Key Figures October 2020 / Trading Update

468,616 passengers flew over Zurich Airport in October 2020, which corresponds to a decrease of 83.7% compared to the same period last year. Flughafen Zürich AG assumes that international travel will remain at a low level over the winter months and expects 8 to 9 million passengers for 2020. The Circle opened successfully with a top-class mix of tenants and a very good occupancy rate. The investment planning for the next few years has been set and liquidity is secured.

Key Figures October 2020
468,616 passengers were handled at Zurich Airport in October (-83.7% vs. previous year). Local passengers decreased by -80.7% and transfer passengers decreased by -92.2%. The transfer rate, which was at 27.0% last October is at 13.0% in the month under review.

In October, air traffic movements decreased by -64.9% to 8,440 versus previous year. 

The average seat load factor saw a decrease of -34.0 percentage points to 46.3% and the average passenger per movement figure decreased to 78.4 (134.4 previous year).

Total turnover in October was CHF 16.5m (-68.9% vs. previous year). The decrease divides into -81.3% for airside and -49.8% for landside.

Traffic Outlook
After the first, slight recovery in travel activities in the summer months, the rising number of pandemic cases and the large number of travel as well as quarantine restrictions prevent a further normalization in the aviation industry. While in August an increase to around 50% of the previous year's capacity was predicted for year-end, the expectations for the winter months are currently significantly lower. Flughafen Zürich AG expects 8 to 9 million passengers at Zurich Airport in 2020, depending on the number of people traveling in the upcoming holiday season. While the outlook is still uncertain, Flughafen Zürich AG remains optimistic in the medium term: The traffic mix with a high proportion of local passengers, a strong home carrier and the robust Swiss economy create favorable conditions for returning to pre-crisis levels in the coming years.

Flight Operations Charges
With regard to the successfully concluded negotiations on flight operations charges, an application for review has been submitted to the Federal Office of Civil Aviation (FOCA) in the meantime. However, the regulator supports the negotiated agreement and hence Flughafen Zürich AG does not expect content related adjustments. The new charges regulations – and thus also the temporary, one-time reduction in flight operation charges – will likely come into force in April 2021 as a result of the review application.

Commercial Activities and Real Estate
The commercial business suffers also from the sluggish recovery. While the business on the publicly accessible landside is recovering more quickly, the situation for our partners on the airside is still challenging. In the meantime, individual agreements on minimum annual guarantees (MAG) for the current year have been made with the majority of the commercial partners. The agreements increase planning security both for the commercial partners and for Flughafen Zürich AG.

There is positive news to report from the real estate business: After around five and a half years of construction, The Circle was opened to the public last week. The pre-letting is currently above 80% and neither cancellations nor cost increases due to the pandemic are to be expected. In general, the investments made in the real estate portfolio in the recent years have a stabilizing effect on revenues, especially in the current crisis.

For the international concessions, a faster recovery in passenger volumes can be expected due to the focus on domestic traffic.

The procedure for the Brazilian compensation claims for 2020 (“Financial Re-Equilibrium”) is well advanced and the details will be clarified with the Brazilian authorities in the next few months.

The airport concessions in Chile have a traffic-dependent, variable concession period. This will extend the concession periods accordingly in order to compensate for the current losses in the future.

The concession contract for the new Delhi Noida International Airport with a term of 40 years was signed at the beginning of October. The appointment of the local management team is almost complete, and the next milestones are the handover of the airport perimeter by the authorities, the conclusion of the financing agreements and the tendering of the EPC (engineering, procurement, construction) contracts.

The focus of the international strategy in the coming years will mainly be on the implementation of the existing projects in Brazil and India.

Capital Allocation
On the financial side, Flughafen Zürich AG initiated measures to reduce costs at an early stage. The operating costs in the current year can be reduced by around 15% compared to the previous year (excluding expenses from construction projects), in particular due to short-time work and further savings.

Investments in Zurich will be around CHF 350 million this year, which is higher than originally expected. This is mainly due to the completion of the major project The Circle, where construction activity has progressed faster than expected despite the pandemic. In the following years, however, the investment volume in Zurich will decrease significantly and level off at around CHF 200 to 220 million per year.

At the subsidiaries abroad, the new terminal in Iquique (Chile) will be completed next year and the construction of the new Delhi Noida Airport in India will begin.

The consolidated liquidity at the end of the third quarter amounted to almost CHF 500 million. The negative free cash flow is currently CHF 30 to 35 million per month and will probably only become positive again in the course of the next year. The leverage ratios will peak at the end of this year and should then decrease again towards the pre-crisis levels depending on the traffic recovery.

The coming weeks or months will remain challenging and the published forecasts show considerable uncertainty. Despite the current difficulties, Flughafen Zürich AG believes it is strategically and financially soundly positioned to weather this crisis and is convinced that it is well positioned for the recovery phase.