Summer this year again saw crowding at Tel Aviv’s Ben Gurion Airport, as the last traces of the aftermath of the Covid-19 pandemic disappeared. The results are evident in the financials not only of the airlines, but also of the Israel Airports Authority (IAA).
At the end of last week, the IAA received affirmation of its perfect credit rating from Midroog, against a background of estimates that 24 million passengers will pass through Israel’s airports this year, which is similar to the number of passengers in 2019, the year before the pandemic broke out.
The IAA’s first half operating profit shot up 345% to NIS 334 million, which also puts it back to the kind of numbers seen before the pandemic.
The IAA is responsible for the maintenance, operation, management, and development of all the international and domestic airports in Israel (other than military airfields), the air traffic control system, and land border terminals.
The maximum Aaa rating, with a stable outlook, that it received from Midroog (equivalent to AAA from S&P) is supported by the assessment that the state will support the IAA if necessary.
The IAA’s financial results derive largely from the landing fees that it charges on the one hand, and from royalties it pays to the state on the other. Its revenue rose consistently between 2017 and 2019, as annual passenger numbers grew from 23.1 million to 26.5 million, but it was badly hit in 2020, as severe restrictions on aviation came into force in a bid to combat the Covid-19 pandemic.
Revenue recovered to some extent in 2021, and more strongly in 2022, and Midroog sees it back at 2019 levels by the end of this year.
In order to enable it to cope with downturn in aviation during the pandemic period, the IAA was allowed to raise external debt of up to NIS 3.1 billion to finance its routine expenditure. In June 2021, the IAA issued two series of index-linked bonds in a private placement with financial institutions, raising NIS 1 billion.
In 2020, passenger numbers fell to 4.5 million, revenue fell to NIS 1 billion, and the IAA switched to an operating loss, of NIS 1.3 billion.
After another tough year in 2021, when the IAA posted an operating loss of NIS 1 billion, results began to recover in 2022. Passenger numbers jumped to 19.3 million, revenue reached NIS 3.55 billion, and the authority posted an annual operating profit of NIS 510 million.
The trend strengthened in the first half of this year, when passenger numbers were 11.4 million, revenue grew by more than 50% in comparison with the corresponding period of 2022 to NIS 2.08 billion, and operating revenue, as mentioned, more than quadrupled to NIS 334 million.
Published by Globes, Israel business news - en.globes.co.il - on September 27, 2023.
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