Third Quarter 2024: Framework conditions providing sufficient room for manoeuvre

In a letter dated November 20, 2024, "Determination of airport charges for Avinor's airports," the Ministry of Transport confirms that their multi-year framework decision for airport charges aims to avoid write-downs of Avinor's assets, and that they are aware that this requires an annual real fee increase of approximately NOK 1.7 billion over the next three to five years, compared to the current situation. The amount includes the proposal in the 2025 state budget to reduce and redistribute the air passenger tax by NOK 600 million, from the state to Avinor, which will result in an unchanged tax burden for airlines.

-Avinor's assessment is that these measures will provide sufficient room for manoeuvre to achieve sustainable financial framework conditions given today's traffic. At the same time, this will maintain safe and stable operation of airports in Norway and the national air navigation service as assumed in the societal mission, says Abraham Foss, CEO of Avinor.

The Avinor Group has been in a challenging financial situation since the pandemic. This is due to several factors, such as the fact that fee revenues for the use of airports during the pandemic and up to 2024 were not indexed in favour of airlines, duty-free quotas were cut twice, and the traffic recovery after the pandemic years has taken longer than anticipated. Overall, this has resulted in weaker growth in both traffic revenues and commercial revenues for the group.

-In addition, the Avinor Group has been assigned several societal tasks without corresponding cost coverage and the implementation of several large investments that are partially to be covered by the group. Measures to improve revenues and reduce costs have been a high priority at Avinor in recent years. There has been ongoing dialogue with the owner for a long time about ensuring sustainable financial framework conditions for Avinor, says Foss.

Passenger growth increases revenues

The group's total operating revenues for January – September 2024 amounted to NOK 9,080 million, an increase of NOK 363 million compared to the same period in 2023. The group's total operating costs increased in the same period by NOK 107 million to NOK 5,905 million. The result for the first nine months of 2024 includes other items corresponding to a net cost reduction of NOK 92 million compared to a net cost reduction of NOK 162 million for the same period in 2023.

Adjusted revenue growth in 2024 compared to 2023 was 6.7 percent for the third quarter alone and 6.5 percent accumulated per September. This is entirely related to higher passenger volumes and the number of flight movements. During the first nine months of 2023, the group had other revenues of NOK 215 million, mainly from insurance settlements for the construction of a new parking garage at Stavanger Airport, compared to NOK 24 million in 2024.

Adjusted operating costs in 2024, compared to 2023, increased by 5.2 percent for the third quarter alone and 4.0 percent accumulated per September. This is mainly related to wage settlements. The group's general wage growth has been in line with the front-line model. Other operating costs have been relatively stable.

Avinor continuously works to optimize costs in ongoing operations. At the same time, a high proportion of the group's cost base is relatively fixed and necessary to maintain safe and stable operations as assumed in the societal mission. The group's adjusted EBITDA for the period January – September 2024 was NOK 3,084 million, an increase of NOK 326 million compared to the same period in 2023.

International traffic continues to drive passenger growth

38.9 million passengers travelled through Avinor's airports during the first nine months of 2024, an increase of 4.5 percent compared to the same period in 2023. For the third quarter alone, 14.6 million passengers travelled through the airports, an increase of 4.2 percent compared to the third quarter of 2023. It is international traffic that drives passenger growth, accounting for 43 percent of passenger traffic in the period January – September 2024, up from 42 percent in the same period in 2023. Passenger growth is 1 percent higher than the forecast so far this year.

For January - September 2024, passenger growth (compared to the same period in 2023) was 8.7 percent for international traffic and 1.6 percent for domestic traffic. For the third quarter alone, passenger growth for international traffic was 7.7 percent, while domestic traffic saw an increase of 1.3 percent.

EasyJet is establishing itself in Norway this winter with 13 routes from Tromsø and Oslo. Thai Airways has strengthened Norway's connectivity to Asia by re-establishing its route to Bangkok with daily departures this summer. This is important for business, but also for tourism in and out of Norway. Norwegian Group has increased its market share in the Norwegian market from 36 percent to 50 percent in the first three quarters through the acquisition of Widerøe (13 percent) and international expansion.

Avinor expects low, stable growth in traffic development towards 2030, with an estimated number of passengers at 54.9 million. The estimate considers the effects of increased airport charges in the coming years. International passenger traffic to Norway is expected to continue to grow well, while domestic traffic is expected to stabilize with low growth.

Avinor's climate goals approved by the Science Based Targets initiative (SBTi)

Avinor has followed up on the expectations in the ownership report and has set science-based climate targets. Science-based climate targets are defined as goals that are in line with the Paris Agreement.

-Reducing greenhouse gas emissions is central to Avinor's strategy. Air traffic is the dominant source of emissions from the aviation industry, but all actors must take responsibility for systematic emission reductions, says Abraham Foss.

Avinor has set climate goals in line with the Paris Agreement and has committed to reducing absolute greenhouse gas (GHG) emissions in scope 1 and 2 (own emissions and emissions from purchased energy) by 42 percent by 2030 compared to 2022, while absolute emissions in scope 1, 2, and 3 (emissions related to all goods and services the company buys and sells) will be reduced by 90 percent by 2050.