Where everything
takes off
Key Highlights 2014
1
Message from the CEO
2014 was the best year ever for Budapest Airport in terms
March connecting Bu-
of passenger traffic growth and improvement of service
dapest with Baku and
quality as well. This short sentence speaks for itself, but
further to the East with
it does not reflect the daily effort made by our people and
Central Asia and the Far
our partners to turn Budapest Airport into the best
East.
airport in the CEE region. In fact this has also happened
as Budapest Airport won the prestigious Skytrax ”Best
The impressive results and
Airport in Eastern Europe” title in 2014 and also 2015
improvements mentioned
awarded on the basis of feedback from our passengers.
above may also have contributed to the successful
These acknowledgements do not come by chance –
completion of the refinancing
they reflect long years of focused performance. Of
of the loan facilities of Buda-
course, many other factors lie behind the record passen-
pest Airport which has been
ger traffic of 9 155 961 (7.5 % growth over 2013) and 86
completed in September
682 Air Traffic Movements. The arrival of new airlines and
2014 and has won a series of
the opening of many new destinations marked 2014 for
financial awards in the category
us at the airport and by the same token for the Hungar-
of European transport-related fi-
ian tourism industry. It would be highly unjust to pick out
nancing deals – a clear indicator
just a few as there were lots of newcomers and our
of the stability, transparency, and
existing partners have contributed to this growth too.
the good prospects of the airport
operating company. We are de- termined to stay on
Air Serbia was amongst the first with the start of daily
track and follow the road leading to new achievements.
service between Belgrade and Budapest, a route that
was missing since 2012. Our largest airport partner Wizz
There is no better way to really see our performance than
Air brought an additional aircraft (their 8th) to increase
coming to Budapest as a passenger – and you are in-
frequency on high-density routes like London Luton,
deed more than welcome to do so!
Moscow Vnukovo or Istanbul Sabiha Gökcen Airport.
Turkish carrier Pegasus Airlines also launched its flight
between Budapest and Istanbul as of mid-July, and
Transavia France started its service to Paris Orly. By the
end of October we had regular wide-body flights again
Jost Lammers,
with the arrival of Emirates of Dubai. Daily flights by their
CEO Budapest Airport
A 330-200 aircraft from the Persian Gulf region represent another turning point in the history of Budapest
Airport.
2014 was marked not only by increasing passenger
traffic but also by the arrival of a new cargo service
provider from the beginning of the year. With the
strongly increasing business ties of Hungary and the
government’s Opening to the East policy, the arrival
of Azerbaijan’s Silk Way West airlines to Budapest came
as a natural development. The first Boeing 767-300F
freighter aircraft was greeted at the airport in early
2
3
Highlights of 2014
October
Budapest Airport created a strategic partnership with Future
FM regarding its Airport Facility Management (AFM) subsidiary.
March
The airport sold 75 percent of its share in AFM to Hungarian
A new Azerbaijani cargo airline Silk Way
Future FM – a dedicated facility management provider. The new
West starts regular cargo flights between
owner takes over operation as of 1st January 2015.
Baku and Budapest with Boeing 767-
January
300F aircraft. The Azeri carrier operates
The first direct Dubai-Budapest daily flight of Emirates was cel-
regular flights between China, the Far
ebrated at the end of the month. After long years of preparations,
November
East and Central Asia and connects
May
July
the Gulf carrier started daily service to Budapest with an Airbus
A brand new inflatable hangar was
new flight is
erected for Lufthansa Technik Buda-
tion to
pest at the airport. The new facility
and
enables Lufthansa Technik to service
A brand new 10-kV third power supply
these areas to Europe
Budapest Airport starts major refurbish-
Budapest Airport finished the reconstruc-
A 330 wide body jet. The
line and a transformer sub-station was
through Buda-
ment works on the airfield including both
tion of the General Aviation Terminal
not only a connec-
inaugurated in the town of Vecsés
pest, Frank-
runways. The total cost of the project is
(GAT) by the end of July and together
the Persian Gulf
and
EUR 2.7 million and the project was com-
with Celebi Ground Handling opened a
the
tion connecting the airport to a third, in-
London .
pleted before the main summer tourist
new business lounge in it. The schedule
East but
months of maintenance. The EUR 2
dependent power supply line increas-
By
the
season began. Both runway surfaces and
was tight since all the works had to be
also signifi-
million project helped Lufthansa
es operational safety of the airport and
end
of
lighting systems were repaired, and, as a
completed in time before the Formula
cantly cuts
Technik Budapest this winter to
adds to the two existing electric power
the year
consequence major reconstruction works
1 team arrivals at the GAT by the end of
flight time
contract 12 Norwegian Boeing 737-
are not necessary during the next ten
July.
between
800 aircraft to be refurbished with an
Budapest and the
in-flight Wi-Fi
neighboring the airport. The new sta-
furt
supplies from Budapest city.
