April 24 2009
Dublin Airport Authority’s core airport business,
comprising Dublin, Cork and Shannon airports, is expected to be loss-making this
year, and if present trends continue, is facing significantly higher losses next
year, according to the DAA.
DAA chief executive Declan Collier said the
recession had led to a drop in passenger numbers and a fall in spending patterns
that was having a significant effect on the company’s business.
of this downturn is unprecedented and it is having a dramatic impact on travel
patterns throughout the world,” Mr Collier said. “Passenger traffic is falling
at our three airports in line with similar declines at airports throughout
Europe. With fewer people travelling, airlines are also cutting capacity.”
Collier was speaking as the DAA published its financial results for 2008, which
showed a 28% decline in the Group’s profits excluding exceptional items.
The DAA began to feel the impact of the recession in the final quarter of last
year, as passenger numbers at Dublin, Cork and Shannon fell marginally during
2008 – the first decline since the Gulf War in 1991.
In recent months
however, the situation has worsened significantly and the company is forecasting
an 11% drop in passenger numbers this year across its three Irish airports. Up
to 2011, the DAA expects minimal passenger growth, given the global economic
climate and the dramatic fall off in Irish GDP.
“The company is facing
a very difficult financial situation,” according to Mr Collier. “This is the
deepest recession since the 1930s and it is having a huge impact on the aviation
Due to the challenging business environment, the DAA has been
reviewing all aspects of its business, with a particular focus on costs,
including capital development and operating expenditure. Discussions will begin
shortly with DAA staff representatives on a major cost recovery programme.
The DAA has also reduced its investment plans at Dublin Airport for the
2010-2014 period by about 50% to less than €400 million to take
account of the current economic downturn. A number of major projects, including
the planned new second runway and additional aircraft parking areas, will be deferred. These
projects will be reactivated when appropriate circumstances dictate.
This scaled-down investment programme is effectively the minimum level of
spend required to keep the airport functioning safely and efficiently, coupled
with a small number of revenue generating projects. It includes an
overhaul of the existing runway, and the reconstruction of certain aircraft
parking stands and taxiways – some of which are 40 years old.
€1.2 billion Transforming Dublin Airport capital programme, which is already
providing much needed improvements in facilities for the travelling public, will
be completed over the next 18 months. Construction of Dublin Airport’s new
passenger terminal T2, which is the central element of the Transforming
programme, will be completed in February 2010, 12 weeks behind the original
As agreed with T2’s main tenant Aer Lingus, and to coincide with
airline scheduling and allow for efficient commissioning and testing, the new
terminal will open fully by November 2010. The construction of T2 is providing
almost 2,000 jobs on site and significant further employment offsite.
delivery of T2 will transform Ireland’s premier gateway and position the country
to take advantage of the economic upturn when it comes,” Mr Collier said. “We
believe the new terminal will stimulate traffic and help make Ireland a more
attractive destination for investment, and business and leisure
Earlier this week, the latest element in the Transforming Dublin
Airport programme was opened ahead of time and on budget when the €54 million
T1X facility welcomed its first passengers. The new facility improves the
passenger journey to Pier A and Pier D and also provides additional airside
retail and food and beverage choices for the travelling public. About 150 new
jobs will be created by the new retail and catering outlets.
Before the DAA
started construction of T2 in 2007, the Commission for Aviation Regulation (CAR)
which sets airport charges at Dublin Airport, signalled that it would remunerate
the new terminal and other projects when it made its next determination in
It is imperative that the regulator now sanctions a price
increase to cover the cost of the new facilities being delivered. The
regulator’s decision, in tandem with the DAA’s cost recovery programme, is
fundamental to the financial future of the company. The current passenger
charges at Dublin Airport are among the lowest of any major European airport and
have actually fallen by more than 30% in real terms over the past 20
Excluding exceptional items, the Group made profits of €78 million for
the year to 31 December 2008, a like-for-like decline of 28% from the previous
year. Total passenger numbers at Dublin, Cork and Shannon airports were
29.9 million, a decline of 0.6% on 2007.
Group turnover increased by 1% to
€631 million. Earnings before interest, taxation, depreciation and amortisation
(EBITDA) declined by 9% to €155 million. Gross borrowings were more than €1
billion at the year-end, as the Group raised debt to fund investments in better
Mr Collier said the DAA had “recorded a satisfactory performance during 2008
against the background of a much more difficult operating environment”. He added
that lower passenger numbers, weaker economic conditions, increased competition,
and lower disposable income all impacted upon the financial performance during
Dublin Airport had its busiest year on record in 2008, handling
almost 23.5 million passengers. This satisfactory performance was underpinned by
the steady growth enjoyed during the first six months of the year; however
passenger traffic declined during the second half.
Passenger volumes at Cork
Airport increased by 2.5% to almost 3.3 million during 2008, marking the 17th
consecutive year of growth at the airport. Terminal traffic at Shannon Airport,
which is the number of passengers who began or ended their journey at the
airport, declined by 10% to 2.8 million during the year. Overall passenger
volumes declined by 12% to almost 3.2 million.
Aer Rianta International
(ARI), which manages the Group’s overseas airport investments and international
airport retail operations, had another successful year as it contributed about
€25 million or 32% of Group profits (excluding exceptional items), a decrease of
13% compared to 2007. On a like-for-like basis, profits at ARI increased by 6%
during the year.
April 24, 2009
For further information contact:
Tel 353 1 8141897, 353 86 6090221
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