(AOF) – Groupe ADP has retained Lagardère Travel Retail as a 50% co-shareholder of the future joint venture Extime Travel Essentials Paris, which will offer a range of “travel essentials” (books and press products, gifts and souvenirs, groceries and snacks to take away, or even travel accessories), mainly operated under the Relay brand for Paris-Charles de Gaulle and Paris-Orly airports. Extime Travel Essentials Paris will operate, subject to merger control, for a period of 10 years and from February 2024, more than sixty points of sale.
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The strengths of the value
– World number 1 in airport management with more than 280 million passengers;
– Turnover of €2.8 billion divided into 5 divisions – aeronautical activities at the 3 Paris airports, shops & services, real estate activity at the terminals (ADP being one of the largest landowners in Ile-de-France), international and other activities;
– Economic model aiming to become a leader in the design, construction and operation of airports and relying on the 3 Paris airports, the 27 airports managed in the world as well as on agreements with airlines;
– Capital 50.6% owned by the French State, ahead of the Dutch company Shiphol (8%) and the Vinci group (8%), Augustin de Romanet, managing director, chairing the 15-member board of directors;
– Tense financial situation, with a debt of €8.3 billion as of June 30, 2022, i.e. a leverage effect of 6.4 (but guaranteed by the State).
Challenges
– “2025 Pioneers” strategy:
– infrastructures: + 80% of departures on time, multimodal connections,
– concessions: average maturity stabilized at 30 years;
– Innovation strategy focused on telecom & mobility services via Hub One:
– global and data-centric digital ecosystem, via 100 international routes and the “smartization” of airports,
– partnership with Saclay in sustainable projects – call for concrete projects before setting up a Green Innovation Hub in 2024 at Roissy airport,
-120 experiments including 30 industrialized;
– Environmental strategy of carbon neutrality in 2030 for ground operations: improvement of air quality, waste recovery, use of 10% low-carbon energy and preservation of surfaces for biodiversity;
– Launch of 3 joint ventures: with Air Liquide in services and engineering for the transition to hydrogen for airports, with JC Decaux for the management of advertising activities and with Lagardère for that of retail outlets in Paris;
– Continued recovery in air traffic in 2022 – rate of 80.9%, vs 2019, pre-covid year, for the group and 80.2% for Paris Aéroport – and expenditure per passenger, of €26.1.
Challenges
– Strong correlation to the financial health of airlines, in particular EasyJet and AirFrance-KLM, 1st and 2nd operators in Paris;
– End of HubLink industrial cooperation between Aéroports de Paris and the Dutch Schiphol, leading by May 2023 to the end of cross-shareholdings;
– Review of international activities;
– After a virtual doubling of turnover at the end of September, 2nd increase in 2022 objectives: operating margin at + 34.5%, and ambition for 2023 of a debt leverage effect of between 5 and 5.5 thanks to a decline in investments in Paris.
Once again weakened results for European airlines
With fuel accounting for up to 35% of their costs, professionals believe European airlines are unlikely to return to profit until 2023 or 2024 at the earliest. These players predict that energy prices will remain high at least until 2023. The International Air Transport Association (IATA) has announced a forecast of cumulative losses of 9.7 billion dollars in 2022 for airlines worldwide. On the positive side, travel demand seems to be resisting the uncertainties caused by the international economic and political situation. However, the uncertainties concerning the Covid, the war in Ukraine, as well as the rise in prices are strengthening last-minute reservations. According to Iata, only 8% of international reservations made at the end of May went beyond September.
The social climate is deteriorating in low-cost companies
These companies are benefiting from a very strong recovery. They had already managed to monopolize 40% of air traffic in 2021, this proportion could even rise to 50% this year. However, strike movements have affected the activity of Volotea, EasyJet and Ryanair, with confrontations over pay and working conditions. In general, the sector faces a shortage of personnel. After having cut severely in their workforce in 2020 and 2021, companies and airports must urgently recruit to support the relaunch of activity.