MAG, the UK’s leading airport group, today reports its interim unaudited half-year results, for the period 1st April 2017 – 30th September 2017
Summary
- Continued strong growth in adjusted EBITDA* (+9.6% to £236.6m) driven by a record-breaking summer season. Revenue increased 12.9% to £544.6m.
- An increase in both long-haul and short haul destinations, as well as higher frequencies to existing destinations ensured MAG passenger numbers increased by 9.1% year-on-year to 34.9m.
- Manchester Airport is seeing record numbers of passengers through its doors and during the six months to September saw more passenger growth than any other UK airport (+9.2% to 16.6m). It has also now begun its £1bn transformation programme, the largest ever private investment in the North West.
- London Stansted Airport has seen passenger numbers in the first half of the year climb 9.8% year-on-year to 14.6m, with continued growth from Ryanair, Jet2.com establishing a new base at the airport, and a host of new carriers and routes to complement the already extensive European offering.
- In April, MAG secured planning permission for a new arrivals building at London Stansted, which will form the centrepiece of a £500m enhancement programme and create the ability for the existing terminal building to be developed as a departures-only facility with additional security lanes, seating and retail facilities.
- At East Midlands Airport, forecasts suggest that it will be a record breaking year for MAG’s cargo operation. 3.2m passengers flew to and from popular holiday destinations between April and September, a 3.2% year-on-year increase. During the same period 202,453 tonnes of cargo passed through the airport (+3.5%)
- Increased revenues have been driven by both aviation and non-aviation income. On the aviation side, additional capacity and higher load factors have led to 15.2% revenue growth. Meanwhile non-aviation revenues were boosted by retail growth at 13.4%, following investment across the airports in food and beverage, retail and car-parking facilities.
- In the last year, activity at MAG’s airports across the UK, at Manchester, London Stansted, East Midlands and Bournemouth contributed £7.1bn of economic value for UK PLC and for the communities in which our airports operate – a 14.5% increase on the previous year.
- MAG has launched its own technology and e-commerce business to respond to changes in the way passengers travel using modern technology and to move the airport experience into a new digital era. MAG-O sits ‘arms-length’ from the rest of the Group and is aiming to improve passengers’ ‘end-to-end’ experience of using the Group’s airports through the introduction of better technology and innovative online products.
- MAG this week completed the sale of Bournemouth Airport to RCA, part of the Rigby Group. The funds generated from this sale will be used to fund MAG’s investments in its other UK airports.
- Following Monarch Airlines entering administration in October, Manchester Airport has seen significant interest from airlines for the slots it vacated, with new flights operating in slots vacated by Monarch already on sale with Jet2.com, Thomas Cook and TUI, and more expected to be announced in the coming weeks.
- MAG Cargo tonnage is in a sustained period of growth, with volumes up 4.4% year on year to 365,565 tonnes. This growth has been driven by increased e-commerce traffic and new routes from London Stansted with CargologicAir, Saudia and Silk Way West to North America, Middle East and Azerbaijan respectively and from East Midlands to Leipzig, Milan and Madrid.
- Major deals completed by MAG Property in the year to September include the sale of 45 acres of prime development land at Airport City Manchester to Icon Industrial, which is a development that could create 5,000 new jobs and 1m sq ft of logistics space. Meanwhile Hampton by Hilton opened its largest ever property at London Stansted Airport, and new cargo and office lettings deals at East Midlands and Manchester.
- The Group announces an Interim Dividend for the half year to September 2017 of £55.3m, a 17.7% year-on-year increase.
Charlie Cornish, MAG CEO, said:
“Our latest results demonstrate that MAG is a strong and resilient business that is confident in its future growth prospects, and one that through the significant investment it is making is demonstrating its commitment to meeting long term customer needs.
“Across the Group, our commercial approach to engaging with airlines has enabled us to build extensive route networks that are proving very popular with passengers. This aviation growth, combined with our ongoing focus on passenger experience and non-aviation revenues, has resulted in us being able to deliver the 13th consecutive half-year of adjusted EBITDA* growth.
“As we grow we are committing considerable investment to enhancing the look, feel and operation of our airports. In addition, the transformational projects at both Manchester and Stansted will deliver the larger terminal facilities needed for us to make better use of our spare runway capacity.
“We are proud of the economic benefits that our airports generate for their local regions and the contribution they make to UK PLC. As the UK gets closer to leaving the EU, we urge Government to do everything it can to secure the seamless connectivity to global markets that people enjoy today. As MAG continues to grow we will work with Government to ensure the policy framework is in place to support our continued success.
