Unique (Flughafen Zürich AG) reports a small profit for the first half of the year 2003. Turnover and operating profit are slightly higher than a year earlier. The outlook for the second half of the year gives no reason for much optimism. As of the end of June, the group had a total of 548 million Swiss francs at its disposal.
Zurich Airport, August 25, 2003: After achieving a total profit of CHF 8,1 million in the financial year 2002, Unique reports a small profit of CHF 0,7 million for the first semester 2003. Swiss’s first fleet and network reductions, the Iraq conflict and the severe acute respiratory syndrome (SARS) led to a decline in air traffic for the first half of the year. Despite the drop in air traffic, the turnover in the first semester 2003 increased by 4,1 % to CHF 258,1 million. Nevertheless, for the reasons mentioned above, the results are unsatisfying. The second half of the year will be difficult for the company. Unique (Flughafen Zürich AG) estimates that due to the home carrier’s announced further fleet reduction, about 16,5 to 16,8 million passengers will use Zurich Airport in the total year 2003. For the first six months of the year Unique (Flughafen Zürich AG) achieved a turnover of 258,1 million Swiss francs (+ 4.1%). Earnings before interest, taxes, depreciation and amortisation (EBITDA) amounted to 96.8 million Swiss francs (+0.9%), the EBITDA margin was 37.5%. Profit for the first half of the year 2003 amounts 0.7 million Swiss francs (lost of 1.8 million Swiss francs in the same period last year). As of the end of June, the group had a total of 548 million Swiss francs at its disposal. In the first half of 2003, earnings before interest and taxes (EBIT) amounted to 20.8 million Swiss francs, versus 26.1 million in the same period last year. This represents a drop of 5.3 million Swiss francs, or 20.3 percent.
With the conclusion of a US private placement of 365 million Swiss francs in April 2003, followed by a private placement of 321 million in Japan in May and a US leverage lease of 400 million in June, Unique was able to take up long-term borrowings totalling almost 1.2 billion Swiss francs in the first half of the year. Most of this capital was used for the purpose of refinancing existing commitments. In April we bought back outstanding debentures totalling approximately 265 million Swiss francs, and in May we repaid short-term loans to banks and the Canton of Zurich amounting to 254 million Swiss francs. On 27 June we made another offer to investors concerning a buyback of debentures up to a maximum of 200 million Swiss francs (see note 2, Events occurring after the balance sheet date, under ”Further details”). On top of this we offered to prematurely repay the existing long-term loan of 300 million Swiss francs to the Canton of Zurich. These financial solutions meant that we were able to significantly extend the due dates of our financial commitments and thus secure the long-term financing of the infrastructure of Zurich Airport. As of the end of June, the group had a total of 548 million Swiss francs at its disposal in the form of cash and cash equivalents, and we intend to use some of this amount for financing the second debenture buy-back programme (up to a maximum of 200 million Swiss francs) and for the proposed loan repayment to the Canton of Zurich. As of the end of June 2003, the remaining freely disposable credit limits with banks and the Canton of Zurich amounted to 826 million Swiss francs.
Trend in traffic volume
During the first six months of 2003, a total of 7,935,055 passengers used Zurich Airport as the starting point or destination of their journey. The three Chilean airports, which are controlled via the holdings in the respective operating companies, handled an accumulated total of 215,376 passengers. This is equivalent to a 3.4 percent decline versus the prior year The average number of passengers per flight fell by 4.4 percent from 61.3 in the prior year to 58.6 in 2003 (minus 4,4 %). Here, the trend among airlines towards use of smaller aircraft and our home carrier’s reduction of its long-distance fleet had a negative impact.
Turnover rose from 248.0 million to 258.1 million Swiss francs (+4.1%) versus the same period last year. Despite lower traffic volumes, Aviation income rose by 1.7 percent from 131.2 to 133.4 million Swiss francs. By contrast with the same period last year, higher passenger fees were charged for the full period under review – the new tariff came into effect on 1 April 2002. Non-Aviation income rose by 6.8 percent from 116.8 to 124.7 million Swiss francs, primarily as the result of higher revenue from rented premises and utilities (electricity and heating charges, etc.), though the trend in turnover in the new Airport Shopping (which was opened on 27 March 2003) also had a positive impact on earnings in this segment. The proportion of Non-Aviation income to the total earnings is now 48.3 percent, versus the prior-year level of 47.1 percent.
Investments totalled 175 million Swiss francs in the first half of 2003 (versus 249 million in the prior year), a large proportion of which (126 million) was attributable to expansion stage 5. The ongoing expansion is proceeding according to plan in terms of both costs and timetable. Compared to what was planned investments were significantly reduced with various cost cutting measurements. Interest-bearing borrowings (net) rose to 1.927 billion Swiss francs, versus 1.692 billion as of 30 June 2002 and 1.835 billion as of 31 December 2002.
Unique’s reactions to market developments
In the first half of 2003, the main factors affecting the market were the war in Iraq and the outbreak of SARS, both of which had a significant impact on the passenger volume. In February 2003, our home carrier – SWISS – announced that it would be cutting a number of routes from its network, and in July it announced further cuts in capacity with effect from the 2003/04 winter flight plan. Unique (Flughafen Zürich AG) quickly reacted to the various developments on the market by taking appropriate measures aimed at cutting costs. In March we announced a first package of measures in response to the anticipated outbreak of war in Iraq. One of these involved the decision to close the gates of Terminal B after Dock E has been officially handed over for operation on 1 September 2003. We then drew up a second package at the beginning of June in response to the announcement by our home carrier that it would be reducing its capacities with effect from the 2003/04 winter flight plan. Both packages included job cuts, and the various measures are currently being implemented.
With respect to the trend in air traffic, Unique (Flughafen Zürich AG) estimates that based on the announced fleet reduction of the home carrier Swiss for the 2003/2004 winter timetable, about 16,5 to 16,8 million passengers will use Zurich Airport in the total year 2003, which would result in a decline of about 8 % compared to the prior year. The cost cutting programmes I and II were aimed to assure a balanced result for the financial year 2003. However, the current developments show that this aim will probably not be achieved.
Restructuring of Business Organs
Focusing on the concentration of strengths, the Board of Directors decided to dissolve the Advisory Board per end of the year 2003. Furthermore, at the next General Assembly in April 2004, a motion shall be brought forward to reduce the tenure of office of Members of the Board from 4 years to one. The Board of Director’s first tenure of office will run out next April.
Attached you will find a tabular overview of the key figures. You can find our detailed half year report at: www.uniqueairport.com.
For questions call Jörn Wagenbach, Head Corporate Communications: ++41 43 816 59 80, Beat Spalinger, CFO Unique (Flughafen Zürich AG): ++41 43 816 30 41 or send an e-mail to email@example.com
Unique Corporate Communications