Third Quarter 2024: Framework conditions providing sufficient room for manoeuvre

27 Nov 2024 12:15 CET

In November 2023, the Ministry of Transport recognized that Avinor needed
significant improvements in its framework conditions to avoid extensive
write-downs of assets. The government announced that it would consider a range
of possible measures to be presented in the 2025 national budget proposal. In
the national budget proposal, the government suggests real growth in Avinor's
charges as the main tool to achieve necessary improvement in results.

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 increase in airport
charges 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
national 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 airport charges
for the use of airports during the pandemic and up to 2024 were not
index-adjusted, tax-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 income and commercial income 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 expenses 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 expenses 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 anticipates a low, stable growth in the traffic development until 2030,
where the estimated number of passengers is 54,9 million. The estimate takes
into account the effects of increased airport charges in the coming years.
Foreign passenger traffic to Norway is expected to continue to show solid
growth, whiledomestic traffic is expected to stabilise 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.

Contact:
Abraham Foss, CEO, +47 479 01 111
Petter Johannessen, CFO, +47 400 03 003
Hilde Vedum, Finance Director, +47 995 00 534

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633285_Avinor_Q3 Rapport 2024_eng.pdf