MAG, the UK’s leading airport group, today reports its interim unaudited half-year results, for the period 1st April 2016 – 30th September 2016.
• Continued strong growth in EBITDA (+6.6% to £215.9m) as new route development drives passenger numbers back to pre-recession levels at Manchester and London Stansted airports.
• MAG passenger numbers group-wide in the first six months were up 7.7% year-on-year to 32m.
• Manchester Airport is now serving more than 25m passengers per year for the first time in its history and London Stansted handling over 24m, breaking its previous record set in 2007.
• Increased revenues have also been driven by the completion of terminal renovations at London Stansted and East Midlands – with retail revenue across the Group up 11% on last year, compared with the first six months the previous year.
• MAG’s Cargo business continues to play a critical role in connecting Britain to the world. East Midlands, Stansted and Manchester airports are respectively the 2nd, 3rd and 4th busiest cargo airports in the UK, with East Midlands the UK’s principal airport for dedicated cargo flights. The inaugural MAG Trade Tracker, launched today, shows that in the first half of the year MAG’s airports exported goods to the USA worth £2.9bn, as well as goods worth at least £300m to each of China, Singapore and Qatar.
• In 2015-2016, activity at MAG’s airports across the UK, at Manchester, London Stansted, East Midlands and Bournemouth, contributed £6.2bn of economic value for UK PLC and for the communities in which our airports operate – that’s a 16% increase on the previous year and equates to £8 of economic activity for every £1 of revenue the Group generates.
• The start of a new direct service from Manchester to Beijing with Hainan Airlines in June 2016 has been a huge success, with load factors at 90% over the summer. The route is the only link to mainland China from the UK outside of London. Manchester Airport’s role as a connector to key global markets and engine of the Northern Powerhouse has been further reinforced by announcement of new non-stop services to San Francisco and Boston, and the start of new non-stop services to Houston and Singapore.
• In September, Jet2.com announced that London Stansted will be its first base in southern England, with flights starting in summer 2017, and British Airways commenced flights to popular summer and winter leisure destinations. It is clear that the airport will play an increasingly critical role in providing aviation capacity to London in the period before a new runway is built.
• There has also been further progress across MAG’s property portfolio. The £45m Hampton by Hilton hotel at Stansted celebrated an important topping-out milestone, and is on track to welcome guests in summer 2017. At Airport City Manchester, Amazon’s 654,000 sq ft fulfilment centre is now fully operational and employing almost 3,000 staff at peak times. ALPHA, a 130,000 sq ft logistics facility was forward sold to LaSalle Investment Management for £12.2 million, following the sale of the 37,413 sq ft DHL Global Logistics facility to HPPUT for £7.68 million.
• MAG USA now has three operational ‘Escape Lounges’ in the USA – at Minneapolis-St Paul, Oakland and Bradley airports, to add to MAG’s five popular Escape Lounges in the UK.
• Group announces an Interim Dividend for the half year to September 2016 of £47m, a 22% year-on-year increase.
Charlie Cornish, MAG CEO, said:
“During the first half of the financial year, the Group has continued to exceed its challenging financial targets and delivered good growth in both passenger numbers and revenue, driven by new route offerings and the completion of the significant terminal redevelopment at London Stansted.
“Our airports will continue to be amongst the most significant drivers of economic growth in their regions, as spare capacity enables them to grow more quickly than other airports. With the decision on Heathrow now made, Government must quickly commit to developing a new aviation policy that will maximise these opportunities for both the country as a whole and the regions that our airports serve.
“The short-term priority for Government must be to make the most of the runways we already have in the 10-15 year period before any new runway is ready and we are calling on them to support faster rail services to Stansted and reduce aviation taxes to encourage new connections from Manchester, particularly to key long haul markets.
“MAG’s business strategy has a long-term focus and is based on resilient foundations. This will put MAG in a strong position as the UK leaves the EU, a process which will highlight the importance of international connectivity to the UK's future.
