Flughafen Wien Aktiengesellschaft (FLU) Earnings Call Transcript & Summary

[Audio Gap] versus 2023, and 0.2% versus 2019. So we have 50,000 passengers more than 2019 and that's a new record. I think the good news is as well that it's not only passenger numbers where we saw a record but cargo as well. So we had 200 -- nearly 289,000 tons of cargo, which is 21% more than last year and 5% over 2019. The record so far was 2010 with 294,000 tons of cargo. We saw records as well in our subsidiaries. Malta reported 9 million passengers last year plus 15% and Kosice 0.7 million passengers, plus 18%, I think, in our small airport group, we saw records and excellent results throughout. So what's the outlook now for 2025? We expect approximately 32 million passengers in Vienna and approximately 42 million in the group. You might think that this is the usual cautious approach Vienna airport is taking. I think we have good reasons to be cautious in 2025. So the approximately 32 million cover everything from 31.5 million till 32.5 million, maybe 33 million. But the main reason for being cautious is the strong summer we saw in 2024. We had an absolute record throughout all the summer months both in terms of absolute volumes and in seat load factor. I think given the difficult economic outlook and situation our economy is facing here in Austria. There's reason to -- good reason to be cautious. And the second part, obviously, is the geopolitical situation. I mean this morning, we learned that there might be a major improvement in the situation in Israel and Gaza. So this might be an upside. And this would be, I think, it would be a very welcome news for our Home Care Austrian Airlines. They really missed the passenger flows from Tel Aviv via Vienna to the U.S. So yes, obviously, the Middle East, the situation there is a bit of relaxed. This might be an upside. But overall, we are cautiously optimistic for 2025, and we would foresee a small growth compared with the record numbers of 2024. Coming to the details, I think what is worth noting that we saw strong growth in local passengers and smaller growth in terms of transfer passengers. Compared to 2019, we saw a decrease in transfer passengers. I think this is good news for mainly Austrian Airlines. Local passengers have on average, a higher yield than transfer passengers. So I think this is a good development as well. What's good as well is that we saw a reduction in terms of flight movements compared to 2019. And so this gives us a kind of capacity reserve compared to 2023. We had an increase of 5.9% in terms of flight movements compared to 2019. It's minus 12%. In total, we had 234,000 flight movements. Seat load factor was on an all-time high, 80.8% compared to 80.5% last year and 77.3% in 2019. I think what's important to note as well, the seats per flight increased from 157 and -- to 171 in 2024, and I think this underlines the structural change of our traffic. As I said, Malta 9 million plus 15% vis-a-vis 2023 plus 22% versus '19, Kosice plus 18% versus 2023 and plus 32% versus 2019. Overall, a very strong development throughout the group. 72 airlines served 195 destinations in 65 countries. 86% of our travelers are flying within Europe, but we saw a good development in our long-haul markets as well. 18% growth to the Far East, where there's still some room to grow in the future, mainly due to Beijing, Shanghai, Shenzhen, Tokyo, and 10% growth to North America. I think this is a positive development. The only market where we saw a decline vis-a-vis 2023 was the Middle East, minus 13% mainly, due to passenger reductions in Tel Aviv, Aman and Jeddah. Looking at our airline portfolio, Lufthansa Group has a market share of close to 51%, Austrian 46%; the low-cost carriers 30.5%, Ryanair 20.9%, Wizz Air 6.4%. So I think this is quite static, essentially the relation between Lufthansa Group and the low-cost carriers. And I think this is -- this is a development which is absolutely okay for us. Austrian growing quite significantly 5%, Ryanair 11.6%. And only Wizz Air was a slight -- saw a slight decline mainly due to the engine issues you are anyway aware of. One of the markets where we still significantly behind 2019 is Germany, minus 1.4 million passengers; Switzerland, minus 440,000 passengers; France, minus 130,000; Netherlands, minus 220,000 passengers. So we saw in all these markets, growth versus '23 with the exception of the Netherlands, but still a major reduction versus 2019. I think this is, on the one hand, due to -- yes, changed behavior, less business traffic. So it will not come back soon and not all of it. But on the other hand, it shows as well that there's quite some growth potential for the future. I think it has something to do as well with ticket prices. I think it has to do with the general approach towards aviation in the German market. So I think there's some potential in the coming years to regain some of these passengers. If we look at the top growing markets in '24 versus '23, Italy, Spain, U.K. and the main declines we saw Israel, Jordan, Saudi Arabia. So I think this reflects what I said before. The major driver of this year's result was obviously the summer months, so from June to October, we really had throughout record figures. And this shows that we became more dependent on leisure traffic, which is still doing very well. We had also a record result in terms of cargo. I think the main driver here is, on the one hand, our geographical location and the high-quality service we offer. And not to forget, obviously, the e-commerce boom, mainly from China. So we really saw