Airport Investment Assessment

Transcription

1 Airport Investment Assessment Page Airport Investment Assessment M2P PRODUCT OFFERING

2 GmbH Bockenheimer Landstrasse Frankfurt am Main Germany First Edition Frankfurt/Germany 2017

3 Airport Investment Assessment Page 3 SUCCESSFULLY INVESTING IN AIRPORT INFRASTRUCTURE Investments in global airport expansion and construction remain strong and continue to grow exponentially. Currently, around 1 trillion USD are planned globally in airport capacity expansion and around 250 billion USD are being invested in the construction of new airports ¹. However, repeatedly, industry and political representatives emphasize an upcoming infrastructure crisis due to lack of airport capacity. In other regions of the world, such as South America and Africa the airport infrastructure investment sector is generally underdeveloped. Investors and the reasons to invest in airport infrastructure are diverse. Governmental institutions and development banks are interested in providing infrastructure in order to increase trade and tourism to further grow the economy. However, banks, as well as funds and other investors, have also identified airports as an attractive, profitable long-term investment opportunity. M2P CONSULTING THE IDEAL PARTNER TO ADD VALUE M2P provides experience, tools and judgment to assist its clients in preparing robust commercial assessments and in-depth risk assessments to provide a solid basis in order to make a profound investment decision. Our knowledge covers traffic forecasting, definition of a target operating model, the prediction of aeronautical and non-aeronautical revenues and an investment decision suggestion based on thorough commercial and risk assessments. Through the M2P team s long-standing experience with airport privatization, PPP projects and construction around the world, in the Americas, Europe, Africa and Asia, our knowledge and capabilities cover the following aspects: SWOT analysis Holistic investment risk assessment Traffic forecast Customer demography & behavioral analysis Analysis of aeronautical and non-aeronautical revenue potential Airport operating model Financial projections and modelling Market intelligence Business strategy Regulatory compliance Overall feasability assessment APPROACH AND METHODOLOGY The decision for or against an investment decision takes more than a financial assessment, especially for large scale and complex infrastructure projects, such as airport renovations, extensions or new constructions (greenfield). To conduct an Airport Investment Assessment, M2P uses a proven four step approach to analyze the different factors in a systematic way and to assemble a full picture in order to make a well-informed and sound investment decision. ¹ Source: CAPA Center for Aviation

4 Page 4 Airport Investment Assessment PHASE 1: Initial Analysis Expectations and constraints of the investor are reviewed. Investment size, type of financing, expected financial KPI s (e.g. ROI, LTV/LTC, ICR, DSCR) and risk affinity are taken into consideration. Additionally, a SWOT analysis is performed that includes an initital risk assessment covering the different categories which might affect the profitability of the investment, including: Macroeconomic risks: Unforeseen macroeconomic changes such as financial crises, fiscal imbalances, price volatility. Market risks: Unforeseen changes in travel / passenger demand and airline business models. Regulatory risks: Unfavorable legal and regulatory changes such as changes in political / economical policies as well as in tax, customs and tariff regulations. Geopolitical risks: Political, social and cultural factors including conflicts and public security issues. Natural risks: Natural catastrophies such as hurricanes, earthquakes or sandstorms damaging the airport or otherwise affecting airport operations negatively. Construction risks: Factors related to the construction, e.g. planning, design, construction works and ORAT. Operating risks: Factors originating in the operations such as process inefficiency, cost, technical and compliance issues.

