Manchester,
06
December
2018
|
08:01
Europe/London

Solid summer for MAG airports as investment plans continue

MAG, the UK’s leading airport group, today reports its interim unaudited half-year results, for the period 1st April 2018 – 30th September 2018.

Summary

  • Continued growth in adjusted EBITDA* (+3.7%** to £244.5m) as group passes the milestone of handling 60 million passengers per annum across its three airports. Revenue increased 8.3%** to £508.5m.
  • MAG passenger numbers increased by 3.8%** year-on-year to 35.7m, driven by strong growth at London Stansted Airport, including the launch of a new Emirates service, and robust performance at Manchester Airport where the airport successfully backfilled the capacity previously operated by Monarch.
  • London Stansted Airport saw passenger numbers in the first half of the year continue to climb strongly. Passenger numbers grew 8.9% year-on-year to 15.9m, with continued passenger growth from Ryanair and Jet2.com and the start of Emirates’ daily Boeing 777 service to Dubai.
  • Manchester Airport had a resilient summer with passenger numbers remaining flat (+0.0% to 16.6m) supported by a resurgence in summer traffic to Turkey. The first phases of MAG’s £1bn transformation programme at Manchester will open on time in Spring 2019.
  • At East Midlands Airport, DHL and UPS are expanding their operations, consolidating the airport’s position as the most important hub for cargo aircraft in the UK and a key component of the ‘Midlands Engine’. Passenger traffic at East Midlands was flat (-0.3%) at 3.2m in the first half of the year.
  • MAG is well positioned to meet growing demand for air travel across the UK, which will be vital to providing global connectivity post-Brexit. MAG welcomes recent clear and positive commitments from the UK Government and the EU to enable airlines to maintain flights, even in a “no deal” scenario.
  • MAG is calling for Government to commit to improving links to nationally significant airports, including Manchester, London Stansted, and East Midlands, as a core part of its forthcoming Aviation Strategy.
  • In the last year, activity at MAG’s airports across the UK, at Manchester, London Stansted and East Midlands contributed £7.8bn of economic value for UK PLC and for the communities in which our airports operate – a 9.9% increase on the previous year.
  • Increased revenues have been driven by both aviation and non-aviation income. On the aviation side, additional capacity and higher load factors have led to 4.9% revenue growth. Meanwhile non-aviation revenues were boosted by retail growth at 7.6%, following continued investment across the airports in food and beverage, retail and car-parking facilities.
  • MAG is delighted that its application to raise the ‘planning cap’ at London Stansted Airport from 35 million passengers per annum to 43 million has been approved by Uttlesford District Council. The decision will enable Stansted to make best use of its spare runway capacity over the next decade at a time when other London airports are approaching full capacity.
  • MAG has announced its intention to bid to operate Sofia Airport, Bulgaria’s largest airport, for the next 35 years. MAG is targeting this opportunity because it sees strong potential growth and has confidence that it can use its expertise to deliver a new passenger experience and global route network at Sofia to compete with top tier airports around the world.
  • Property income across MAG has increased 5.6% to £24.4m, driven by additional letting activity across each site, including newly refurbished office space at Manchester, a new cargo facility at East Midlands and new lettings at Stansted. Occupancy levels have grown to 94.7%. In September, online beauty and wellbeing business The Hut Group (THG) announced plans to develop 1m sq ft of office space at Airport City Manchester.

*Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, gains and losses on sales and valuation of investment properties, and significant items

**All comparisons are like-for-like, excluding Bournemouth Airport, which was sold to Rigby Group in December 2017. Additionally Revenue for the 6 months ended 30 September 2017 have been restated to account for the adoption of IFRS 15 by the Group in the year ended 31 March 2018

Key Financials

6 months ended 30 September 2018 (£m)

6 months ended 30 September 2017 (£m)

Change (%)

Year ended 31 March 2018

Passenger numbers (m)

35.7

34.4

3.8%

58.9

Revenue

508.5

469.4

8.3%

818.1

Adjusted EBITDA*

244.5

235.7

3.7%

358.8

Adjusted operating profit**

167.8

164.4

2.1%

215.4

Profit from operations

164.9

159.7

3.2%

206.8

Cash flow from operations

246.3

188.0

31.0%

328.8

 

 

 

 

 

Passengers

6 months ended 30 September 2018 (m)

6 months ended 30 September 2017 (m)

Change (%)

Year ended 31 March 2018

Manchester

16.6

16.6

0.0%

27.9

London Stansted

15.9

14.6

8.9%

26.1

East Midlands

3.2

3.2

(0.3%)

4.9

Total

35.7

34.4

3.8%

58.9

**Adjusted operating profit is operating profit before gains and losses on sales and valuation of investment properties, and significant items

Charlie Cornish, MAG CEO, said:

“MAG’s dynamic and innovative approach to operating our airports has again delivered a healthy performance, with sustained growth taking us through the 60 million passengers per annum milestone across our three airports in September 2018.

“Our airports are nationally significant assets with the ability to deliver the aviation capacity the UK needs in the coming decade, and their continued growth is being supported by significant investment by MAG. I am delighted to report that the first elements of our new terminal investments will be opening on time at Manchester Airport early next year. The new facilities in Terminal 2, part of our £1bn investment in transforming the airport, will not only offer significant additional terminal capacity to allow us to grow further, but will also offer a first class passenger experience.