very strong growth in this respect. Daily freight was growing 43% versus 2023. And overall, we saw really major growth throughout the sector. We have now 38 cargo-only flights per week, and the market share for the VIE handling of 80%. Pharmaceuticals were growing as well, plus 15% versus '23, and we doubled our result for the -- for our pharmaceutical distribution center compared to 2019. So I think this is a positive development as well. And what is very important is that we extended our contract with Lufthansa Cargo for another 4 years. East Asia is obviously the main driver of our cargo results. Therefore, we intensified cooperations with Incheon Airport and with Korean Air and we are optimistic that we will see some positive results through these cooperations as well. One thing which was a major strength of the Vienna Airport since the pandemic is our flight operation. we are still by far the most punctual airport and most punctual hub in the Lufthansa Group in -- from January [Audio Gap] So we were the fourth most punctual hub from January till November. In November, we were the third most punctual hub in Europe. So overall, I think a very positive result. And Skytrax ranked as the 13th best airport worldwide. I think what is important as well is our security checks. 95% of our passengers are waiting less than 5 minutes at the checkpoint. So I think this is a very positive result as well. And our winter service, which we are operating ourselves as well is working excellent. So it's obviously our ambitions to keep these high quality standards and especially for hub carrier, but for the low-cost carriers as well. I think this is an important base for our economic success as well. A few words regarding the airlines. Looking back to last year, I think it was very important to -- that ANA resumed their flights from Tokyo, Hainan came back from Shenzhen and started Chengdu in December. Air Arabia started to Sharjah in December. Sky Express started to Athens in December. So overall, I think very positive development. Yesterday, Scoot announced that they will connect Vienna with Singapore 3 times a week starting from June this year. And Condor will open a base this year and operate flights to Frankfurt. So I think the first signs in the new year are positive. And especially, I think in East Asia, there is some potential to get probably the one other destination back or new in the course of 2025. We spoke briefly about Malta. Yes, 9 million passengers is an absolute record. I left in 2011, and I think we had backed then 3.5 million passengers. The top markets there are Italy, U.K., Germany and Poland. You will understand that we need to heavily invest there in the coming years in the terminal, but in the airport city of multi-international airport as well. So in 2025, Malta Airport will invest EUR 70 million. And overall, in the next 5 years, they will roughly invest EUR 340 million. Kosice, yes, positive development as well, mainly due to the summer charter and overall, again, a positive contribution to the group results. I spoke about our guidance, we expect approximately EUR 32 million, as I said, could be anything from a flat development to 32.5 million passengers, maybe a few hundred thousand more. But I don't expect a major growth in 2025. We saw very significant growth in '23 and '24. So I think we can do with a relatively flat development in '25 as well. On the long run, I'm still very optimistic for the growth potential of Vienna Airport than the whole group. I think East Asia still has a lot of room for growth. Long haul in general we'll see a significant growth in the coming years. I think the XLR development is a potential for a market like Vienna. And as we spoke before, Germany, Switzerland, France, we're still far behind the 2019 figures. And I'm not saying that the 2019 figure soon, but for sure, we will make up to a certain extent. And then obviously, the geopolitical situation could or should change to the better. And probably, we see already positive development in the least in 2025, which would definitely contribute to passenger growth in Vienna as well. And on the other hand, obviously, everybody is still hoping for peace, real peace in the Ukraine after the war, which Russia brought over Ukraine in 2022. And all these, I mean, Russia, Ukraine, Belarus, were all very strong markets for Vienna. So I think midterm, I see some growth potential from these markets as well. So therefore, midterm, we are still very optimistic for 2025. We are a bit cautious. Before I hand over to Günther, just 2 or 3 sentences to the political situation, as you probably know, they are now discussions between the Freedom party and the People's Party to form the government. I think they will form a government, and it shouldn't take more than a couple of weeks until the government is ready. I think looking at the aviation industry, we expect, obviously, a more aviation-friendly environment with the government like that. I think this government would probably more appreciate that Green Party how important aviation is for the economy in general, but for tourism in particular. And we hope that we see a government which doesn't penalize aviation, appreciates the benefits of aviation. But on the other hand, helps as well to invest more into R&D to invest more into the production of SAF because in the end, this is the only way how aviation can become a CO2 neutral in the next 30 years. So overall, we expect here some positive policy effects on the aviation from our new government. Yes, that is from my end, and I would like to hand over to Günther.