Silk
Way
West changed
years.
its aircraft to larger
system.
Australia.
Highlights
increased market demand.
April
BUD recognizes the performance of key
A new airline,
airline and airport partners in 2013 for their
Air Serbia
Budapest Airport hosted the Freight-
role in keeping the airport on the right
was cele-
ers and Belly Cargo World Conference
track. This is reflected not only in increas-
brated
in the Hungarian Capital. Conference
ing passenger numbers but also in con-
on
the
delegates could convince themselves
stantly increasing quality standards of
first day of
of the logistical advantages of the air-
airport service recognized in the quar-
the month
port and the development potential of
terly ASQ survey results.
starting a daily
service between
the capital of Serbia and
4
more aircraft during the winter peak
Far East, China and
Boeing 747-400 due to
February
Middle
September
June
August
Budapest Airport with regards to air
Buda-
Budapest Airport
cargo.
cele-
started a commercial campaign series to
December
Hungary. After major reorganization and
brated the 10th anniversary of Wizz Air
promote Hungarian products in Sky-
The 9 millionth passenger was cele-
involvement of professional investor
operations in Hungary with signing a
Court. The so-called trinity promotion
brated on 17th December in SkyCourt
Etihad to Air Serbia the national carrier
lease agreement to build a line mainte-
where the airport, the Hungarian produc-
with flowers and a brass band orches-
started flights to Belgrade with an ATR-42
nance hangar for the low cost carrier. Wizz
er and Heinemann Duty Free join forces
tra. The lucky winner was a young
aircraft. This new service offers a series of
Air will take over the new facility in 2015.
proved to be extremely successful and
Hungarian family arriving with Brus-
transfer opportunities to important des-
Wizz Air has increased its fleet to eight air-
has led to double-digit increases in sales
sels Airlines from Brussels. This event
tinations in the Balkans.
craft in Budapest in June 2014.
due to tasting and discounted price pro-
also marked that Budapest Airport is
motions in the given month. Different
in for a record-breaking year in 2014.
Hungarian wines, spirits and sweets were
By the end of the year the passenger
promoted every month until November.
number was best ever: 9,155,961.
pest Airport
5
Airport completes award-winning refinancing
Together with its financial advisor, Rothschild, BUD
approached over 65 financial institutions in the market-
In spite of difficult conditions, Budapest Airport suc-
point of concern for all involved and many lenders
testing phase drilling it down to a final group of 19
cessfully achieved its market-based refinancing at the
were passing on the Budapest Airport loan to their
senior and junior lenders. Headline terms for the
end of September 2014. Budapest Airport could refi-
restructuring teams,” explained Ingo Ludwig. Next
market-based refinancing were:
nance all of its existing bank loans with new and exist-
to the high leverage, the refinancing process was
ing banks in the amount of EUR 1.1 billion senior debt and
also burdened by a long-term interest rate swap with
EUR 300 million junior debt. The refinancing was well
a negative market value of around EUR 250 million.
maturing at the end of 2019
• EUR 300 million of 6.25 year junior debt, maturing at
oversubscribed and the new loan agreements run for a
period of more than five years.
• EUR 1.05 billion of 5.25 year senior bank facilities,
The financial and economic crisis had hit Hungary
the end of 2020 and part of the junior debt originat-
hard. The country missed its original ambitious
ing from shareholders
“This is really a great success for the Airport,” said
growth targets and on top of that in 2009 the Hun-
• Extension of EUR 1.1 billion interest rate swap arrange-
Ingo Ludwig, Chief Financial Officer and Deputy
garian GDP decreased by 6.7%. This also translated
ments, including a EUR 770 million off-market swap,
CEO of the Airport and responsible for the refinanc-
into more or less zero passenger growth for the air-
a EUR 132 million reverse swap and a new EUR 142
ing project. “Yet, when we started the project in late
port from 2007 to 2012 and, while the airport was
million on-market swap
2012, it seemed anything but certain that the exist-
nicely recovering in 2011, it was hit hard again by the
ing facilities could be refinanced” he adds, when re-
collapse of national airline Malév in February 2012.
