Annual Report 2009
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ANNUAL REPORT 2009 ADAPTING TO A NEW ENVIRONMENT CONTENTS CEO LETTER 1 OUR PHILOSOPHY 20 HIGHLIGHTS 21 LEADERSHIP 24 OMA ADAPTS TO THE NEW ENVIRONMENT During 2009, we carried out strategic initiatives that enabled us to move overcome the challenges presented by the economy and the complex environment for the air transportation industry. Innovation played an important role in creating a solid competitive position and in consolidating our sustainability policy. We gained strength by creating new sources of revenue and putting into effect initiatives to control costs. We used all the abilities and talents of our team in order to adapt to the new environment and to continue creating value for our shareholders and our other stakeholders. Victor Bravo CEO 1 • OMA • ANNUAL REPORT 2009 TO OUR SHAREHOLDERS 1,988 1,897 1,896 371 1,687 347 369 OMA’s 2009 results reflected outstanding performance by 1,480 316 our people. We offset the impact on revenues of decreasing 288 1,617 passenger traffic and we generated an EBITDA margin of 1,550 1,527 51% while delivering aeronautical and commercial services of excellence. We fulfilled our investment commitments, improved 1,371 our processes and client service, strengthened operational 1,192 and airport security, and took innovative actions to generate new sources of revenue. We took steps to develop our human capital, contributed to the betterment of the communities where we operate, and operated in an environmentally responsible manner. Our operating strategy is built around three main initiatives: 1. To provide quality aeronautical services; 2. To improve the passenger experience; and 3. To diversify revenues through new commercial businesses. Particularly in these difficult times, we also intensified controls on costs and expenses. Together, these initiatives enabled us to generate revenues of Ps. 1,896 million in 2009, an Adjusted EBITDA of Ps. 971 million, and a net income of majority interest of Ps.471 million, despite the 18.1% decrease in passenger traffic volumes. (1) Adjusted EBITDA is defined as net income minus net comprehensive financing income plus taxes and depreciation and amortization, and excludes other income (expenses). It is equivalent to the concept UAFIDA in Mexico and should not be considered as an alternative to net income, as an indicator of our operating performance, or as an alternative to cash flow as an indicator of liquidity. Our management believes that Adjusted EBITDA is a useful measure and widely used by investors and analysts to evaluate our performance and compare it with other companies. Adjusted EBITDA is not defined under U.S. GAAP or MRFS, and may be calculated differently by different companies. 2 • OMA • ANNUAL REPORT 2009 OUR MAIN OBJECTIVE IS TO OMA’s principal objective, and the reason for our being, is to provide quality aeronautical services. To this end, we took action PROVIDE HIGH QUALITY to increase the connectivity of our airports and to provide facilities that meet the highest standards of safety, security and efficiency. AERONAUTICAL SERVICES The air transportation industry in Mexico has endured a number of shocks over the past two years—some of which are still affecting us—and our actions were principally defensive with the goal of sustaining revenues, even with lower passenger traffic volumes. We optimized our regulated tariffs; as a result, our aeronautical revenues increased to 95% of the maximum tariff in 2009, compared to 88% in 2008. We took important steps to increase air traffic and the connectivity of our airports. This includes new initiatives to promote Monterrey Airport as the regional hub for northern Mexico, to foster the development of low-cost carrier traffic, and to renew again the push for international traffic and seasonal flights. These efforts resulted in the opening of 28 routes during the year. 3 • OMA • ANNUAL REPORT 2009 NEW TERMINAL B AT MONTERREY AIRPORT We invested Ps. 868 million during 2009, including Master Development Plan (MDP) investments for the expansion and modernization of all our airports and strategic investments to develop our businesses. Terminal B, Monterrey Airport During the year we completed one of the most important investments of the five-year MDP: the new Terminal B at Monterrey International Airport. The project includes the 21,000m2 terminal with a capacity of two million passengers per year, ample commercial spaces, access roads, parking, aircraft platform, and taxiways. Once we put Terminal B into service in September 2010, we believe it will set the new standard for passenger terminals in Mexico and greatly improve the passenger experience and airport operations. 