Cardiff Airport ‘in great shape’ despite losses nearly trebling
CARDIFF Airport’s pre-tax losses have nearly trebled in a year as bosses warn the loss of Thomas Cook will only really be felt in next year’s accounts.
In its financial statements and annual report for the year ending March 31, 2019, the airport declared a pre-tax loss of £18.5m – almost three times the pre-tax loss figure of £6.6m in the previous year’s report.
The latest financial statement, which has just been published, shows the airport has been able to record a better turnover than the year before, up from £17.9m to £20.8m, but the loss for the financial year is recorded as £19.6m, up from £5.7m the year previously.
The airport was bought by the Welsh Government for £52m in 2013 and has recently been given an additional £21m of taxpayers’ money.
Outgoing chairman Roger Lewis writes in the 41-page statement of accounts that the aim of the board for the previous financial year was to “further strengthen the financial position of the company” and to “improve the customer experience”.
He said it has recorded 15 months of continuous growth and has launched a masterplan for the future growth of the airport.
Staffing levels are up 9.3% and commercial revenue has also grown, he says. However, he has warned that external economic factors are playing a part.
“While we were very pleased to note substantial continued growth over the reporting period, we also saw increased signs of major global economic factors such as the ongoing uncertainty over Brexit and concomitant Sterling weakness, climate change and rising fuel prices impacting on the aviation sector,” wrote Mr Lewis.
He also referenced changes to Flybe and Thomas Cook collapsing in September.
“The impact of the liquidation of Thomas Cook has limited impact in the financial year 2019-20 with the loss of only 16,000 passengers, however the impact in financial year 2020-21 will be the loss of approximately 150,000 passengers. The business will continue to seek opportunities to replace this opportunity.”
Mr Lewis, who announced he is standing down, said due to all those factors they had re-evaluated the value of intangible assets – things which are not physical but include goodwill, brand recognition and intellectual property such as patents, trademarks, and copyrights –and downgraded their estimated worth by £9.3m.
The strategic report from the board reads: “The aviation industry continues to be volatile with the impacts of geopolitics and currency having an impact on the industry. With the recent liquidation of Thomas Cook and recent challenges seen within the industry, the board have decided to review the life of our intangible assets with the useful life being shorted.” However, Mr Lewis said “our national airport is in great shape” and that “our journey ahead looks bright”.
Passenger numbers were up by the end of the 2019 financial year standing at 1.59m – a 7% increase on the year before. That includes the arrival of Qatar Airways’ daily summer and five-times-weekly winter service between Cardiff and Doha, which the report says carried 81,556 passengers in its first year.
Flybe also increased in that period, while they say that Tui added 100,000 additional seats for summer 2019.
The document also includes the amount paid to directors, with the highest-paid director – who is not named – earning £116,000.
The airport highlighted a different measure, its Ebitda – earnings before interest, tax, depreciation and amortisation – which is a measure of a company’s operating performance and the key metric by which airports are valued globally.
In 2017-18 it posted an Ebitda profit of £7,000 and £77,000 the following year. The next result is due in late 2020 when, an airport spokeswoman said, it is expecting to see continued growth.
Asked to comment on the increased losses, Huw Lewis, Cardiff Airport’s chief financial officer, said: “Our focus this financial year (201819) has been to build on the previous transformational year and further strengthen the financial position of the company.
“As a result we have seen a growth in revenue by over 34% due to improved commercial operations across the airport, notably increasing the departure lounge and retail, food and beverage offering, investing in our car park and car hire offerings.
“We have increased our headcount by over 9% to meet the growing business demands and brought forward our commitment to pay at least the Real Living Wage to all Cardiff Airport employees.
“In light of the continuing volatility and uncertainty in the global economy and specifically the aviation industry, including recent airline failures, we have reviewed the life over which we measure our intangible assets and taken the prudent decision to write down the value of these assets. This has resulted in an exceptional charge of £9.3m which is reflected in our accounts for this financial year.”
A Welsh Government spokesperson said: “Since our acquisition of Cardiff Airport passenger numbers have increased by 70%. The airport contributes a quarter of a billion pounds to the Welsh economy every year and sustains around 2,400 aviation related jobs.”