5 Airport Investment Assessment Page 5 PHASE 2: Target Operating Model The development of a Target Operating Model based on client investor s targets, risk affinity and on Phase 1 analyses is assessed in the five substeps below:

6 Page 6 Airport Investment Assessment 1. Traffic Forecast: Conduction of regression, trend line and market analysis to model historical and future traffic demand (passengers, aircraft movements, cargo, MTOW, peak hour ratios) considering macroeconomic analysis, passenger demand, identification of airlines and type of operations (LCC/hub), seasonality, flight origins / destinations. 2. Aeronautical Revenues (regulated): Forecast of revenues resulting from the provision of regulated aeronautical services, based on existing fee regulation, forecasted operational data (passengers, movements), expected airlines and aircraft mix, among others. Estimation of expected aeronautical revenues based on tariff structure analysis (historic and current tariffs) and benchmarks among other studies. 3. Non-Aeronautical Revenues (non-regulated): Forecast of revenues resulting from the provision of nonregulated services, such as retail, duty free, food and beverage, car parking, rental cars and advertising. Commercial revenue forecasts based on main determinants (revenue mix, passenger behavior, spending rate), benchmark or comparable airports and possible strategies to improve revenues. 4. Operating Expenditures: Forecast of operating expenses, based on the existing data on both staff and non-staff operating costs, considering potential process improvements and savings. The additional requirements are derived from the airport s traffic growth forecast and the possibility of implementing expanded (e.g. night) operations. Main assumptions to be made in this case will be related to the elasticity of staff and services / resources, to the volumes of traffic expected at the airport as well as the requirements of expanded operations. Forecast of operating costs is focused on staff and external contracts and on possible savings. 5. Functional Design: Design of Processes and Standard Operating Procedures, Stakeholder Definition and Management, Ensuring Consistency with Forecasts and Preparing Alternatives. 6. EBITDA: Construction of the Operating Model: Review of the existing and planned / expected investments for the development of the airport infrastructure, based on the Airport Master Plan and other existing data. Consolidation and integration of all areas in order to present a consistent and coherent Operating Model: Calculate EBITDA, ratios per passenger, margins and develop operating scenarios and sensitivities. PHASE 3: Development of Finanical Model Scenarios, sensitivities and financial structure, and, if applicable, conduction of roadshows with financial institutions and private equity firms in order to define terms and conditions for the bid. Definition of airport requirements and estimation of construction and operating costs with potential contractor and operator will be evaluated. PHASE 4: Recommendation Based on the outcome of the various, previously conducted assessements, on the discussion with the investor, potential contractors and operators, benchmarks and on our extensive experience we provide a presentation of our results and detailed recommendations regarding your investment decision.

7 Airport Investment Assessment Page 7 LET S PARTNER TO ASSESS YOUR AIRPORT INVESTMENT OPPORTUNITIES Contact us for an open discussion and further information without obligation on how M2P can support your organization based on your individual needs, requirements and schedule as a valued client. Dr. Christoph Lymbersky Partner, Venture & Capital Frankfurt, London, Silicon Valley lymbersky@m2p.net More than 12 years of experience in top management consulting especially turnaround, restructuring and raising efficiency projects. Former VP at Deutsche Telekom Capital Partners and CEO of T-Venture, Europe s biggest strategic venture capital firm. Priscilla Schelp Manager, Risk Solutions Frankfurt, London schelp@m2p.net More than 5 years of experience consulting boards of international companies across various industrial sectors in Asia and Europe. Focus on major projects, strategy, risk management and supply chain management. WHY M2P Our team of leading airport and airline industry experts in business planning, strategy, and management plus stakeholder communications and relations have been delivering award winning services to clients for over 19 years. We are independent and objective. OUR STRENGTHS M2P has functional and industrial experience in airports and airlines, combining the knowledge and experience of strategy consultants and functional specialists. We thus provide expertise across all airport subjects: Business strategy, operating standards, operations, physical assets, human resources management, security planning and business restructuring. We possess a deep understanding of airline strategy, regulation, financing, operations and route development, and setting of airport charges to airlines in the U.S., Europe and around the world. M2P s digitalization expertise adds value in assessing future digital business cases. OUR PROFILE M2P has a global presence, with more than 100 dedicated employees serving clients worldwide from offices in New York, London, Frankfurt, Dubai, Hong Kong and Silicon Valley. We have been adding value to the businesses of satisfied clients for 19 years, delivering 500+ projects to this day.

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