4 • OMA • ANNUAL REPORT 2009 In addition, 2009 investments included the most important diversification project for OMA to date: the development of the NH Terminal 2 hotel at the Mexico City International Airport, which started operations on August 24, 2009. OMA has made major investments in upgrading, expanding, and modernizing all 13 airports. The year 2010 concludes our current five-year MDP that contemplated investments totaling approximately Ps. 2,450 million. The MDP for 2011- 2015 will be negotiated with the Federal Government before the end of 2010. NH Terminal 2 Hotel, Mexico City Airport 5 • OMA • ANNUAL REPORT 2009 Culiacán Airport Torreón Airport IMPROVING THE PASSENGER EXPERIENCE In the past five years, Our second strategic objective is to improve the passenger experience at our airports. This includes carrying out we increased the initiatives to increase and improve the commercial offering, index of passenger add new passenger services, develop advertising, improve client service, increase parking capacity, and improve satisfaction by 36 operational and airport security. The index of passenger satisfaction in 2009 reached 87%. In the past five years, percentage points. we increased the index of passenger satisfaction by 36 percentage points. During 2009, we opened 26 new commercial spaces, including stores, restaurants, and passenger services such as auto rental, currency exchanges, and hotel information. Our commercial strategy is to make services or advertising available to the passenger at every point along his or her path through the airport, from arrival in the parking area, through check-in and ticketing, security, waiting areas, VIP lounges, and boarding gates and jetways, to baggage claim and ground transportation. We want to improve the experience at each of these points, reduce stress, and increase the use of our services and the amount of time the passenger spends in our commercial areas. 6 • OMA • ANNUAL REPORT 2009 OUR 13 AIRPORTS CERTIFIED FOR QUALITY MANAGEMENT UNDER ISO 9001:2008 In 2009 we obtained quality re-certification under ISO 9001:2008 for all 13 airports, under the multi-site scheme, for services including parking, management of commercial areas, and access for persons with disabilities, among others. Specifically in the area of parking, we remodeled and expanded the parking areas of several airports and installed new automated access and payment systems. 8 • OMA • ANNUAL REPORT 2009 OMA RECOGNIZED AS A SOCIALLY RESPONSIBLE COMPANY SINCE 2008 OMA has been recognized as a Socially Responsible Company since 2008 by CEMEFI. In 2009, OMA signed onto the United Nations Global Pact to support the ten principles related to human rights, worker’s rights, environmental protection, and transparency. Five of OMA’s airports received PROFEPA Environmental Quality re-certification last year, in recognition of efforts to minimize the environmental impact of airport operations. 9 • OMA • ANNUAL REPORT 2009 AIRPORT SAFETY MASTER PLAN IN ALL 13 AIRPORTS We implemented our Airport Safety Master Plan in all 13 airports, with standardized emergency response procedures in keeping with national and international standards. In connection with this, we completed the upgrading of our rescue and firefighting squads (CREI) through the “CREI de Excelencia” program. This four-year program included enhanced training in the latest techniques and use of new facilities and equipment. This year, we are moving forward with International Civil Aviation Organization (ICAO) certification, starting with the Acapulco, Monterrey, and Mazatlán airports. We expect this process to last through 2011. 10 • OMA • ANNUAL REPORT 2009 11 • OMA • ANNUAL REPORT 2009 DIVERSIFYING REVENUES As regards revenue diversification, our third strategic objective, we generated a strong new source of revenues with the opening the NH Terminal 2 Hotel in the Mexico City International Airport, and we improving our business for the management, warehousing, and custody of airfreight, OMA Carga. OMA Carga, Monterrey Airport 12 • OMA • ANNUAL REPORT 2009 NH Terminal 2 Hotel, Mexico City Airport NH Terminal 2 Hotel, Mexico City Airport OPENING THE NH TERMINAL 2 HOTEL IN THE MEXICO CITY INTERNATIONAL AIRPORT The opening of the 287-room, five-star NH Terminal 2 hotel in August 2009 enabled us to provide new services related to air transportation, while reducing the dependence on regulated aeronautical revenues. The hotel reached an occupancy rate of 32.5% by December 2009 and 63.8% by June 2010. 13 • OMA • ANNUAL REPORT 2009 GROWING OUR We strengthened OMA Carga during the year. Our airfreight CARGO LOGISTICS business handled 9,521 tons of commercial cargo in 2009, an BUSINESS increase of 10.8%. OMA Carga also formed strategic alliances with other participants in the logistics chain, increasing the speed for delivery of goods to and from Asia and Europe and adding value for our clients. Another of our cargo initiatives bore fruit in January 2010 with the opening of the DHL hub at the Monterrey airport that promises a further expansion of the OMA Carga business. 14 • OMA • ANNUAL REPORT 2009 IMPROVING THE BALANCE BETWEEN AERONAUTICAL AND NON-AERONAUTICAL REVENUES Going forward, we will continue to look for opportunities to maximize growth. We seek a better balance between regulated aeronautical revenues and non-regulated commercial revenues through the development of new sources of commercial revenue. We expect to invest in projects that add value and make better use of our existing assets, including land reserves.