commerce business The Hut Group. At London Stansted Airport, Hampton by Hilton opened its largest ever property, a new 357 bedroom hotel, while at East Midlands Airport, Heavyweight Air Express agreed a 20,000 sq ft logistics warehouse letting and West Atlantic relocated their operation from Coventry Airport.

MAG-USA continues to expand, with four Escape Lounges now open across the USA and a fifth due to open in Greenville-Spartanburg, South Carolina, in Autumn 2018.

The Group announces a final dividend for FY18 of £110.7m, to be paid in July 2018. This comes following an interim dividend of £55.3m, that was paid in December 2017. This brings total dividends in respect of FY18 to £166.0m, an increase of 17.8% on the previous year (£140.9m).

In December, MAG sold Bournemouth Airport to RCA, a division of the Rigby Group.

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*Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, share of result of associate gaines and losses on sales & valuation of investment properties – and before significant items.
**Figures adjusted on a like-by-like basis to exclude Bournemouth Airport, sold to RCA in December 2017
*** 2017 revenue has been restated due to the adoption of IFRS 15: “Revenue from Contracts with Customers”. Revenue for both 2017 and 2018 is now reported under the new standard