SPAIN. Airports company AENA has said that it will not extend any contracts that are affected by a new law that changes the basis on which concession fees are calculated at its airports. This includes AENA’s biggest partner Dufry, whose contract is set to expire in 2023, but which had an extension option until 2025.
In a statement on Tuesday, AENA told The Moodie Davitt Report: “AENA Chief Financial Officer José Leo stated last Friday during the conference call to present Q3 results that the extensions of the current commercial contracts will not be activated.”
Approached by The Moodie Davitt Report today, Dufry declined to comment. We have also approached leading food & beverage operator Areas for comment.
As reported, in September the Spanish Congress of Deputies (Parliament) approved a new law stating that the Minimum Annual Guaranteed rents (MAG) payable at Spanish airports are not owed for the period between 15 March 2020 and 20 June 2020. In addition, these will be proportionally reduced from 21 June 2020 onwards by comparing the lower volume of passengers at the Spanish airports to 2019 passenger levels. This formula will stay in place until passenger numbers return to those that match 2019.
Speaking to investors on Friday, José Leo confirmed that the company would abide by the law. But, he added, it would not renew any contract that bound it to reduced rent.
He said that not renewing contracts under these conditions would help cushion the financial blow to AENA by around €115 million, from a predicted €1.5 billion to around €1.35 billion in the period to 2025.
Without naming Dufry, he said that the adjustment relates mainly to AENA’s largest client; other partners across retail and dining would also be affected by AENA ruling out contract extensions.
In September 2019, AENA announced an extension to Dufry’s current concession for duty free shops at 25 Spanish airports for up to five more years, as its contract at the time was due to expire on 31 October 2020.
That extension included an initial duration of three years and an option to further extend the agreement in two steps of one year at a time, in parallel with an investment programme in the stores. If the final two-year extension does not apply, Dufry’s contract will end on 31 October 2023.
Background to the new law
On 3 October, Act 13/2021 entered into force, which modifies the lease agreements for food & beverage and retail activities that were in place on 14 March 2020 or tendered before then.
Changes introduced are as follows (as stated in Q3 AENA results presentation): Minimum Annual Guaranteed Rent (MAG) established in the contracts and running from 15 March 2020 to 20 June 2020, both inclusive, is abolished (retrospectively) and AENA cannot demand payment.
From 21 June 2020, MAG is automatically reduced on an airport by airport basis in direct proportion to the volume of passengers at the airport where the premises is located, and related to the volume of passengers. This reduction applies in 2020, and in all subsequent years until the annual volume of passengers at the airport reaches 2019 levels.
AENA can still demand the payment of variable fees established in the contracts based on the income derived from sales.
Contracts included under these provisions include duty free, food & beverage and speciality stores; contracts between Aena S.M.E., S.A. and private operators and contracts in force on 14 March 2020 or tendered and awarded prior to that date even if not effectively implemented.
Taking into account 2020 actual passenger traffic, the current forecast of passenger traffic for 2021 and the 2022-2026 traffic forecast, 2019 traffic levels are expected to be reached by 2026.
On that basis, AENA has estimated a reduction in commercial revenue collections of approximately €1,350 million over the period 2020-2025. This estimate includes the reductions of rents already offered by AENA on 18 January 2021 to commercial operators.
Nine-month performance
Aena recorded a loss of €123.7 million in the period between January and September 2021, a figure which reflected the fallout from the Covid-19 crisis. Passenger numbers in the first nine months of the year reached 76.5 million (+18% more than in the same period in 2020), or 35.8% of the volume in the same period in 2019.
Total consolidated income stood at €1,760.8 million, up +1.6% compared to the first nine months of 2020.
Commercial income at €723.5 million was down by -6.2%. In applying accounting standards IFRS 16, in the first nine months of 2021 income from MAG rent was recognised for the amount of €388.1 million.
