(AOF) – Groupe ADP has launched a public consultation on its Duty Free & Retail activities for Paris-Charles de Gaulle and Paris-Orly airports. Lagardère Travel Retail has been chosen to become Groupe ADP’s co-partner in Extime Duty Free Paris, as part of the deployment of the hospitality and Retail brand, Extime.
Groupe ADP has launched a public consultation on its Duty Free & Retail activities for Paris-Charles de Gaulle and Paris-Orly airports. Lagardère Travel Retail has been chosen to become Groupe ADP’s co-partner in Extime Duty Free Paris, as part of the deployment of the hospitality and Retail brand, Extime.
Extime Duty Free Paris will operate nearly 140 points of sale for beauty, gastronomy, technical products and fashion. It will be held, subject to the authorization of the competent competition authorities, by Groupe ADP up to 51% and by Lagardère Travel Retail up to 49%.
In the first quarter of 2022, the airport group recorded a 99.8% increase to 270 million euros in its trade and services activities.
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Key points
– World number 1 in airport management with nearly 300 million passengers;
– Turnover of €2.8 billion divided into 5 areas – aeronautical activities at the 3 Paris airports, shops & services, real estate activity at the terminals (ADP being one of the largest landowners on the 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 debt of €8 billion and debt/equity ratio close to 200% but cash of €2.4 billion and debt guarantee by the State.
Challenges
– “2025 Pioneers” strategy: infrastructure: +80% departures on time, multimodal connections, concessions: average maturity stabilized at 30 years;
– Innovation strategy focused on telecom & mobility services via Hub One: global digital ecosystem focused on data, via 100 international routes and the smartization of airports, 120 experiments including 30 industrialized;
– Environmental strategy of carbon neutrality in 2030 for Paris airports: improvement of air quality, waste recovery, use of 10% low-carbon energy and preservation of surfaces for biodiversity;
– Organizational overhaul of Aéroports de Paris;
– Continuation of cost reductions but resumption of investments at €1 billion per year until 2025, including €550 to 600 million for Paris in 2022.
Challenges
– Strong correlation to variations in the pandemic and 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 company Schiphol, leading to the end of cross-shareholdings, by May 2023 at the latest;
– Review of international activities;
– Outlook: 2022: after the very strong 1st quarter (revenues up 79%) traffic recovery of 60 to 80% compared to 2019, operating margin of 30% to 35%, return to positive net income and leverage of debt between 6 and 7 / 2023: traffic equal to 85-95% of that of 2019, margin at the same level as in 2022, minimum dividend of €1, i.e. a payout rate of 60% / 2024: traffic equal to 85-95% of that of 2019, operating margin of 35 to 40% and minimum dividend of €3, i.e. a rate of 60% / 2025: traffic
– Maintenance of the suspension of the dividend until 2022.
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 at around the world, it will still be necessary to wait until 2023 to see the return to profits on a global scale, due in particular to the surge in oil costs and the rise in labor costs. 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 reinforcing 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 severely cut their workforce in 2020 and 2021, companies and airports must urgently recruit to support the relaunch of activity.