Second Quarter 2024: Weak improvement in results, but strengthened framework conditions are essential

The Group's revenues (adjusted for other income) in the first half of 2024 amounted to NOK 5,635 million, an increase of 6.4 percent due to passenger development. The Group's operating costs (adjusted for other expenses) increased by 3.5 percent during the same period. Increased personnel costs are mainly related to ordinary wage settlements, which have been in line with the industry's development. Other operating costs were relatively stable compared to the same period in 2023, despite challenging winter operations in 2024.

-We are satisfied with the operations. Avinor is working long-term and continuously to reduce costs in ongoing operations. At the same time, a high proportion of the Group's cost base is relatively fixed and necessary to meet the requirements for safe and stable operations as assumed in the societal mission. Revenue development remains the biggest challenge, says Abraham Foss.

In May, the Group issued bonds totalling EUR 500 million (NOK 5.8 billion). The increased debt will be used to refinance debt maturing in 2025 and partially finance ongoing projects. For the first half of 2024, the Group had a net profit of NOK 51 million (a loss of NOK 146 million in the first half of 2023). The second quarter showed a profit of NOK 427 million (a profit of NOK 190.7 million in the second quarter of 2023).

Compared to the previous year, the Group has a positive development in underlying operating margin, both from increased operating income and lower operating costs per passenger, but fundamentally, the operating margin is too weak to provide the necessary future return on invested capital. This is related to the Group's financial framework conditions, which mainly involve insufficient revenues to maintain daily safe and stable operations, fulfil societal tasks, and finance Avinor's large investment projects.

Good operations and progress in major projects

While the first quarter of 2024 was characterized by winter operations, with challenging weather conditions resulting in some airports being closed for air traffic for shorter periods, the second quarter has been characterized by buildup towards the summer season for airlines with high activity at the airports. Operations in the quarter have generally been good. When Oslo Airport was named the best European airport in the category of 25-40 million passengers by the industry organization Airports Council International Europe (ACI Europe) in early July, the airport's ability to deliver good operations and punctuality was highlighted, among other things.

Ongoing technology projects have made significant progress during the quarter. The same applies to the major construction projects, new airports in Bodø and Mo i Rana, and a new baggage facility at Oslo Airport.

Passenger growth driven by foreigners

In the first half of 2024, 24.3 million passengers travelled through Avinor's airports, an increase of 4.6 percent compared to the same period in 2023. For the second quarter, passenger growth was 5.6 percent.

The airlines' summer program runs between March 31 and October 26 and entails an increased number of flight movements and traffic growth in the second and third quarters. Much of the traffic growth is due to increased foreign passenger traffic to Norway, driven in part by favourable exchange rates for foreigners visiting Norway. Northern Norway, and Tromsø in particular, is a driver of increased traffic from abroad. During 2023 and 2024 (including winter routes starting up), 14 new routes to Tromsø from various places in Europe have been opened.

Compared to the first half of 2023, passenger growth for international traffic has been 9.4 percent, while domestic traffic has increased by 1.8 percent. For the second quarter, passenger growth for international traffic is 9.3 percent, while domestic traffic had a decrease of 2.7 percent compared to the same quarter in 2023.

Norway as an international test arena for zero and low emission aircraft

In the work on the National Transport Plan (NTP) 2025-2036, Avinor has identified the need for infrastructure facilitation for the introduction of zero and low emission aircraft at the airports. The government prioritizes a budget of NOK 1 billion in the National Transport Plan 2025-2036 to accelerate the transition to zero and low emission aviation. To strengthen the professional and regulatory facilitation, and the development of necessary infrastructure at the airports, increased resources are therefore prioritized for the Civil Aviation Authority and Avinor as part of the budget.

In April, the Civil Aviation Authority and Avinor entered into a cooperation agreement to establish Norway as an international test arena with the aim of reducing barriers for testing.