Annual and sustainability report 2019 We unite Norway – and Norway with the world 2 AVINOR AS 54 000 000 PASSENGERS ↑ 0.6 PER CENT FROM 2018 677 324 DEPARTURES AND LANDINGS ↓ 1.2 PER CENT FROM 2018 3 012 PERMANENT EMPLOYEES 78 652 OVERFLIGHTS ↓ 3.2 PER CENT FROM 2018 ANNUAL AND SUSTAINABILITY REPORT 2019 3 THE YEAR 2019 84 PER CENT PUNCTUALITY Avinor’s target is 88 per cent average punctuality for all its airports. Poor punctuality is largely due to weather conditions, traffic challenges in Europe, and internal challenges among the operators within Avinor’s network. 4 AVINOR AS Our performance Operating income Operating expenses Profit after tax 11 785 8 151 702 NOK MILLION NOK MILLION NOK MILLION NUMBER OF AIRLINE PASSENGERS NUMBER OF AIRCRAFT MOVEMENTS Figures in 1 000 Figures in 1 000 60 000 800 50 000 700 40 000 30 000 600 20 000 500 10 000 0 400 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 NOK MILLION 2019 2018 2017 2016 2015 Operating income airport operations 10 357 10 303 10 162 9 675 9 424 Operating income air navigation services 2 100 2 107 2 085 1 991 2 088 Total operating income group 11 785 11 724 11 526 10 788 11 989 EBITDA group 1) 3 634 4 201 3 126 3 521 4 692 Profit after tax 702 1 170 499 1 029 2 449 Number of airline passengers (figures in 1 000) 54 099 54 387 52 885 50 803 50 025 Number of aircraft movements (figures in 1 000) 677 690 697 704 724 1) The Group uses EBITDA as an alternative performance measure (APM). This calculation is directly reconciled in the profit and loss account. EBITDA is used because it is an approximate calculation of free cash flow from operations. ANNUAL AND SUSTAINABILITY REPORT 2019 5 Content 06 About Avinor 08 Message from the CEO 10 Corporate Governance 15 Report of the Board of Directors 2019 20 Sustainable value creation 23 Goals and results for corporate social responsibility in 2019 26 Avinor shall ensure good aviation services for the whole of Norway 35 Avinor shall be a driving force in the work on climate and environmental challenges within aviation 48 Key figures climate and environment 2015-2019 50 Avinor shall be a professional and attractive employer 54 Avinor shall ensure that it conducts its business responsibly 60 Overview of GRI indicators 66 Executive management 67 Board of Directors 68 Income statement 69 Statement of comprehensive income 70 Balance sheet 72 Changes in equity 74 Statement of cashflows 76 Notes to the accounts 127 Responsibility Statement from the Board of Directors and the CEO 128 Auditor’s report Avinor’s annual and sustainability report for 2019 is the Group’s joint report on its operations, finances, and corporate social responsibility. This is the fifth time that the Group is presenting a joint report. Corporate social respon- sibility is an integral element in Avinor’s strategic planning and in the management of the Group. Avinor’s corporate social responsibility efforts are based on the expectations set forth in Avinor’s Articles of Association and in the Norwegian Accounting Act. Avinor takes the OECD’s guidelines for responsible business as the basis for its corporate social responsibility efforts, and it signed up to the UN Global Compact in 2014. Avinor’s efforts cover areas such as human rights, employee rights and social conditions, the external environment, and combatting corruption. This report has been prepared in accordance with the GRI Standards: Core option. 6 AVINOR AS About Avinor Avinor’s social obligations relate to owning, operating, and developing a national network of airports for the civilian aviation sector and a joint air navigation service for the civilian and military sectors. Operations must be carried out in a safe, efficient, and environmentally friendly manner and ensure good accessibility for all groups of travellers. ANNUAL AND SUSTAINABILITY REPORT 2019 7 Avinor owns 45 airports, including the subsidiary Svalbard Lufthavn AS and Værøy Heliport. Haugesund Airport is rented out and AVINOR’S AIRPORTS Fagernes Airport will be sold in 2020. Avinor is self-funded through Avinor’s airports vary by size and traffic volume. Oslo Airport is traffic revenues from airlines, revenues from commercial tenants, by far the largest and accounts for more than half of Norway’s air and direct sales to passengers. A smaller component of the Group’s traffic and just over 70 per cent of the country’s total interna- revenue stems from assignments for other organisations, such as tional traffic. Bergen, Stavanger, and Trondheim also have a the Norwegian Armed Forces. The airport operations are run as a sizeable proportion of direct international traffic. Some other single financial unit, whereby the large financially profitable air- airports also have international traffic: Kristiansand, Ålesund, ports finance the rest of the airport network. Commercial