The Chairman and CEO of Aena, Maurici Lucena, highlighted today at the group’s General Shareholders’ Meeting the principles of its Climate Action Plan which after the approval of the amendment to its articles of association will become a permanent, independent item on the agenda of the annual meetings.
This means Aena becomes the first Spanish company and one of the first in the world to report to its shareholders each year on its climate plan.
“It is a clear sign of commitment to fulfilling the Plan and to transparency about it,” said Lucena. “I would like to stress that we are the first Spanish company that is going to add the obligations it accepts in the environmental field to its articles of association.”
The Chairman stated that the fight against climate change is “the main line of action that will generate value for society and for our company” and that “there will be no trade-off (on average) between environmental protection and profitability”.
With this initiative the company is taking a further step in its environmental commitment by enhancing its leadership in achieving more sustainable air transport.
Climate change strategy: more ambitious targets
The main objective in Aena’s strategy to combat climate change is to achieve a progressive reduction in CO2 emissions resulting from the company’s operations.
As of today, the targets set in the first stage of this strategy have already been achieved, and in line with more ambitious aims Aena has updated and extended its targets:
· Increasing from 70% to 100% the percentage of self-supply from renewable energy facilities in Aena’s Photovoltaic Plan by 2026.
· Bringing Aena’s carbon neutral programme forward to 2026 as well as achieving ACI EU Airport Carbon Accreditation carbon neutral Level 3+ in its main airports.
· Bringing its ACI EU Net Zero carbon commitment forward to 2040 to reach net zero emissions at all airports in the network.
The ultimate goal is to move towards sustainable recovery in order to achieve the commitments taken on in terms of decarbonisation and environmental protection by working in partnership with our stakeholders, airlines, air traffic service providers, fuel producers, handling companies, aircraft manufacturers, etc.
Impact of COVID-19 and measures taken
After analysing the situation and as a precautionary measure in view of the uncertainty and poor outlook regarding operations at the airports over the coming months, on 30 June the Board of Directors decided to propose to this Meeting that no dividend be distributed and that the 2019 result be allocated to reserves. This was approved by the Shareholders' Meeting.
Turning to the current situation, the Chairman pointed out that in recent months there has been a demand crisis in the air transport industry as it has not matched the supply placed on the market by airlines. This has resulted in occupancy rates that are much lower than the ones recorded in previous years. Concerns about the evolution of the pandemic and about the measures which may be taken by the governmental authorities in each country mean both passengers and airlines are unable to look beyond the very short term, not even a few weeks ahead as shown by the intention to fly rates based on flight searches for the coming months which have fallen sharply. This is not exclusive to Spain and has impacted all the countries around us in a very similar way
At present, in the Chairman’s view “it is very difficult to make a specific estimate of the recovery of our operations given that multiple factors influence the control and final containment of the pandemic and consequently the recovery of passengers’ confidence to travel once more, such as the availability of vaccines or new diagnostic tests making for more reliable, cheaper and faster detection of the disease.”
The timeframe for getting back to the 2019 levels prior to this health crisis will depend on the specific moment when this containment takes place and on the prospects for economic recovery both in Spain and in the main countries our tourists come from.
On the measures adopted by Aena, Maurici Lucena pointed out that “in order to adapt to the sudden drop in activity, the company has tailored its capacity and services to the specific needs of its operations in order to achieve more efficient management.” They include adapting timetables, operating on demand, temporarily closing facilities and adjusting services. “The ultimate purpose of this measure has been to reduce cash outflows to protect the company’s financial strength.”
In terms of health and safety measures, it has been a priority for the company to prevent the spread of COVID-19 and to protect the health of workers, suppliers, external personnel and passengers.
Furthermore, since the beginning of the crisis Aena has worked on identifying safe and coordinated airport processes so that all the airports in its network could resume operations in a safe way and build passenger confidence. The measures implemented include the ones indicated by the European Union Aviation Safety Agency (EASA) and the European Centre for Disease Prevention and Control (ECDC) to return to safe operation at European airports once travel restrictions have been lifted.
