Ceo's Message

Ceo's Message

As TAV, in 2018 we succeeded in all three pillars of our strategy for growth. In May 2018, we purchased a 50% stake in the company operating Antalya Airport for EUR360 million and added the fifteenth airport to our portfolio. Thus, we were able to realize value accretive inorganic growth in 2018.

Organic growth in 2018 turned out strong and 2018 became our best year so far both operationally and financially. Total passengers served increased 31% and reached 152 million. Stripping out the additional passengers from Antalya, like for like organic growth in total passengers served was 8% in 2018.

As the third pillar of our company’s growth strategy, the service companies now comprise 37% of our combined revenue. TAV Operation Services bought the majority shares of Spain-based company GIS, which owns brands like Premium Traveler and HelloSky and accelerated growth in South America and Europe. The footprint of TAV service companies comprising ATU, BTA, Havas and TAV Technologies reached 76 airports in 21 countries including Denmark and Indonesia.

As Turkey’s value proposition In tourism became more evident in 2018 with lower prices, Turkey again became very attractive for tourists from all parts of the world. In 2018, European visitors to Turkey increased 33% while Russian tourists increased 26%. Visitors from the rest of the world increased 8%. With this strength in tourist arrivals Turkey reached all time highs in tourist numbers. With the value proposition still continuing, we expect another very strong year in tourism in Turkey in 2019.

Our contract in Istanbul Ataturk Airport ends in January 2021. As we prepare to shut down Istanbul Ataturk Airport to commercial traffic earlier,  we will have lost a period of operation for which our losses of profit will be compensated by the State Airports Authority. The determination of the amount of compensation is a technical matter which is being detailed out between KPMG which advises us and PWC which advises the State Airports Authority.  We have coordinated very carefully with the Human Resources of the new airport to make a smooth transition possible for our employees. We invested in a new headquarters building in Vadistanbul because we have to vacate our headquarters in Istanbul Ataturk Airport.

As a result of the excellent performance in 2018 operations we had very strong financial results. Our revenue grew 4% and became EUR 1181 million. Our EBITDA grew 13% and became EUR 573 million. Our net income grew 46% and became EUR 255 million. The capital expenditures came in at EUR 92 million.

In revenue and passenger numbers we reached our targets we announced in July. EBITDA was 1% below our targets due to accounting changes in Antalya. Nevertheless, net income was much better than guidance due to reversal of some impairment provisions made in 2017 . Capital expenditures came in below guidance due to some investments being deferred to 2019.

Due to the special situation of Istanbul Ataturk Airport, we have provided our 2019 targets without including any contribution and or effects related to Istanbul Attaurk Airport regarding both passenger numbers and financial results. Thus, excluding passengers served at Istanbul Ataturk Airport in 2019 we are guiding for 90 to 94 million total passengers served. Again, excluding any EBITDA generated from Istanbul Ataturk Airport in 2019 and excluding any financial effects related to compensation negotations, we are guiding for a 38 to 42 % decrease in consolidated EBITDA.

In 2018, we distributed TRY406 million in dividends in line with our official dividend policy of 50% payout which crystallizes our vision of balancing growth and income. Similarly, for 2018, our Board of Directors has resolved to submit for shareholder approval, a dividend of TRY758 million, out of 2018 earnings at the General Assembly meeting, which corresponds to a payout of 50%.

In a relatively short period of time we built a global brand in Turkey. We owe this success to our employees, our shareholders and all our business partners as it was their efforts and their trust that made everything possible. I wholeheartedly thank our employees, our shareholders and all our business partners for bringing TAV Airports to today.