“As plans for east-west rail connectivity in the North reach a critical milestone, we continue to make the case for the Government’s forthcoming aviation strategy to focus on connecting passengers to the airports up and down the country quicker and more easily. Northern Powerhouse Rail will not just bring the cities of the North closer together, it will also join them all, via Manchester Airport, to a range of global cities unrivalled in the North.

“A real focus this year has been on securing brand new long haul routes from our airports. To this end, the launch of new daily Emirates flights from London Stansted to Dubai on a three-class Boeing 777 was a magnificent moment for both the airport and the wider region. We know that the service is already appreciated by businesses from the London-Cambridge corridor who are now using Stansted to travel east, as well as by leisure passengers from London and across East Anglia.

“Similarly at Manchester, we were able to announce new routes to Mumbai and Addis Ababa, the first links between the North and the economic heart of India, and sub-Saharan Africa. These are the kind of links that will form the backbone of the country’s new trading links when Britain leaves the European Union next year, and at MAG we stand ready to connect all parts of the UK to key long haul markets. At East Midlands Airport, we now facilitate more than £10bn worth of non-EU trade each year.

“As the UK prepares to leave the European Union, we have always been clear that the best result for the aviation industry would be a deal which preserves the liberal flying freedoms and competitive approach to the aviation market that have driven so much important connectivity and economic growth across the continent over the last couple of decades.

“However, we have also welcomed the publication of technical notices from both the UK and the EU which have set out a clear and positive commitment to allowing airlines continued access between the UK and the EU, even in a no deal scenario. The recent signing of an aviation agreement between the UK and the US is further positive news for passengers.”

Business Review

MAG has continued to deliver growth in the first six months of FY19, meeting or exceeding its financial targets and once more continuing year on year growth in adjusted EBITDA*, driven by record passenger numbers.

Group adjusted EBITDA* rose by 3.7% to £244.5m, and profit from operations rose by 3.2% to £164.9m, driven by an increase in passenger numbers of 3.8% to 35.7m and improved commercial yields. MAG passenger growth is outperforming the UK market, driven by 8.9% growth at London Stansted owing to increased capacity from Ryanair and Jet2.com and a new Emirates service to Dubai.

The Group has also been able to translate profits into cash, enabling the Group to grow successfully and sustainably. Cash generated from operations increased by £58.3m (+31.0%) to £246.3m.

Manchester Airport has continued to develop its long haul network, with direct links to Mumbai and Addis Ababa announced in the first half of the year. The airports had a resilient summer, with passenger numbers remaining flat (+0.0%) year on year, despite the loss of Monarch, which was the airport’s seventh largest airline. The new long haul routes, coupled with strong short haul growth that backfilled Monarch’s capacity and a resurgence in summer traffic to Turkey, means MAG forecasts a return to significant growth for Manchester for the remainder of the year and for next summer. The growth will be supported by the opening of the first phases of the £1bn Transformation Programme (MANTP) on time in Spring 2019.

London Stansted Airport achieved a new record high of 15.9m passengers in the first half of the year – a growth of 8.9%. The airport is now welcoming more than 40% more passengers every year than when MAG acquired it in 2013 The first of the year saw the much-anticipated launch of Emirates’ daily Boeing 777 service to Dubai, offering three classes of service to business and leisure travellers. The route opens up an unprecedented range of global destinations for passengers travelling east from Stansted and MAG is optimistic that this route will grow further in the coming years and that other new airlines will follow in providing long haul connections from Stansted. The decision by Uttlesford District Council to approve Stansted’s application to raise its ‘planning cap’ to 43 mppa will enable the airport to make best use of its capacity, with the assurance that its future growth will be delivered in a measured and sustainable way.

East Midlands Airport is playing an ever more critical role in powering the ‘Midlands Engine’ and the whole of the UK’s economy. The airport’s popular passenger operation has ambitions to grow (HY performance: 3.2m, -0.3%). The airport is the most important airport for cargo aircraft in the UK, and one of the most important e-commerce hubs in the country. DHL’s operation at the airport continues to expand, and UPS are building a new facility which will boost further the airport’s express freight credentials. A 6 million sq ft new logistics park and rail freight terminal next door to the airport will contribute to the ongoing success of this element of the airport’s operation.

Retail income grew 7.5% to £111.9m driven by both increased passenger volumes and improved yields. This has been supported by continuing good food and beverage performance. In the first half of the year MAG piloted its first own branded, food-led “Proof 65” bar at East Midlands Airport, to complement its range of in-house airport lounges, Escape and 1903.

In the MAG Property division, income across the Group has increased by £1.3m (5.7%) to £24.4m, driven by additional letting activity across each site, including the newly refurbished top three floors in 4M at Manchester, a new cargo facility at East Midlands and new lettings at London Stansted. Occupancy levels across the group’s investment portfolio have grown to 94.7%.

*Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, gains and losses on sales and valuation of investment properties, and significant items

**All comparisons are like-for-like, excluding Bournemouth Airport, which was sold to Rigby Group in December 2017. Additionally, Revenue for the 6 months ended 30 September 2017 have been restated to account for the adoption of IFRS 15 by the Group in the year ended 31 March 2018