“Our strategy to drive top-line growth, improve efficiency and broaden our mix of business will continue and in the coming year we will ensure that we remain focussed on delivering further profitable growth.
“As the country prepares to enter a new era, we will be working closely with Government and the rest of our industry to put in place a framework that will ensure the UK has the very best connections to the rest of the world - something that is fundamental building block for a modern, trading economy. At no point have the excellent links that this country’s airports provide been more vital to the nation’s future prosperity and economic growth.”
MAG has continued to deliver growth in the first six months of FY17, meeting or exceeding its financial targets and once more continuing year on year growth in EBITDA, driven by record passenger numbers.
Group EBITDA rose by 6.6% to £215.9m, driven by passenger numbers surpassing pre-recession levels at both Manchester and London Stansted through an exciting range of new long haul and short haul routes. MAG continues to deploy its operating model which is focused on achieving growth in passenger volumes, strong commercial performance and operational cost control. We are supporting this with continued investment in infrastructure with a focus on customer service.
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 £3.2m (+ 1.8%) to £183.4m.
An Interim Dividend of £47m will be paid in December 2016 for the half year to September 2016 which is 21.8% 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.
MAG’s inaugural trade tracker, launched today, demonstrates the significant and important role played by air cargo in helping the UK trade with non-EU nations. MAG is the only air cargo airport operator with geographic spread across the UK and operates the 2nd, 3rd and 4th busiest cargo airports in the country. In terms of tonnage handled In the first half of the year, MAG airports saw £6.1bn worth of goods being traded with the USA alone. The importance of China is also demonstrated by figures from the tracker and the country is now the third biggest export market at MAG’s airports and the second biggest import market, with £936m worth of trade to and from the world’s most populous nation in the first half of the year.
MAG Cargo’s income has continued to benefit from growth in e-commerce and internet shopping, with integrated express carriers expanding their operations and contributing to 3.8% growth in revenue. MAG’s pure cargo operation has also been bolstered by new direct flights launched by Etihad at East Midlands and London Stansted. MAG’s airports are ready to provide the capacity which will be demanded by freight operators as other airports in the South East fill up over the coming 10-15 years.
Manchester Airport continues to set records. 2016 was its busiest ever summer, which has pushed the number of passengers served in a year through the 25m barrier for the first time in its history. The airport is showing double-digit passenger growth every month, driven by an increasing list of destinations and airlines – both to business destinations and to holiday favourites. Its EBITDA for the first half of the year is up 10% as a result.
London Stansted Airport has also experienced strong growth in passenger numbers – up 6.4% year on year. Since MAG acquired the airport in 2013, it has gained over 7 million passengers per year, and MAG’s terminal transformation programme, now complete, has significantly improved commercial performance in the terminal. EBITDA at London Stansted increased 4.6%.
East Midlands Airport has performed slightly ahead of expectations, with passenger numbers up 6.9% due to improved load factors and additional capacity added by Ryanair and Jet2.com in particular. The airport is now fully recovered from the withdrawal of Monarch from the previous year and is set for growth in the year ahead.
In retail, revenue is up even though we have seen continued challenging conditions in duty free retail. Despite changes in buying habits, as well as a shift in holiday traffic from Middle Eastern and North African destinations to lower yielding EU routes, income is up 11% as a result of investment in new retail offers across our airports, and in particular the completion of the terminal transformation programme at London Stansted
In the MAG Property division, progress and delivery has continued across the portfolio. The construction of the largest Hampton by Hilton hotel in Europe celebrated an important topping-out milestone, with the £45m, 357-bed hotel on track to welcome guests in summer 2017 at London Stansted Airport. At Airport City Manchester, within Manchester’s Enterprise Zone, Amazon’s 654,000 sqft fulfilment centre is now fully operational and employing almost 3,000 staff at peak times. ALPHA, a 130,000 sqft logistics facility was forward sold to LaSalle Investment Management for £12.2 million, following the sale of the 37,413 sqft DHL Global Logistics facility to HPPUT for £7.68 million.
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