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Record Passenger Numbers Drive MAG Growth

03 December 2015

Record Passenger Numbers Drive MAG Growth

MAG, the UK’s leading airport group, today reports its interim unaudited half-year results, for the period 1st April 2015 – 30th September 2015.

Highlights

• Continued strong growth in EBITDA (+10.7% to £202.5m) driven by record passenger numbers (+5.7% to 29.7m) and new route development.

• MAG has experienced its most successful summer ever. London Stansted Airport added more passengers year-on-year (1.2m) than either Heathrow Airport (0.9m) or Gatwick Airport (1m), making it the fastest growing major airport in the UK. Manchester Airport experienced the busiest month in its 77 year history in August and continued this momentum into the autumn.

• The introduction of 31 new routes across the Group has helped to boost passenger numbers to record levels. The new routes include a host of exciting destinations across the globe, including new long haul routes announced from Manchester to Boston and Los Angeles and long haul flights started from Stansted to Las Vegas, Orlando and Cancun. New short haul routes from MAG airports include the Azores, Deauville, Castellon, Stuttgart and Porto.

• Increased revenues have also been driven by more passengers upgrading their airport experience with a ‘little slice of luxury’ and taking advantage of MAG’s award-winning Escape Lounges, Premium ‘Meet and Greet’ valet parking offers and fast track security clearance.

• Cargo income has grown strongly, up 5.7% year-on-year, benefitting from the continued growth in internet shopping, new route launches and also businesses diverting freight operations away from the Channel Tunnel due to the ongoing disruption. Cargo revenue at East Midlands Airport is up 8.8%.

• The recently launched MAG USA is making good progress, with its first premium ‘Escape Lounge’ opening at Minneapolis-St Paul International Airport next week. Today, MAG USA is pleased to announce that it has secured its second contract to build and operate an Escape Lounge in the USA, at Oakland Airport, California.

• MAG Property has agreed a number of significant deals across our airports; Mountpark Logistics has started construction of a 268,000 sq ft unit at Manchester Airport, to be completed by Q1 2016. In addition, a new high-quality 357 bed hotel is to be developed at London Stansted Airport in a £45 million development project, in a deal agreed with Urban & Civic. DHL has agreed an expansion of their UK logistics hub facility at East Midlands Airport, with a 244,000 sq ft cargo hub extension to their existing 450,000 sq ft facility.

• In 2015, MAG’s airports across the UK, at Manchester, London Stansted, East Midlands and Bournemouth, will contribute £5.6 billion in economic activity to UK PLC. This means that for every £1 the Group earned in revenue last year, economic activity worth another £7.58 will be generated in the wider economy as a result.

• Stansted is now handling 4.8 million more passengers than when MAG acquired the airport in early 2013, an increase of 27.4 per cent. The airport still has significant spare capacity and is well-placed to meet future growth in London's aviation demand, prior to any new runway being built.

• Group announces an Interim Dividend for the half year to September 2015 of £38.6m, a 25% year-on-year increase.

Key Financials

6 months ended 30 September 2015 (£m)

6 months ended 30 September 2014 (£m)

Change (%)

Year ended 31 March 2015

Passenger numbers (m) 29.7 28.1 5.7 48.5
Revenue 445.5 421.4 5.7 738.4
EBITDA 202.5 182.9 10.7 283.6
Operating profit 137.0 117.6 16.5 153.6
Cash flow from operations 180.2 174.4 3.3 309.5
Total dividend 38.6 31.0 24.5 93.0

Charlie Cornish, MAG CEO, said:

“The first half of the year has seen sustained growth; outperforming our challenging targets in many areas with record numbers of passengers using our airports.

“Our Group operating model continues to deliver benefits and support our airports in competing to attract new passengers and airlines.

“This has been our busiest summer ever and as we approach the milestone of handling 50 million passengers a year, we are responding to changes in the way people want to travel by giving them the opportunity to upgrade their airport experience and begin their journeys in style. Our offerings in this area are driving strong growth in our retail revenues.

“Our Escape Lounges, in particular, have been a real hit with passengers in the UK, and we are now exporting the concept to the USA, with our first lounge opening in Minneapolis-St Paul next week, which we expect will be the first of many across North America.

