Covid-19 sees IAA report first pretax loss
Company’s annual report shows operating profits plunged by 93.5% from €31.88m to €2m
Last year, air traffic volumes managed by the IAA decreased by almost 60 per cent. File photograph: Dara Mac Dónaill/The Irish Times
The Irish Aviation Authority (IAA) recorded its first pretax loss last year following the collapse in international air traffic due Covid-19 .
The authority recorded a pretax loss of €164,000 following a pretax profit of €32.86 million in 2019 – a negative swing of €33.1 million, according to its 2020 annual report.
It recorded the pretax loss – its first since it was established in 1994 – after revenues declined by 21 per cent from €197.2 million to €155.5 million.
Operating profits at the IAA last year plunged by 93.5 per cent from €31.88 million to €2 million and it recorded the pretax loss mainly to net interest payable and similar charges.
Last year, air traffic volumes managed by the IAA decreased by almost 60 per cent and chairwoman Rose Hynes stated in her report that “air traffic levels over the course of 2021 are likely to be as low, if not lower, than the full-year 2020”.
In March, the board proposed slashing its dividend to €40,500 compared to a dividend of €7.8 million paid out last year.
Cost containment measures
In his report, IAA chief executive Peter Kearney said the authority’s cash funds and short term deposits reduced by €62.8 million from €232.6 million to €169.8 million at the end of December last.
“Managing our own cost base and preserving our liquidity was a key response to Covid-19 and the immediate loss of income.
“Without the actions taken, the level of cash burn would have been significantly higher. Cost containment remains in place in 2021 and is a necessary component of our strategy to manage our way through the crisis and secure the future of the company.”
The cost containment measures introduced last year included: a moratorium on recruitment; pay freezes; a reduced working week in July to October; deferral, where risk-assessed as appropriate, of capital projects; cancellation of student controller training; and cancellation/deferral of all non-essential expenditure.
“Cost reduction measures will continue in 2021. A banded pay cut of up to 10 per cent for employees is in place and will apply from January 8th, 2021 to January 6th, 2022,” the review states.
In 2019, the IAA managed a record number of flights at 1.17 million and Mr Kearney stated that by the end of 2020 it had “recorded levels of air traffic akin to the late 1980s, just 498,803 flights in total, down almost 60 per cent on 2019. At one point in April 2020, flight numbers were down by 90 per cent”.
While turnover decreased by 21.2 per cent to €155.5 million compared to an average reduction in overall air traffic activity of 57.4 per cent, almost one third of reported revenue is accrued revenue to be paid to the IAA through adjustments to en route and terminal customer charges in future years, up to 2027 or, at the discretion of the Aviation Regulator, 2029.
The IAA last year recorded the bulk of its revenues at €101.9 million from ‘en route’ air travel activity.
Staff and wages
Numbers employed at the IAA last year increased from 714 to 725 as payroll costs declined from €93.5 million to €90.7 million.
The wage cuts last year resulted in the numbers earning over €150,000 last year declining from 35 to 14 and numbers earning between €125,000 and €150,000 reducing from 154 to 101.
This contributed to the numbers earning between €100,000 and €125,000 increasing from 185 to 220.
The company is availing of the Government’s Employment Wage Subsidy Scheme and the amount due in respect of 2020 was €1.79 million.
Mr Kearney’s salary reduced from €225,000 to €217,000 due to a company wide 4.5 day week from April to December. His remuneration package totalled €312,000 after pension contributions of €81,000 and other taxable benefits of €14,000 are taken into account.
The loss in 2020 takes account of non-cash depreciation charges of €10.3 million and Met Eireann charges of €6.49 million.
Preparations are continuing for the separation of IAA’s air traffic management functions from its safety regulations functions, and Ms Hynes said the Air Navigation and Transport Bill, enabling the restructuring, was published in December 2020 and is currently making its way through the Oireachtas.
Shareholder funds at the end of last year totalled €194.93 million.