The stretched leverage refinancing represented
membering initial considerations to refinance the
These factors caused many lenders to lose confi-
senior leverage of 7.2 times EBITDA and 9.2 times
loan package that was taken out in 2007 to finance
dence and become more cautious. Special bank tax-
incorporating the junior debt. The lending consor-
the acquisition of the airport from the British BAA
es and the forced currency exchange for loans made
tium includes existing lenders rolling or upsizing
which had taken it over from the Hungarian govern-
in Swiss Francs to Forint at a fixed rate implied huge
their participation in the senior loan like SMBC,
ment only one year before. Completed just before
losses for the banks, which added to the negative
Unicredit, Crédit Agricole, HSH Nordbank and ING
the 2008 financial crisis, the transaction was distin-
sentiment. Nevertheless, management worked in-
as well as new senior lenders such as RBC, Natixis
gration of a new holding company into the existing
guished by high leverage (with debt to EBITDA of
tensively during this period to mitigate the lack of
and Deutsche Bank. Out of the group of senior lend-
shareholder structure of Budapest Airport. The shares
more than 16 times) and optimistic passenger
passenger growth and collapse of Malév, substan-
ers several lenders acted also as swap counter par-
of the new company were pledged to the new Senior
growth projections. At the end of 2012 the leverage
tially improving the profitability and cash flow gen-
ties. On the junior loan key investors were Park
B lenders.
was still 11 times, while the market level for financ-
eration of the company by increasing EBITDA from
Square, Macquarie and Deutsche Bank, who partic-
ing of comparable assets was between five to seven
EUR 83 million in 2007 to EUR 115 million in 2012
ipated both in the senior and junior financing as well
A key element of the successful refinancing was the
times at this point. “This overleverage was a major
(+39%).
as the swap.
cooperation with the Hungarian state. Budapest Airport management approached the state-owned hold-
“The successful refinancing is a great success for the airport and
provides a stable platform for future growth”
While preparing for the refinancing, it became
to consider it as part of an overall market-based refi-
quickly evident through discussions with the lend-
nancing of the existing facilities. This structured solu-
ers that the thirty-strong bank consortium was quite
tion enabled BUD to:
polarized. Ingo Ludwig describes it as “While half of
ing company MNV quite early in the process and held
by winning a total of four internationally recognized
various meetings with MNV and the ministries to keep
deal of the year awards by specialist finance maga-
them in the loop. Budapest Airport ensured that the
zines Project Finance International, Global Transport
financing structure was in line with the privatization
Finance, IJ Global as well as emeafinance.
contracts, particularly with respect to leverage and
interest service ratios. The Hungarian state was very
As is typical with diversified financing structures, the
cooperative throughout the lengthy process and in
rights and obligations of each specific group were
the end approved the transaction.
the bank consortium liked the asset and was very
• Provide an exit for some existing senior lenders while
integrated into the financing contracts and the in-
supportive of a refinancing, the other half was very
allowing others to participate in the new financing
tercreditor agreement. Budapest Airport, supported
“The successful and oversubscribed refinancing is of
keen to exit rather sooner than later.” Many banks in
• Significantly delever the company allowing BUD to
by their financial advisor Rothschild, worked with a
course a great acknowledgement of our work and the
the latter group had effectively left the project and in-
achieve a market-based refinancing of the senior debt
total of six different law firms. One key challenge
trust that the lenders place in the management of
frastructure financing market for good, thus making
• Restructure, roll and partially break the existing inter-
was the implementation of a completely new security
Budapest Airport,” summarized Ingo Ludwig. “But
structure that considers the difference in rankings be-
more importantly the new financing provide us with
discussions with the consortium quite challenging. As
6
The refinancing was also recognized by the industry
est rate swaps
negotiations continued into late 2013, BUD’s trading
• Get consent of the Hungarian State and an extension
tween Senior A and Senior B lenders. This requirement,
a stable platform to further drive the growth and
Ingo Ludwig (Chief Financial
continued to improve while at the same time the ju-
of the direct agreement between the Hungarian State
from the lenders themselves, was fulfilled via the inte-
profitability of the business.”
Officer and Deputy CEO)
nior debt market developed favorably enabling BUD
and the lenders
7
Report 2014
Aviation business
Passengers
The annual passenger traffic hit a record
high of 9.2 million passengers in 2014,
2014
2013
2012
2011
9,155,961
8,520,880
8,504,020
8,920,653
which exceeded the 2013 figure by 7.5%.
