2021 interim results
For Flughafen Zürich AG, the first half of 2021 was marked by pandemic-related travel restrictions and significant constraints in the commercial centers. This resulted in a consolidated loss of CHF 45.1 million for the first half year. Costs and investments were cut significantly, without losing sight of the long-term focus. Thanks to the diversified business model, revenue did not decline to the same degree as air traffic, with the real estate business in particular proving to be a stable source of income. The opening of the Convention Center and the Hyatt Regency Zurich Airport hotel in the Circle as well as the Cantonal Government Council’s decision to proceed with the runway extensions also marked a significant milestone.
The first half of 2021 remained challenging for the aviation industry, the area around the airport and Flughafen Zürich AG. Air traffic was at 25% of pre-crisis levels at best. Shuttered shops and restaurants, a fragile medical situation and constant changes in travel restrictions and regulations made for a difficult start to the new year. Following the improvement in the medical situation in the spring, the progress on the vaccination front and the gradual reopening of borders, especially within Europe, passenger and traffic volumes have been rising again since this summer.
Traffic volumes
Between January and June 2021, some 2.1 million passengers used Zurich Airport as a departure, transfer or destination airport, down 60.5% from the prior-year period. In comparison with the first half of 2019, the number of passengers fell by as much as 85.9%. The number of flight movements fell by 31.9% to 41,123 take-offs and landings in the first half of 2021. Only the number of freight flights increased (+18.6%), which also had a positive impact on the volume of freight handled compared with the first half of 2020 (up 25.1% to 180,788 tonnes).
Financial results
Total revenue in the first six months of 2021 decreased year on year by 15.1% to CHF 263.6 million; compared with 2019, it was down by as much as 55.2%. Aviation revenue in particular declined. This made up just 25% of total revenue, whereas pre-coronavirus it accounted for around 55%.
Despite a high proportion of fixed costs, operating expenses fell year on year by 16.6% to CHF 171.4 million. Compared with 2019, the adjusted cost base declined by as much as 30.4%. The savings are mainly attributable to lower personnel expenses as a result of short-time working, lower police and security costs, and other general cost reductions.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 12.1% year on year to CHF 92.2 million. Compared with 2019, EBITDA was 69.6% lower. This resulted in a loss of CHF 45.1 million in the first half of 2021. In the prior-year period, the company likewise posted a loss of CHF 27.5 million, whereas in 2019 it achieved a profit of CHF 143.4 million.
Despite a higher level of debt, Flughafen Zürich AG will continue to weather the crisis independently thanks to a high equity ratio, adequate reserves and a diversified business model. The cuts in costs and investments are bearing fruit and the company’s liquidity is assured.
New retail and catering partners at the airport
For retailers and especially for bars, cafés and restaurants, the restrictions imposed during the first half of 2021 were drastic. While stores were able to reopen at the beginning of March, restaurants were not permitted to do so until early June. Since early July, all retail and catering partners have returned to operating during core opening hours.
Despite the challenging conditions, the first half of the year saw the opening of various new commercial and culinary offerings in the Circle and in Airport Shopping. Five new businesses launched retail, event, therapeutic and office spaces in the Circle. The opening of the hotel Hyatt Regency Zurich Airport The Circle and The Circle Convention Center in April marked a major milestone in bringing some vibrancy to the new district at Zurich Airport.
Political process launched for runway extensions
Despite the pandemic, Flughafen Zürich AG in its capacity as airport operator is adhering to its long-term plan to ensure high-quality flight operations going forward. The runway extensions are a key plank in this strategy. The political process for these extensions started on 19 May. The dossier is currently at the Cantonal Parliament of the Canton of Zurich. The total costs for the runway extensions are estimated to be in the region of CHF 250 million and will be financed from airport charges. The runway system needs to be extended in order to maintain more reliable operations, regardless of weather conditions and including in the evening, as well as to improve the safety margin and thus minimise aircraft crossings on the ground and in the air. The construction work on the extensions will take place from 2030 at the earliest.
Climate protection remains central for Zurich Airport
Alongside the pandemic, climate protection remains the major challenge to which aviation will also make a contribution.
As an infrastructure operator, Flughafen Zürich AG has already met the requirements of the Paris Agreement for 2030 and made a binding commitment to be carbon neutral by 2050. Our joining the United Nations Global Compact also underscores the importance of our commitment to sustainability for our company.
Measures to achieve this goal include upgrading buildings and installing a modern energy supply. Flughafen Zürich AG is also investing a great deal of energy in procuring alternative fuels, that is sustainable aviation fuels (SAFs). These will enable flights to be almost entirely carbon neutral in future. Together with various partners, Flughafen Zürich AG has developed a process for importing SAFs into Switzerland and in the first half of 2021 airliners at Zurich Airport were for the first time refuelled with alternative fuel.
Outlook
Since the summer, both flight operations and our commercial centers have resumed an upward trajectory. Following the start of the summer holidays in July, there has been a continual rise in passenger volumes, which on peak days have approached 68,000 passengers, roughly 60% of 2019 levels. If the positive trend continues, Flughafen Zürich AG currently expects passenger numbers to be at around half of pre-crisis levels by year-end. However, the passenger and traffic forecast for this financial year remains highly uncertain due to numerous travel restrictions and the lack of clarity over when they will be lifted and the further course of the pandemic.
We are confident that air travel will recover over the medium term. The world population is growing and becoming ever more globally interconnected, as a result of which the demand for international mobility will continue to increase.
Impressions from the first half of the year, including statements from CEO Stephan Widrig and functional managers at Flughafen Zürich AG (only available in German): https://youtu.be/sTrQHR6Xgus
2021 interim report: https://report.flughafen-zuerich.ch/2021/hyr/en/
Detailed business performance: https://www.flughafen-zuerich.ch/newsroom/flughafen-zuerich-ag-half-year-2021/