Good afternoon and following the traffic results of 2024, I can give you an economic outlook for 2025. Overall, we still see that consumers are reluctant to spend money. So the saving quota has gone up fastly and private spendings are more or less on the level of 2023. The only area where this is not the case is traveling. And although the overall economic framework looks rather gloomy for 2025, and we cannot expect a substantial growth, we think that still traveling is a very high priority. And therefore, we are optimistic that we can maintain the levels of '24 also in 2025. Also, we are not expecting substantial growth. Upside potential could be the end of the war of Russia against Ukraine, and also further reduction of tensions in the Middle East. And hopefully, the expectations with the incoming new President in the United States. And his promise to end the war and to find solutions also to the very difficult situation in the Middle East, could provide a positive surprise of further down in 2025. Overall, our financial guidance for 2025 is sales around EUR 1.08 billion, EBITDA of at least and around EUR 440 million net profit around EUR 230 million, which is more or less in line with what we expect also for full year 2024. In any case, we are prepared for future growth and we are investing to cope with that growth potential. So our investments are increasing to around EUR 300 million in 2025, roughly EUR 80 million out of that will be invested in Malta. You have heard that Malta is fastly growing, and they urgently need new terminal capacity and what is connected with it, and they are also opting for a new Sky Park. So we will see substantial investments also in Malta. From our side, we can finance all these investments from our own funds. So for the time being and maybe the next 3, 4 years, we will not be in a position to look for external financing. And nevertheless, we'll be able to offer our shareholders dividend in more or less the range what we saw for 2024. So a payout ratio of 60% to 66%. I mean, we will take this decision once we have full year's results. But I think it's not premature to expect that dividend for 2024 will grow as results improve. In regard of subs and sustainable aviation fuels, we see that there is little production and prices are high. And if we put together all the regulation that is in place now from European side, we could expect that ticket prices will go up substantially. And to counteract for that, I think it is very urgent to change EU regulation that SAFs can be used from any production worldwide. And price per liter would go down substantially because the production from biogenic means leads to EUR 4 around per liter, which is much too expensive. And there will not be sufficient SAF if we try to use only SAFs that are produced in Europe out of European by using European CO2. So here, we see substantial needs and necessity to improve regulation also to create a level playing field, which is not the case in the current regulation. But overall, I'm relatively optimistic because given that the government is formed as it is now discussed that the new government will be much more supportive and positive towards aviation as the previous was with participating representatives of the Green Party. And from that side, I'm relatively optimistic that we will get additional support. If we move on, you see again our guidance in detail. And on the next slide, the financial highlights, just to remind you for the first 3 quarters. And in roughly 8 weeks from now, we will have the full year's results for 2024. From today's perspective, there will not be any surprise in that. If we look at our Airport City development, we see substantial growth also there. So TUI will move to the airport and will start operations here. And also many other companies are on the way to the airport. Therefore, we will also increase our office park and the hotel that is planned to open in November is on the way. So building construction going as planned. The same is true for our South extension project, and it will be ready in time and in budget in beginning of 2027. A very important initiative from our side is to improve our digital abilities and the innovation hub that we created is working very successfully. On one hand, our partnership with Plug and Play. On the other hand, the initiatives that are on the way, for example, autonomous wheelchairs, cleaning robots and especially full digitalization of planning, construction and operation. We are a market leader there. And it is a very, very powerful tool to improve planning, construction and operation and to save substantially costs by providing higher quality and especially our space cluster is developing very well. So Enpulsion, is going to increase the production here and 3 new companies in the space, technology are already booked. So they will start operation in the coming weeks in our Airport City. So that's from my side, and feel free to ask your questions.

First hand is raised. It's Carlos.

Just 2 on my side. First, with regards to the 2025 summer schedule, I see that some airports are seeing between 3% to 4% increase in seat capacity. So I was wondering if you could shed some light your expectations? And secondly, on Chinese traffic, could you share with us the number of passengers in 2024 compared to 2019 levels?