Aircraft Movements
After the market consolidation during the
past 2 years, 2014 saw a significant expansion of airline capacity and passenger traffic. In comparison with Budapest
2014
2013
2012
2011
86,682
83,830
87,560
109,949
2014
2013
2012
2011
89,987
92,112
93,123
106,595
Airport’s 7.5% traffic growth the EU av-
Cargo Volume
erage growth was only 5.3% in 2014.
The Hungarian capital airport handled
a total of 9,155,961 departing and arriving passengers which was even high-
Business Unit Property
er than in the last year of Malév’ operation. However, the
and Vueling. In addition, existing airlines’ development
aircraft movements, i.e. the number of take offs and land-
was driven by either frequency or capacity increases or
ings, did not show a similar recovery as it remained at the
launch of new routes. The most important development
Property revenues increased by 2.9% in 2014 driven
level of 86,682 movements, which is still an improvement
was demonstrated by Wizz Air with their 8th based aircraft
by new tenants as well as new facilities built and
Air traffic performance
compared with 2013 (+3.4%) but remained far below 2011
starting to operate from April 2014 and providing addition-
rented at the airport. These include the new DHL
Airlines: 38 scheduled airlines operated in 2014
movements by 26.8%. This confirms the trend of airlines’
al capacity either to new destinations such as Kutaisi, and
logistics center (new facility and new tenant) as
efforts to increase efficiency via load factor improve-
Alicante or increasing frequencies on existing routes such
well as a spare parts facility and inflatable hangar
ments and deploying larger aircraft.
as Barcelona, Moscow or Istanbul. In the meantime many
for Lufthansa Technik (new facilities). The DHL logis-
7 Low-cost
other airlines increased traffic e.g. Norwegian (new flight
tics center is also the first development of the Airport
31 Full-service
The above record traffic was achieved by attracting new
to London Gatwick), Turkish Airlines (frequency increase),
Business Park on the southern edge of the airport.
airlines to BUD, such as Emirates flying to Dubai from
Jet2.com (new flight to Leeds) and El-Al through the
The new building comprises 3,000 square meters
October 2014 or new flights by Pegasus, Transavia France
launch of its own low-cost subsidiary UP.
of office space, 7,800 square meters of warehouse
7
31
space and 5,700 square meters of maneuvering
space.
Consumer and landside business
Destinations: 88
88 airports
74 cities
35 countries
Revenues in the consumer and landside business
improved by 2.7% compared with 2014. The consumer business continued to benefit from the increased
88
74
35
2014
2014
retail and food & beverage offering after completion
of SkyCourt and the refurbishment of the terminal
areas T2A and T2B in 2012. Altogether, the airport
currently offers more than 50 stores and catering
2014
outlets on a total area of around 6,300 square meters.
In 2014 additional new outlets were opened, such
as Victoria`s Secret and Vodafone. 2014 saw the first
full year of operation of the improved curbside and car
park access system as well as the online booking system contributing to a substantial increase of landside
business revenues.
8
9
Financial Highlights
Consolidated statement of financial position
(in EUR `000)
Consolidated income statement
31 December 2014
31 December 2013
(in EUR `000)
for the period ended 31 December 2014
for the period ended 31 December 2013
265,658
246,818
(72,711)
(64,741)
(6,231)
(7,683)
Employee benefit expense
(19,038)
(17,936)
Depreciation and amortization
(18,681)
(20,594)
Other income, costs and expenses
(25,325)
(25,929)
Operating profit
123,672
109,935
Finance income
527
1,066
ASSETS
Revenue
Non-current assets
Raw materials and consumables
Property, plant and equipment
used
27,911
32,663
2,176,314
2,169,931
49,091
-
50,408
62,076
2,303,928
2,275,404
1,710
2,496
Trade receivables
17,400
20,163
Finance costs
(180,272)
(121,249)
Cash and cash equivalents
112,241
131,285
Loss before income tax
(56,073)
(10,248)
8,601
8,106
(31,917)
(8,315)
139,952
162,050
(87,990)
(18,563)
2,443,880
2,437,454
28,311
159,684
2014
2013
Aviation revenues
130,171
121,721
Fuel supply revenues
75,730
66,503
52,169
51,657
7,588
6,937
265,658
246,818
Intangible assets
Derivative financial instruments
Other non-current assets
Total non-current assets
Current assets
Inventories
Other receivables
Total current assets
Total assets
EQUITY
Utility expenses
Income tax expense
Loss for the period
Income statement notes
LIABILITIES
Revenues (in EUR `000)
Non-current liabilities
Borrowings
1,968,503
672,330
256,698
200,170
Other non-current liabilities
82,163
74,767
Total non-current liabilities
2,307,364
947,267
Derivative financial instruments
Other
Current liabilities
Trade payables
Borrowings
Derivative financial instruments
Other current assets
Total current liabilities
Total liabilities
Total equity and liabilities
Rental revenues
8,769
8,339
73,432
1,278,753
-
15,985
26,004
27,426
108,205
1,330,503
2,415,569
2,277,770
2,443,880
2,437,454
Total
The reason of the increase in aviation revenues is increased flight and passenger numbers in 2014.