As for the implementation of health controls and in compliance with Royal Decree Act 21/2020 on urgent measures for prevention, containment and coordination to deal with the health crisis, Aena signed an agreement with the Ministry of Health, which is responsible for border health issues, under which the company has made available to this Ministry the human, health and support resources needed to ensure controls on the entry of passengers on international flights at the airports in the network managed by Aena.
The aforementioned Decree also provides for the recovery of the costs incurred by Aena as a result of its collaboration with the health authorities to carry out the activities envisaged in the agreement with the Ministry of Health.
Financial measures
Aena also put in place all the measures needed to ensure the proper operation of its services and the availability of liquidity over the short and medium term, which would also enable the company’s corporate interests to be protected.
Consequently, during the months in which the state of emergency was in force and which led to an almost total loss of traffic, a plan was implemented with the aim of obtaining a reduction in the average monthly cash outflow coming to approximately 100 million euros per month. This plan meant operational cost savings standing at around 43 million euros per month as a result of the adjustment of the capacity of our airports to specific operational needs and a temporary halt of the investment programme with the aim of cutting cash outflows by approximately 52 million euros per month.
Lucena said that “the target we set ourselves has been largely achieved, since as a result of both measures and over these three months of idleness we were able to cut cash outflows by more than 332 million euros, including expenditure and investment.”
Once the internal borders of the EU and some external borders were reopened, coinciding with the start of the recovery of activity, firstly essential facilities and services were gradually reopened and secondly the investments that had been suspended were resumed. This has meant a gradual increase in the volume of expenditure and investment, albeit under strict efficiency and cost saving parameters.
Despite the reactivation of activity, the company is continuing to make significant cost-cutting efforts (only expenses, not investment, are included) which in the last quarter came to 127.3 million euros, in addition to the 157.1 million euros obtained during the second quarter of 2020.
With respect to investment scheduling, last May the Board of Directors agreed to reactivate the 2020 Investment Plan. This analysis process has concluded with some rescheduling from 2020 to 2021 in the implementation timetable due to the temporary suspensions along with continuity in a large part of the planned actions. The vast majority of these investments are related to regulatory commitments, replenishment or security for the business which were already planned beforehand and therefore essential for the performance of business operations.
The investment estimated to be executed in 2020 is 352 million euros, of which 224 million euros have been executed as of 30 September 2020. In this respect, Lucena commented that “despite the severity of the crisis, Aena will seek to comply with all its investment obligations set out in the current regulatory framework.”
In the economic sphere, another of the company’s objectives since the beginning of the pandemic has been to bolster its financial position with a view to having sufficient liquidity in the short and medium term and safeguarding the proper operation of its services. The company has arranged loans with various financial institutions including the ICO and the EIB. Following these agreements, the company believes it has achieved the goal of its plan to enhance liquidity in response to the effects of the spread of COVID-19.
As of today, Aena has cash and credit facilities amounting to 2,441.2 million euros in addition to the option of issuing up to 900 million euros through the Euro Commercial Paper (ECP) programme, of which 845 million euros is available.
Following the declaration of the state of emergency and in view of the progress of COVID-19, last March the Board of Directors of Aena agreed to postpone the decision on whether or not to maintain the dividend. After analysing the situation and as a precautionary measure in view of the uncertainty and poor outlook regarding operations at our airports over the coming months, on 30 June the Board of Directors decided to propose to the Meeting that no dividend be distributed and that the 2019 result be allocated to reserves.
As for Aena’s results between January and September 2020, net profit stood at -107.6 million euros reflecting the impact of the COVID-19 crisis and the travel restrictions it has entailed.
The company’s total consolidated income stood at 1,733.4 million euros, a 49.7% drop compared to the first nine months of 2019. The decline in traffic has led to a reduction in airport income, which at 811.6 million euros is down -63.6% compared to 2019, while commercial income at 771.0 million euros has fallen by 19.3%.
Aena’s gross operating profit (EBITDA) in this period was 516.0 million euros, down by 75.9% on 2019, while cash flow came to 321.8 million euros compared to 1,913.9 million euros in the first nine months of 2019. In the same period, the company’s net financial debt increased slightly to 6,704.3 million euros compared to 6,672.8 million euros at the end of 2019.