We don't have yet the final flight plans for summer. And I would not foresee a significant capacity growth in Summer 2025. I think it depends -- if you compare with other airports, it depends a lot as well how these airports did in recent years. So I think we saw a very strong recovery in 2023 and '24. And therefore, I think it's not unnatural that we have a bit more flat development in 2025. So I would not see -- as things stand today, I would not foresee a significant growth in the summer schedules of our major airlines, Austrian, Ryanair and Wizz Air. If so, yes, there would be a positive surprise, but I don't see it yet. Regarding China, I have to check to be honest. I mean China, overall, you're not talking about big numbers. We have a daily flight to Beijing. Now we have 5 times a week a flight to Shanghai and now with Shenzhen and Chengdu another 5 flights in total. So there's still some room for growth. But I don't have the exact figure at hand right now, and this is something we'll -- I'll give you either later on in the call or Mr. Maura will get back to you.

One question from my side or actually 2 or 3. And I'll talk about the first one is -- on the guidance, you guide for EUR 300 million in CapEx, which -- of EUR 120 million in the spot expansion, and you mentioned some EUR 70 million in Malta. So the rest is EUR 110 million. What is exactly behind that figure? Is it largely remains CapEx? Is there anything else I'm missing? Maybe you can shed some light on that.

Yes, there is a logistic building included in that the renewal of our cargo screening and a lot of smaller projects throughout the whole company.

Okay. And is that something that is specifically higher for 2025 and would -- might go down in terms of maintenance CapEx for 2026 and '27? Or is it a new normal that we should anticipate in terms of maintenance CapEx plans?

I would assume that we will see a level around this figure, maybe for the next 3, 4 years. And once the South extension is operational, we will continue with building to enlarge Terminal 3 and to build new stands there. So we will have a period of maybe 5, 6 years where we provide the necessary capacity increases to meet future growth. And as I said before, from today's perspective, at least for the coming 3 to 4 years, we will be able to finance all these investments from our own funds. And from today's perspective, we are also be linked to maintain our dividend policy.

Yes. Okay. Understood. And maybe a follow-up on the Malta CapEx and specific, you mentioned an amount in a period. I did not get the number. Could you please repeat? So you plan which amount over which years in the Malta CapEx plan?

Malta has a plan to invest this year, roughly EUR 70 million in the 5 years starting with 2025, EUR 340 million.

Okay. And then one question also for you, Mr. Jager, on the passenger outlook for 2025, I'm fully aware of what you said and I got it perfectly. But on the midterm, you're turning more positive on the midpoint. What is it based on? Is it based on further that the demand will remain stable despite economic development? Is it also coming in effect that the seat load factor will increase gradually. So the frequencies and the movements might not need to increase that much? What is the sort of the mix for the years 2026 to 2030 or something like that?

I think the major driver of growth will be demand. And I think globally, we will see huge growth. I mean, markets like India, Saudi Arabia, East Asia, we will see very strong growth, and there will be spillover effects to Europe and Vienna as well. So this is one area why we are on the midterm, quite optimistic. And secondly, as I mentioned, we have some markets which are either debt, which were important markets for us like Ukraine, like Belarus, like Russia. We have markets which have been very strong in '22, '23, like the Middle East, which due to geopolitical reasons, we are much weaker in 2024. And we have, on the other hand, markets like Germany, like Switzerland, France, Netherlands, where we see quite some growth potential for the future if there's -- in general, a more positive attitude towards aviation, if taxes in Germany may be reduced on aviation in the future. So I think it's mainly the demand side where I see some potential for us in the future. And obviously, I think from our geographic location, it's very advantageous. I think Vienna remains a very strong tourism magnet. And still, as Günther said before as well, I think the people below 40 or below 30 will probably travel more than we ever did. And therefore, I think in terms of values and the importance to people that in traveling and discovery in the world has a higher value probably than 20 or 30 years ago. So overall, we remain optimistic and probably we'll see in 2025, a relatively modest growth. So that's our expectation from today's perspective.

