The pandemic weakens Avinor's earnings
The corona crisis has sharply weakened Avinor's results and solvency. Grants from the Norwegian government ensures continued operation.
The demand for national and international flights is greatly reduced due to the measures to limit the spread of the Covid-19 infection. The airlines have adjusted route production and, like Avinor, implemented redundancies.
To help the airlines financially, the government has suspended large parts of Avinor's airport charges in the period from 13 March to 31 October 2020. The total loss of airport charges and commercial revenues for Avinor is estimated at NOK 7 to 8 billion for the financial year 2020.
After the injection of capital from the owner, the Norwegian Ministry of Transport and Communications, the Avinor Grouphad a profit after tax of minus NOK 107 million in the first half of 2020. Air traffic during this time, measured by the number of passengers travelling through Avinor’s airports, was reduced by 55.2 percent compared with the corresponding period in 2019. In the second quarter alone, the decrease was 85.4 percent.
Grants affect the quarterly figures
On 19 June 2020, the Norwegian Parliament decided to give Avinor grants of up to NOK 4,270 million and a one-year deferral of repayments on the company’s state loan.
In addition, a dividend exemption was granted for 2019. Subsidies from the owner of NOK 2,170 million were paid out on 30 June 2020, thus affecting the quarterly figures to a large extent.
“The grant from the owner is a crucial contribution to maintaining the financial basis for Avinor's business,” Dag Falk-Petersen, CEO, said.
Cost reductions implemented
Measures to secure Avinor's financial status in the longer term have been implemented, and further measures are being planned. These efforts will help to ensure that both the group’s operations and the implementation of prioritized planned investment projects can be continued. By the end of the second quarter of 2020 a total of 509 employees were laid off, fully or partially.
Due to the long-term effects of the virus outbreak, the pandemic has been assessed as an impairment indicator for the group'scash-generating units, airport operations and aviation security.
“The main focus for Avinor now is to ensure safe and stable operations and preparedness during the corona pandemic, as well as introduce infection control measures that make travel safe,” Falk-Petersen said.
Operations and infrastructure are adapted to the reduced traffic volume, in order to minimize the exposure of infection on Avinor employees and have reserves that can replace infected or quarantined crew.
“The goal is a profitable Avinor after the effects of the pandemic are over, so that we can continue to deliver safe and stable operations and ensure a good airport offer throughout the country,” Falk-Petersen said.
Reduced investments and new assignments
This year's investments have been reduced by NOK 1 billion compared to the original plan. Avinor will continue to expand the terminal in Tromsø, build helicopter terminals in Kristiansund and Hammerfest, extend the runway in Kirkenes and enter the pre-project phase of the new airport in Bodø. Avinor will also complete the development of the non-Schengen area at Oslo Airport, but according to a reduced model.
On 27 May 2020, Avinor received a letter of assignment in which the Ministry of Transport and Communications wants Avinor to take over the further process of building a new Mo i Rana airport. In accordance with the letter of assignment, Avinor has presented a progress plan for the new airport Mo i Rana.
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