Focus on safe and responsible travel after sharp fall in traffic due to COVID-19 pandemic
2020 Interim Results of Royal Schiphol Group
Today, 28 August 2020, Royal Schiphol Group publishes the interim results for the first six months of 2020. The COVID-19 pandemic has had an unprecedented impact on the airports of Royal Schiphol Group and the aviation industry as a whole. In the first six months, Amsterdam Airport Schiphol experienced a drop in passenger numbers of 62.1% to 13.1 million (HY 2019: 34.5 million). The number of air transport movements at Schiphol was down by 52.1% to 115,952 (HY 2019: 242,107). Cargo volumes showed a decline of 14.5% to 656,000 tonnes (HY 2019: 767,000 tonnes). Eindhoven Airport and Rotterdam The Hague Airport saw a significant decline in traffic as well.
The net result for the first half of 2020 resulted in a loss of 246 million euros compared with a profit of 133 million euros for the first half of 2019. By reducing its operations and closing part of Schiphol’s terminal during the first months of the crisis, Schiphol Group adapted to the new situation while remaining open and reducing its operational expenses. Schiphol Group has received the NOW1 government grant (Noodmaatregel Overbrugging Werkgelegenheid; temporary governmental compensation for labour costs) and applied for the NOW2 grant.
Safe and responsible travel
To prevent transmission of COVID-19 and to give passengers and staff confidence in safe and responsible air travel, a full set of measures is in place. This includes information for passengers, the use of health questionnaires, social distancing at the airports, the wearing of face masks, improved ventilation and cleaning, the installation of sanitising equipment (including UV-C cleaning) and risk-based testing of passengers. There is a need for further international collaboration to align travel requirements. Schiphol is in favour of a system of testing for travel to and from countries with an orange or red risk profile. This can reduce the need for travel bans and quarantine measures. The international response is currently insufficiently aligned and coordinated. This impacts air travel, and therefore economic recovery.
Impact on the Schiphol organisation
For 2020, Schiphol Group at this moment expects a decrease in passenger numbers of between 55% and 72% compared with 2019. The outlook for the coming years is very uncertain, and depends on the course of the pandemic, whether a vaccine becomes available, international coordination in travel measures, the profile of the economic recovery and behavioural changes by passengers and businesses. Scenarios for the return to 2019 traffic levels indicate that this will not happen until the 2023-2025 time frame. In light of this, Schiphol Group has decided to adjust its expenses to reflect the new outlook.
Schiphol Group aims to reduce overall operating expenses by approximately 20-25% in 2021 and 2022. The cost savings will be realised across all operating expenses, including services and contracts. This will, however, also mean a reduction in the number of jobs at Schiphol Group. The Management Board has put a request for advice to the Central Works Council ('Centrale Ondernemingsraad') on the organisational adjustments. A social plan will be developed with the unions. The job impact is still uncertain, but is expected to be in the order of several hundred positions out of a total workforce of around 3,000.
Various cost-saving measures have already been implemented. Schiphol has pro-actively decided not to pay out dividends for shareholders and variable income for management over 2019.
Schiphol Group has 1.5 billion euros in liquidity at its disposal per 30 June 2020, consisting of 0.5 billion euros in cash and deposits and 1.0 billion euros in committed undrawn bank facilities. This liquidity position is sufficient to cover at least a 12 month period in the various scenarios considered by management.
Impact on projects
The COVID-19 crisis has an impact on investment levels at Schiphol as well. However, in 2020 and 2021 combined, Schiphol still expects to invest approximately 1.5 billion euros. Schiphol will prioritise safety and hygiene measures and will continue to invest in maintenance, safety, sustainability, quality of service and innovation. Schiphol accelerated a number of innovation and maintenance projects during the months with very low traffic volumes. The construction of the new pier and the redevelopment of Departure Hall 1 is progressing. Other projects have been postponed, including the construction of the new terminal - for at least two years.
The current crisis also offers us an opportunity for reflection. Not only are we adapting to the new circumstances, we have a clear ambition to improve as well; building back better instead of a return to business-as-usual. Steps forward can be taken towards realising the widely shared ambition of achieving sustainable aviation connecting the Netherlands to the world with a multimodal Schiphol that improves the quality of life.
Other key developments in the first half of 2020
- The total number of passengers at the airports of Schiphol Group fell by 63% to 14.5 million (HY 2019: 38.7 million). The number of passengers at Eindhoven Airport dropped to 1.1 million (-65%) and the number of air transport movements to 8,339 (-58%). Rotterdam The Hague Airport saw a decline of 71% to 274,148 passengers, with 2,514 air transport movements (-68%) in the first half of 2020. All airports remained operational.
- In June, we saw traffic recover as travel restrictions within the EU were eased. As a result, the very low passenger volume in April and May (-97%) improved in July (-80%). In the third week of August, passenger volumes further recovered to -74%. However, uncertainties will continue to exist for the time being, which makes it difficult to predict the development of traffic in the near future.
- In the first six months of 2020, Schiphol invested 411 million euros in amongst others the redevelopment of Departure Hall 1, the realisation of the new pier and other construction projects at its airports. Schiphol also acquired a strategic land position.
- Royal Schiphol Group launched and priced 750 million euros in green bonds under the Euro Medium Term Note programme.
- In May, the Ministry of Infrastructure and Water Management published its draft Aviation White Paper. Schiphol welcomes the paper, as it outlines a new long-term perspective on Schiphol's development. It also sets the course for an improved balance between the quality of the network and the quality of the living environment, in line with Schiphol Group's Vision 2050.
- In the first quarter of 2020, Schiphol launched its nitrogen action programme, following the recommendations by the Remkes Committee. Furthermore, Air Traffic Control the Netherlands (LVNL) and Schiphol announced a joint programme with measures to reduce noise disturbance, 'minderhinder.nl', for public consultation. The definitive programme will be presented to the Ministry of Infrastructure and Water Management later this year.
- The Ministry of Infrastructure and Water Management aims to allow for the opening of Lelystad Airport for commercial leisure traffic in November 2021.
- Schiphol Real Estate successfully completed the circular dismantling of Cargo Building 18, adjacent to Runway 06-24.
- VolkerWessels and Schiphol Real Estate jointly purchased 90 hectares of land south of Badhoevedorp. A large part of the land, to the south of motorway A9, will be used in order to improve Schiphol's accessibility. The land to the north of the A9 motorway is acquired for commercial development in cooperation with VolkerWessels.
- Schiphol has announced the continuation of its partnership with Hardt Hyperloop to further investigate the future role of hyperloop as an alternative to short-distance travel by air.
- Schiphol and partners started a trial with a sustainable aircraft-towing vehicle (Taxibot), which consumes 95% less fuel than taxiing with the use of the aircraft's engines.
- Schiphol was voted Best Airport in Western Europe at the Skytrax World Airports Award 2020. In addition, Schiphol is also number one for best website and digital services.
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