All right. And then one more question, I think, for both of you regarding sustainable aviation fuel. First, did I understand correctly that sustainable aviation fuel -- is it used in Europe. It needs to be produced domestically in Europe, so it cannot be imported. And secondly, you mentioned that it's roughly EUR 4 per liter, the biogenic one. And assuming that the oil refined Jet A1 is, I don't know, EUR 2 per liter. So that's what double the price, the more you mix towards the sustainable aviation fuel is that a correct assumption more or less?

No, it's 4x.

4x. So it's 1 liter approximately now for Jet-A1.

It's even, I think, some around EUR 1, EUR 1.20, is the oil-based price. Yes, unfortunately, I mean, the regulation stipulates that the CO2, which is part of SAF has to be part of the European Emission Trading. So the only initiative I know for -- to produce outside this one initiative in Morocco, and the CO2 should be transported from Spain to Morocco to produce SAFs there. So that's I would say, close to crazy to expect that with such a regulation, we can get the necessary amount at a reasonable price. So therefore, I think this regulation has been changed. If it's really probable that we will see progress there. If we don't change these regulations, I think this will bring about a lot of troubles starting from the...

Okay. Got it. I mean, yes, if you look at -- as SAF was produced, you kind of use from food waste, but that obviously is a limited resource. So the rest to be done from electricity. But if you use electricity, the utilization or the efficiency, not as high, and it's far more expensive for an so the EUR 4 will actually go up probably?

No, it would not go up in the areas where you get electricity at maybe EUR 0.005, I mean, in the desert of North Africa.

Yes, sure. If you produce it domestically, then...

If you produce it domestically, it's so expensive that it will not be marketable.

I have the China figures now. In 2019, we had 344,000 passengers to and from China. And in 2024, they were 244,000.

Thank you for interesting presentation, and thank you for quite encouraging set of data. With respect to the overachievement of your original indicated numbers for the passenger traffic. Would it be fair to assume that the passenger-related revenues and in general results, they will be also higher. So that would imply that your guidance for 2024 would be too conservative and we can fairly assume that you will achieve higher than previously guided figures? Then my next question would be regarding the third runway. Is there any progress in that topic? Do you see any change or so with respect to the changing political landscape or how the project in general looks like? And then I know that you don't navigate us regarding the cargo, but I would be interested. What are your thoughts about cargo developments for 2025?

Let's start with the last topic. The cargo issue is difficult because one of the main drivers in 2024 was e-commerce. So obviously, there's quite a political element in there as well. We don't know yet if the regime from the -- I would expect that the regime that -- the regime of the European Union would probably tighten a bit. I mean if you look at Budapest cargo figures, they had a growth of 70% in 2024. And this is mainly related to the fact that all the shipments go through customs in Budapest and then they have distributed again in Europe. So there's -- there might be a downside effect from tighter regulation. Obviously, the economy is facing difficulties as well. So we would be happy with modest growth, and this is what we budgeted as well. So very modest growth in cargo as well. Your second question, the third runway, no major changes. We don't expect changes due to the new government. In the end, this is not a decision taken by government anymore. Vienna Airport Plc has to decide, and we still aim to take a decision in, I would say, in the first quarter or first half of 2026. Under the current regime, we have to decide until the end of '26. Maybe Günther, do you want to comment on the guidance?

In 2024, the question is open -- Vladimira, if you may repeat the question on results expectations for 2024?

Yes. As I said, you overachieved your targets regarding passenger traffic. So should we assume that proportionately, we should also expect better than guided figures for 2024?

Not proportionally, but in principle, yes.

But I meant proportionately is like passenger revenues, I know that not all of your revenues are passenger related. So the passenger-related revenues would be higher than originally expected, right?

Partly, yes. Yes.

So at the moment, no hand is raised. Are there any further questions? Any follow-up questions? It's not the case. Thanks, everyone. Yes. Henry, one follow-up.

Just a small one. Regarding your guidance, what kind of tax rate do you plan with -- for 2025? Is it the 24% statutory tax rate from Austria?

It should be 1% less because our corporate tax is going down to 23%. In Malta, it still remains at, I think, 33%.

35%.

35%, it's higher in Malta than in Austria. In Austria, it goes down by 1 percentage point.

Okay. [Operator Instructions] Otherwise, I thank everyone for participating in the conference call by showing the interest in Vienna Airport. First time on a Friday afternoon slot also -- on 3rd of March, it's a Monday, it's not Friday afternoon, it's a Monday afternoon. So then -- at the latest, we hear and see each other than on the 3rd of March. Have a good time till then and all the best.