Statement of financial position notes
Borrowings
The Group refinanced its bank loans with expiration date of end of 2014 on 25 September 2014.
As of 31 December 2014 the total amount of borrowings (both short and long term) consisted of EUR 765 million
shareholder loans, EUR 1,100 million bank borrowings and EUR 177 million other borrowings.
10
11
Raw materials and consumables used (in EUR `000)
2014
2013
(70,542)
(62,025)
Other
(2,169)
(2,716)
Total
(72,711)
(64,741)
Cost of fuel sale
Outlook for 2015
Budapest Airport foresees for 2015 the traffic to reach
of Emirates, Wizz Air basing its ninth aircraft, and new
10.1 million (+10.7 percent), with a moderate growth of
airlines, for instance Iberia, Air Transat and Air China.
movements by 5.7 percent. This growth will be driven
Frequency increases are also expected (Pegasus to
among other things by the first full year of operation
Istanbul, Transavia France to Paris).
Finance costs
Top 10
airlines
The main reason of the increase in the accounted borrowing costs related to the refinancing of the senior
bank borrowings of the Group.
Income tax expense (in EUR `000)
2014
2013
(4,358)
(4,575)
Deferred tax
(27,559)
(3,740)
Total
(31,917)
(8,315)
Current tax
The main reason of the increase in income tax expense is that in 2014 the Group realized a one-off effect on the
revaluation of the deferred taxes due to the tax law change.
Key figures
Key figures
2014
2013
265,658
246,818
Revenue excluding fuel supply (EUR `000)
189,928
180,315
EBITDA (EUR m)
142,583
130,709
10.9
19.1
Debt (EUR m)
1,358
1,282
Cash (EUR m)
112
131
1,246
1,151
Revenue (EUR `000)
Capex (EUR m)
Net debt (EUR m)
12
Wizz Air
Ryanair
Lufthansa
easyJet
KLM
Norwegian
British Airways
Air France
Germanwings
Travel Service
Top 10
destinations
London
Paris
Brussels
Frankfurt
Amsterdam
Munich
Istanbul
Rome
Moscow
Milan
Top Ten Ranking of 2014
13
Budapest Airport at a glance
Budapest Airport is Hungary’s largest international airport.
Operations
Terms of concession
100 percent privatization, duration until 2080, contract concluded
22 December 2005
Ownership structure
Ownership structure: 52.666 % AviAlliance, 22.167 % Malton Investment
Pte Ltd, 20.167 % Caisse de dépôt et placement du Québec, 5 % Kf W
IPEX-Bank
Technical Data
Total area of airport
1,515 hectares
Location
Budapest Ferihegy, 16 kilometers south-east of Budapest’s city center
Geographical coordinates
47° 26’ 22” N, 19° 15’ 43” O
Airport codes
BUD (IATA), LHBP (ICAO)
Terminal 1
T1 (opened 1950, reconstructed 2005, but temporarily closed)
Terminal 2
2A (opened 1985)
2B (opened 1998)
SkyCourt (opened 2011 between 2A and 2B, the new large Terminal 2)
Runways
Runway 1 (13R-31L) 3,010 m Runway 2 (13L-31R) 3,707 m
Passengers (in million)
Aircraft Movements
Cargo Volume (in tons)
9.2
8.5
86,682
83,830
89,987
92,112
267
248
2014
2013
2014
2013
2014
2013
2014
2013
Publisher: Budapest Airport Zrt., Communication, Tel.: + 36 1 296-6753, E-mail: mihaly.hardy@bud.hu
14
Revenues (in EUR m incl. fueling)
Status: October 2015