AIRPORT STRIKES FIRST PROFIT IN 8 YEARS
– 24-PAGE BUSINESS IN WALES
CARDIFF Airport has delivered its first profit in eight years as it continues to grow passenger numbers and revenues.
Based on earnings before interest, tax, depreciation and amortisation (Ebitda) – which is seen as the key measure of operating performance and cashflow – the airport posted a small, but nevertheless important financial milestone, with a profit of £7,000 for the year to the end of March 2018.
This compared to Ebitda losses of more than £800,000 a year earlier.
Although on the pre-tax profit measure, following a year where its capital expenditure rose in improving infrastructure such as its terminal, it remains £6.6m in the red.
During the year revenues were up from £16.6m to £17.9m.
Revenues at the airport, which is wholly-owned by the Welsh Government but is operated at arm’s length through a commercial company, consisted of £9.6m in traffic income, £7.1m in commercial income and £1.1m in tenant income
It also has a £38m lending facility with the Welsh Government. At year end some £30m had been drawn down from the facility which has a 20-year repayment term. The interest is charged at commercial rates. As the airport is owned by the Welsh Government borrowing from financial institutions could impact negatively on the Welsh Government’s block grant.
The Welsh Government acquired the Rhoose-based airport from Spanish conglomerate Abertis in 2013 for £52m.
The positive passenger and revenue impact of the new route from Qatar Airways from Cardiff to Doha, launched in May – in the first scheduled service between Wales and the Middle East – will be felt in the current financial year.
During the last financial year total passengers grew year-on-year by 9% to reach 1.48 million. It is on track for double digit growth in the current financial year.
Based on modest organic growth the airport is on track to reach three million passengers by 2030, at which stage it will need a new and larger terminal at an estimated cost of £100m.
However, its chairman Roger Lewis said the aim, fuelled by securing new airlines and routes, is to achieve that target potentially as early as 2025.
Required investment in any new terminal could be the trigger for the Welsh Government to sell an equity stake in the business.
On the latest audited financial results Mr Lewis said: “As a board our focus was to significantly improve our business performance whilst simultaneously delivering the service expectations of our shareholder, stakeholders and customers. Subsequently we have strengthened the financial position of the company and we have enhanced the airport’s reputation and standing.
“We have continued our progress to financial sustainability and I am delighted to report that the airport has achieved a positive Ebitda performance for the first time in some eight years, improving our year on year result by £897,000.
“So, it truly has been a transformational and a pivotal year [financial] for Cardiff Airport. We have achieved significant continued growth in passenger numbers and we have strengthened our financial performance.
“We have done much to enhance the experience of our customers who choose to fly from Cardiff Airport and we have offered them more choice with new routes and airlines added to the network.
“That said, we acknowledge there is still much more for us to do, but I would highlight the continued success so far achieved by the team.”
Earlier this year the airport launched a consultation on its 20 year masterplan, which as well as a new terminal in the short-term could see a new four star hotel built as well as a major storage facility as the airport looks to grow its freight business.
During the year its highest paid director was its chief executive Debra Barber with a total remuneration of £116,000. The airport’s headcount also grew from 248 to 268. Total staff costs, including pension costs, were £7.6m, compared to £6.9m a year earlier.
Last week the first four months of passenger numbers for the Cardiff to Hamad International Airport route from Qatar Airways were revealed by the Civil Aviation Authority.
They showed that numbers have grown steadily from the launch month in May, at just over 2,400, to reach nearly 11.400 in August.
On the current figures the route is on track to achieve a passenger load factor of nearly 60% in its first year.
Mr Lewis said: “To see that passengers in August were almost on a par with Birmingham, where Qatar Airways launched a daily service back in 2016, is a truly remarkable performance just four months into the new route.”
The Welsh Government and the airport continue to press the UK Government for air passenger duty (APD) to be devolved.
First Minister Carwyn Jones said, if devolved, the tax on longhaul flights would be abolished entirely to help attract more carriers to the airport.
Now business bodies the South Wales Chamber of Commerce and FSB Wales have joined forces to also lobby the UK Government to devolve APD to Wales, as is the case already in Scotland and Ireland, ahead of Philip Hammond’s Budget at the end of the month.
In a joint letter to the Chancellor the business organisations say: “Wales has always been a proud and outward-looking nation and both the FSB and South Wales Chamber believe that the devolution of air passenger duty will allow Welsh Government to support the development of new routes to and from Wales and provide vital new links to benefit business and, ultimately, the Welsh economy.
“APD is already devolved to Scotland, while Northern Ireland has devolved capacity over long-haul flights.”
Given that Wales is the only UK nation without control of these issues, the two business organisations call upon the Chancellor to take this opportunity to rectify this in the upcoming UK Government budget.
The letter adds: “Bristol Airport has long-haul flight capacity issues which are not present in Cardiff, meaning that any potential expansion of Cardiff Airport into further long-haul flights could benefit the West country as well as Wales, without being detrimental to Bristol Airport.”
The letter follows the publication of a report last week from the Assembly’s cross-party Economy, Infrastructure and Skills Committee which has made a number of recommendations for boosting the visibility and international trade capacity of Wales including the lobbying of UK Government for the devolution of APD.