Commitment to recovery, support for the industry and society
During his speech, the company’s chairman also noted the recent approval by Aena of a new extraordinary incentive package for airlines designed to drive the industry’s recovery and work with airlines to encourage an increase in traffic at the network’s airports at a time that is also very difficult for Aena.
This incentive package for the winter season is tailored to current market circumstances, just as was done in the summer season. In this respect, the chairman pointed out that “Aena is aware that only by joining forces with all the economic stakeholders who make up the industry’s value chain will we be able to move forward.”
This incentive package comes on top of a series of exceptional specific financial support measures for the rest of the players in the industry, such as deferral and exemption from payments, discounts on rent and renegotiation of contracts (airlines, cargo operators, handling agents, commercial operators, service companies, builders, consultancy and engineering firms, etc.).
Just as a result of the extraordinary deferral of payments for companies providing services at airports and customers and tenants with liquidity problems resulting from the situation generated by COVID-19, Aena has deferred income totalling 83.6 million euros, with commercial operators benefiting by 18.6 million euros and airlines by 65.0 million euros.
With regard to commercial activity which has been especially hard hit by the evolution of the pandemic, the company’s management team is studying the impact that this crisis has had on the various commercial contracts and the measures taken by the public authorities to deal with it so as to negotiate and agree on appropriate contractual modifications if need be.
In addition, Maurici Lucena reported that in compliance with accounting standards, Aena has conducted a valuation of its assets in Murcia, Brazil and Colombia to determine whether there has been any impairment as a result of the situation and has started up processes to renegotiate the current conditions which are now underway to seek a rebalancing of the financial conditions of the contracts.
In this social commitment field, the Chairman underscored the role played by the airports in Aena’s network in ensuring the operation not only of essential commercial aviation services but also other types of aviation such as air cargo (supplies for the general public and medical goods) and other key services for the police, Civil Guard, air and sea rescue, organ transplants, etc., as well as the return of Spaniards and the departure of foreigners as quickly and safely as possible in the early stages of the epidemic. Aena decided to meet the cost of airport charges for aircraft bringing in medical supplies needed to fight the pandemic.
The company also donated two million euros to the Spanish National Research Council to collaborate in research projects. In addition to this sum, there were also voluntary contributions from more than 2,500 donors, company employees, made through the “Solidarity Salary” project.
“We are fully aware that the company has a twofold purpose: firstly, it has the obligation to defend corporate interests, the interests of its shareholders, and at the same time it is conscious of its key role in air transport, tourism and the economy,” concluded the Chairman at this point.
Strategic prioritisation
Looking to the future, Maurici Lucena stressed that the company will continue to focus on the strategic priorities already undertaken before the health crisis and that these will be the driving forces behind the recovery. Therefore three lines of action will be pursued to generate value for both shareholders and society as a whole: sustainability, innovation and digitalisation, in addition to the next regulatory period, the DORA2 (Airport Regulation Document) due to its importance for the company’s operations.
As far as sustainability is concerned, the inclusion of the action plan against climate change in the articles of association is the best example of Aena's commitment. In terms of innovation and digitalisation, one of the most significant programmes is the "Aena Airport 4.0" project whose purpose is to improve the passenger experience at the airport. This project includes the introduction of biometric technology in airport processes, the recent implementation of the AenaMaps airport guidance app and the Aena Ventures start-up acceleration programme. This latter project, whose call has just ended with the presentation of bids by more than 250 companies, will allow the company to accelerate five start-ups in airport management and commercial projects with the aim of promoting disruptive technologies in an innovative, sustainable and efficient way.
Finally, another of the main challenges that Aena will face will be the preparation of the DORA2 (2022-2026) proposal, which will be completed with the approval of the Council of Ministers expected during the third quarter of 2021.
Appointment of Directors
At the meeting, the appointment of Irene Cano Piquero as an independent director and the appointment of Javier Marín San Andrés as an executive director of the company were approved. Furthermore, the re-election of Amacio López Seijas and Jaime Terceiro Lomba as independent directors was endorsed. The Chairman acknowledged the efforts and contributions made by the directors who are finishing their term of office, José Luis Bonet Ferrer and Francisco Javier Martín Ramiro.