“In July, we welcomed the Government’s statement that it supports making best use of existing capacity at all airports around the country. It is now for the Government to use its Aviation Strategy to set out an ambitious plan to make better use of existing runway capacity and improve the UK’s international connectivity. Improving road and rail access to airports is a critical part of this.
“As we leave the EU, it will be more important than ever for the UK to develop the best possible connections to global markets. MAG expects demand for air travel to and from the UK to remain buoyant and to continue growing. As MAG continues to grow we will work with government to ensure the policy framework is in place to support our continued success.”
Business Review
MAG has continued to deliver growth in the first six months of FY18, meeting or exceeding its financial targets and once more continuing year on year growth in adjusted EBITDA*, driven by record passenger numbers.
Group adjusted EBITDA* rose by 9.6% to £236.6m, and result from operations rose by 9.9% to £159.9m, driven by both aviation and non-aviation growth. Passenger numbers are higher than ever before at Manchester, London Stansted and East Midlands, growth which we have combined with successful retail management and continued focus on customer service. Jet2.com had an extremely successful first summer season at their new London Stansted base and we have added an exciting range of new long haul and short haul routes across our airports. MAG continues to deploy its operating model which is focused on achieving growth in passenger volumes, strong commercial performance and operational cost control.
We have also begun our £1bn transformation project at Manchester and secured planning permission for the start of London Stansted’s £500m transformation.
The Group has also been able to translate profits into cash, enabling the Group to grow successfully and sustainably. Cash generated from operations increased by £7.5m (+4.2%) to £188.0m.
An Interim Dividend of £55.3m will be paid in December 2017 for the half year to September 2017 which is 17.7% higher than was paid at the same point last year – a result of the strong performance during the period and the Group’s confidence in the long term prospects for the business. 65% of this dividend will be paid directly to our shareholders at Manchester City Council and the other Greater Manchester councils.
Manchester Airport continues to set records. Growth in passenger numbers for the period stands at 9.2%. This was driven by the new long-haul routes with new and existing airlines that MAG has added to Manchester, including the launch of new direct routes to Muscat (Oman Air), Boston (Thomas Cook Airlines and Virgin Atlantic) and San Francisco (Thomas Cook Airlines and Virgin Atlantic). This was combined with very strong demand for short and medium haul summer holiday flights, with Spain being a particularly strong market. Manchester’s adjusted EBITDA* for the first half of the financial year was up 7.5% as a result.
London Stansted Airport has also experienced strong growth in passenger numbers – up 9.8% year on year. This was primarily driven by Jet2.com successfully establishing its first ever base in the south east at London Stansted, and continued growth by Ryanair. During the first half of the year, we also announced two significant new airlines for London Stansted. Primera Air will offer direct flights to New York, Boston and Toronto on new A321neo aircraft and WOW Air will offer flights to US destinations via their hub in Reykjavik. EBITDA at London Stansted increased by 11.8%.
East Midlands Airport has performed ahead of expectations, with passenger numbers up 3.2% due to improved load factors and additional capacity added by Ryanair and Jet2.com in particular. Its adjusted EBITDA* improved in line with this, up 3.5% driven by growth in cargo tonnage and the highest passenger numbers seen at the airport since 2008.
In MAG Property, the focus has remained on providing the right kind of property and location to businesses in industry sectors that benefit from airport locations. Occupancy levels remain strong across the Group. Major deals completed by MAG Property in the six months to September include the sale of 45 acres of prime development land at Airport City Manchester to Icon Industrial, a development which could create 5,000 new jobs and 1m sq ft of logistics space. Meanwhile Hampton by Hilton opened its largest ever property at London Stansted Airport, and there were new deals at East Midlands with Heavyweight Air Express and at Manchester with Select Transport and API Group.
MAG Cargo income saw growth of 1.3% and tonnage growing 4.4% year on year to 365,565 tonnes. This growth has been driven by increased in e-commerce traffic and new routes from London Stansted with CargologicAir, Saudia and Silk Way West to North America, Middle East and Azerbaijan respectively and from East Midlands to Leipzig, Milan and Madrid, together with the expansion of DHL’s facility at East Midlands.
In retail, revenue is up even though we have seen continued challenging conditions in duty free retail. Despite changes in buying habits, with a shift to online, income is up 13.4% as a result of investment in new retail offers across our airports, and in particular investment in food and beverage offerings at London Stansted.