revenues Tromsø, Bodø, Harstad/Narvik, and Molde, in addition to some account for roughly 54 per cent of operating revenues, while traffic international charter traffic at individual airports. Haugesund revenues from airlines account for roughly 46 per cent. Airport, which is leased to Lufthavndrift AS as of 2019, has international traffic as well. Avinor Air Navigation Services is a subsidiary of the Group. Air navigation services are funded through traffic revenues from the Oslo Airport is the only Norwegian airport to have two parallel airlines for en-route navigation services, as well as revenue from runways. Stavanger Airport has a secondary runway used during the operation of tower and approach services from Avinor’s airport certain wind conditions. operations. Avinor Air Navigation Services provides services including en-route navigation services, approach control services, Oslo Airport’s runways are 3,600 metres long. At the other large and control tower services, as well as flight navigation services and airports, the runways are between 2,600 and 3,000 metres long, services relating to technical operations. The Norwegian Ministry which means they can be used by larger jet aircraft. 27 of Avinor’s 45 of Transport and Communications will evaluate a new ownership airports have short runways of between 800 and 1,200 metres. These structure for air navigation operations. Avinor is investigating are used by smaller aircraft types such as the Bombardier Dash 8, air various alternatives on behalf of the ministry. The work is due for ambulances, and private aircraft. These small airports are of huge completion in the first quarter of 2020. Regardless of the ownership importance in ensuring settlement in and economic development of remote areas. In addition, a heliport is operated at Værøy. structure of the air navigation services, airport and air navigation services are closely integrated and mutually dependent on each other in their fulfilment of Avinor’s social obligations. Avinor co-operates with the Norwegian Armed Forces at eleven generated by Oslo Airport is crucial for the financing of the network airports, nine of which are Avinor airports (Oslo, Stavanger, of airports spread across the rest of Norway. Bergen, Trondheim, Bodø, Andøya, Harstad/Narvik, Bardufoss, and Lakselv). In addition, Ørland airbase has only military traffic, and There was a total of 677,324 movements (take-offs and landings) at Rygge airport has only military activity and some general aviation. Avinor’s airports in 2019, a slight decline of 1.2 per cent compared Co-operation with the Norwegian Armed Forces is expected to be to the year before. In 2019, there were 78,652 overflights using extended to include several more airports in the future. Norwegian airspace, a decline of 3.2 per cent compared to 2018. A total of 54 million passengers travelled to, from, or via Avinor’s The shares in Avinor AS are wholly owned by the Norwegian state airports in 2019, an increase of 0.6 per cent compared to the as represented by the Ministry of Transport and Communications. previous year. The Ministry of Transport and Communications manages the corporate governance on behalf of the Norwegian state, determines Norway’s primary airport, Oslo Airport, had nearly 28.6 million Avinor’s financial framework, and regulates aviation fees. The passengers in 2019, an increase of 0.3 per cent compared to 2018. ministry also sets the Civil Aviation Authority’s regulations that Oslo Airport is the hub of Norwegian aviation and a transit airport have consequences for Avinor’s operations. Avinor’s head office is for traffic between Norway and the rest of the world. The profit located in Oslo. VISION MISSION VALUES We create Avinor will develop and · Open valuable operate a safe, efficient, · Accountable relationships and sustainable aviation · Dynamic system throughout · Customer-focused Norway. 8 AVINOR AS Message from the CEO Aviation is and will continue to be fundamental to Norway’s development This report covers Avinor’s activities in 2019, before the corona epidemic showed its first signs in China. In the course of the first three months of 2020, the epidemic reached more or less all countries in the world, leading to a more or less complete halt in international passenger air traffic. No-one can tell what the short- or long-term effects on aviation will be. We have a very good dialogue with all important stakeholders in Ålesund and Bodø. Moreover, Avinor achieved its best-ever results aviation and with the Ministry of transport. In addition, I would in two Norwegian reputation surveys in 2019. This is due to the also like to stress the good cooperation we have with our stakehold- consistently good and systematic efforts of everyone at Avinor, in ers within health, defense, finance – and the business community.