MIA: An update on latest developments | Calamatta Cuschieri

With consumer confidence and air travel demand remaining subdued, MIA’s latest traffic results for February 2021 illustrate a drop in passenger traffic of 93.5 per cent on a comparative basis. With passenger movement falling to an all-time low since the airport’s reopening to commercial flights last July, MIA further reported that seat capacity deployed by airlines in February 2021 amounted to just 10 per cent of those registered in February 2020.

As expected, the COVID-19 pandemic has decimated MIA’s performance for FY20 with total revenue dropping by 68%. Naturally, aviation revenue was the worst hit, with this segment registering a drop of 75% over the previous year. Moreover, the non-aviation segment, which includes revenue generated from the Company’s retail and property segment, dropped by approximately 52% when compared to FY19. 

On a positive note, through its strict cost-cutting measures, MIA was able to lower its total operating expenditure by 28% or €10.5m during FY20. Apart from the implementation of such cost-cutting exercise, MIA’s decline in operating expenses is also attributable to the Company’s participation in the ‘Covid Wage Supplement’ assistance as well as a temporary salary reduction from April until July 2020.

However, despite generating minimal revenue during FY20, MIA remained cash rich, with the Company’s cash levels as at December 2020 standing at approximately €26m. More interestingly, the latest financial results also illustrate a remarkable decrease in payment due from debtors, which on a positive note, has assisted MIA to retain a healthy liquidity profile.

Moreover, in an attempt to preserve the cash reserves of the Company, MIA has made drastic adjustments to the original capital expenditure programme for 2020, and has as a result suspended all non-essential projections. In view of the implications brought about by the pandemic on the Company, MIA has shifted its focus to the completion of major projects namely the construction of the new multi-story car park and the expansion of the cargo village, works on which were already at an advanced stage before the outbreak.

Additionally, management further reported that while 2020 was a quieter year in terms of passenger traffic, MIA completed several upgrades, with a particular focus on more energy-efficient lighting systems.

As per direction provided by management, MIA will retain its focus on projects and works that are essential to the maintenance of the Company’s assets, investing mainly in the airfield infrastructure, IT projects and the completion of the fire truck replacement programme.

Management further reported that the Company will forge ahead with its strategic projects, including the relocation of the existing fuel station, the completion of the cargo village and the embellishment of the court, with a total investment of around €4m earmarked for 2021.

As a consequence of the current stressed environment, MIA further announced that it will not be distributing a dividend for FY20. Additionally, in its Feb-2020 update, MIA disclosed that urgent and coordinated stakeholder action is needed at national and European levels, if the industry is to achieve the predicted signs of recovery by summer.

The continued vaccine roll-out and improved testing procedures have provided some ground for an optimistic second half for 2021, with 2019 operating levels are expected to be fully reached by 2023. As such, we reiterate our stance that widespread and effective vaccines are expected to significantly boost consumer confidence, which will ultimately aid in the recovery of passenger traffic.

This article was issued by Andrew Fenech, Research Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.