“I was also delighted to welcome The President of China, His Excellency Xi Jinping, to Manchester Airport in October as part of his State Visit to the United Kingdom. The President and the Prime Minister unveiled a new direct link from Manchester to Beijing, starting in Summer 2016, which will give the 100,000 passengers travelling each year between the two cities the convenience of direct scheduled services. The new route demonstrates the key role that the airport plays as a Global Gateway from the North.

“MAG airports continue to be true growth engines for their regions, employing thousands of people and generating significant economic activity in the wider economy.

“They also continue to offer choice and competition for passengers, providing the direct services that passengers want to see from their local airport. A network of competing airports across the country provides the best solution for customers and also contributes hugely to the growth of UK PLC. At a time when other airports are running out of capacity, our airports provide a solution to the UK’s aviation needs both now and in the future.

“We have confidence in the Group's long term prospects and I look forward to a successful second half of the year.”

Business Review

MAG has delivered sustained growth in the first six months of FY16, meeting or exceeding its financial targets and once more continuing double digit growth in EBITDA.

Group EBITDA rose by 10.7% to £202.5 million, driven by record passenger numbers and successful new route development – with Manchester and Stansted in particular both handling increasing numbers of passengers.

A continued focus on cost control and measures to improve operating performance has again contributed to growth in EBITDA, backed up by 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 through investment in infrastructure and development opportunities. Cash generated from operations increased by £5.8 million (+ 3.3%) to £180.2 million.

An Interim Dividend of £38.6 million will be paid in December 2015 for the half year to September 2015 which is as a result of the strong performance during the period and the Group’s confidence in trading during the rest of the financial year.

A record number of passengers are using Manchester Airport. August was the busiest month in the airport’s history and passenger numbers to September 2015 were 0.6 million (4.5%) up on the same period last year. The increase has been driven by new long haul routes as well as incumbent short haul carriers adding capacity through additional services and larger aircraft.

The ‘Manchester Airport Transformation Programme’ – a £1bn, 10-year plan – was unveiled and will deliver a significant phased upgrade of the facilities at the airport, ensuring that it continues to thrive as a national asset and play an even greater role as the ‘UK Global Gateway from the North’.

London Stansted Airport has also experienced impressive growth in passenger numbers – 1.2 million (10.6%) up year on year. During August, flights to and from Stansted were on average 93.5% full - a record load factor for the airport. Growth has been driven by the introduction of new destinations, coupled with increased frequency of flights on existing routes.

Stansted served over two million passengers for five consecutive months to September, the first time this has been achieved since 2008.
East Midlands Airport has performed slightly ahead of expectations, with cargo income up 8.8% as an increasing volume of express freight traffic takes advantage of the airport’s freight facilities and central location.

Passenger numbers in the period were down by 0.2 million (6.5%) year on year, driven by withdrawal of flights by Monarch. The airport has partially mitigated the impact of the withdrawal through improved load factors to other destinations. Bournemouth Airport performance was in line with the previous year.

Car parking has been an area of growth, as customers increasingly take advantage of advance booking offers and premium ‘Meet & Greet’ valet parking products. The Group’s status as one of the world’s biggest providers of valet parking has been consolidated by increased uptake of these products, driven by competitive pricing and more customers booking in advance.

Cargo income has benefitted from growth in e-commerce and internet shopping, with integrated express carriers expanding their operations and contributing to 8.8% growth in revenue at East Midlands, the biggest airport for dedicated cargo traffic in the UK.  The cargo business also benefited from customers choosing to divert their freight operations away from the ongoing disruption being experienced at the Channel Tunnel.

In retail, revenue is up despite challenging conditions in duty free retail. The Terminal Transformation Programme at Stansted is now nearing completion, delivering a significantly improved retail and food & beverage offering to passengers. The completion of the East Midlands Airport terminal upgrade has also boosted retail performance.

In the MAG Property division, revenue has remained broadly consistent with the prior year, reflecting a strong portfolio of tenants in MAG’s offices, hotels and cargo properties. Airport City Manchester, in which MAG holds a 50% investment, continues to see strong levels of interest and is expected to deliver significant returns in the next few years.