‘Our rating is higher than the Spanish treasury’, says Aena boss

The boss of the world’s largest airport group believes his company has ridden out the turbulence facing the wider industry

Luton airport has suffered a difficult 2020 but the owner sees room for optimism

No matter how big the personalities of the board of Aena, the €22bn (£20bn) airport owner, Maurici Lucena Betriu has made it clear where their footballing loyalties should lie.

“From the moment I was appointed chairman and chief executive of the company, all of them became Barcelona supporters – even Sir Chris Hohn,” says the boss of the world’s biggest airport operator.

Hohn, one of Mayfair’s most successful hedge fund investors, indicated his previous footballing allegiance during his record-breaking $530m (£377m) divorce in 2014.

The two-week hearing offered a rare insight into the billionaire’s world, with him labelling Spanish centre-forward Fernando Torres – a £50m flop signed by Chelsea – “worthless” during one of the more bizarre exchanges. The same cannot be said for his near-4pc stake in Aena, in which Hohn’s TCI fund is the second-biggest shareholder after the Spanish Government.

Holding out on Aena has proved a shrewd investment despite the turmoil facing the global aviation sector. Shares in the Madrid-listed company have surged almost a quarter in November on hopes of a vaccine, adding more than €150m to the value of Hohn’s stake – or two-and-a-half of Fernando Torres.

Almost 300 million passengers passed through Aena’s airports in 2019. That is nearly three times the size of its nearest rival group, Aeroports de Paris. Heathrow, until recently Europe’s biggest individual airport, welcomed 81 million people last year.

The company manages 46 airports in Spain and has stakes in 23 others. Its UK base is at Luton, Britain’s fifth-busiest airport and the home of easyJet. Aena’s other airports are spread across the likes of Brazil, Mexico, Colombia and Jamaica.

Such geographical reach gives Aena considerable financial clout. The strength of the operator’s balance sheet even surpasses that of its biggest investor. “We have the highest rating among Spanish companies. Our rating is higher than the Spanish treasury,” explains Lucena Betriu.

As the pandemic drags on, UK airports continue to lobby ministers for bespoke financial support.

Treasury loans and Rishi Sunak’s job retention scheme are welcome but not enough, they say. Such requests have, so far, fallen on deaf ears. And UK industry insiders say the aviation sector is becoming increasingly fragmented, as evidenced recently by airlines launching individual pilot schemes to reopen the crucial London to New York travel corridor, rather than taking a coordinated industry-wide approach.

Italian officials appear more amenable. Last week, it emerged that Rome was considering a €1bn funding request from Italian airport association Assaeroporti to cover losses expected to be incurred next year. Aena has fared much better by comparison.

Lucena Betriu is sceptical of a report published at the end of October that warned nearly 200 airports across the UK and Europe were at risk of going bust within months.

Maurici Lucena Betriu, chief executive of Aena Credit: Aena

Aena has not made use of any of Spain’s public financial support schemes, such as Madrid’s version of the job retention scheme or state guarantees on loans, he says. In part, this is because Aena sub-contracts the majority of operations. Just one in five of the people working at the company’s airports are directly employed.

“Our workers mainly supervise, they mainly manage,” he says. “This has clearly been another strength.”

Heathrow headwinds

Heathrow, owned by another Spanish company Ferrovial, is facing a particularly bleak future.

With plans to build a third runway looking like little more than a pipe dream, what was Europe’s busiest airport is laden with £17.5bn of debts, and recently became embroiled in a bitter row with the British aviation regulator over the latter’s refusal to increase airport charges by £1.7bn to compensate for Covid losses.

“We have historically been very prudent. For example, if you were to compare Aena’s debt to British airports... the ratio of our debt to Ebitda [profits] is a lot lower. And a lot lower than the average of the most important British airports. This has some drawbacks in ordinary times, but when you are facing such a strong and profound crisis as this one, this is clearly an advantage.”

Heathrow is the last airport owned by a consortium of investors, that originally acquired BAA in 2006. Fourteen years ago, BAA was better diversified, owning Gatwick, Edinburgh and Stansted airports among others. A forced sell-off, at the behest of UK competition regulators, has left investors exposed to a one-dimensional asset; a weakness laid bare as Covid swept across the globe.

“Heathrow is the largest airport in Europe and it is an excellent airport. It is one of the main reference points for every airport in Europe,” says Lucena Betriu. Yet there is a “but” on the tip of his tongue.

“Having said that, their business model is very different. The nature of their ownership is completely different to Aena; another very important difference is that Heathrow is a sole airport. The company just owns Heathrow; in the case of Aena we have a [broad] network of airports.”

Going green

Extinction Rebellion protesters blockade a road to London City Airport in October 2019 Credit: Heathcliff O'Malley

Prior to the pandemic, the climate change agenda dominated the aviation industry. Airports were a regular target of protestors from Extinction Rebellion, which sought to “flight-shame” the public into turning their back on air travel.

The demonstrations left Hohn, one of Extinction Rebellion’s biggest donors, open to claims of hypocrisy.

Aena is not the only airport in Hohn’s concentrated portfolio of investments. Since last year, he has built a stake in Ferrovial – Heathrow’s 25pc shareholder – that is now worth almost €1bn.

He is also the second-biggest investor in Getlink, the company that owns the Eurotunnel – a staple of lorry drivers bringing goods to the UK. But the billionaire’s rebellion manifests itself differently – through internal, rather than external, pressure.

For almost a year, Hohn has pressed Aena to make a slew of climate change commitments. Last month, with the blessing of the Spanish Government, the company finally relented, explains Lucena Betriu.

In what the 44-year-old bills as a “turning point”, he says Aena is the first listed company in the world to put its green promises to the vote at its annual investor meeting. And he makes no attempt to cover up who was driving the changes.

“Chris Hohn is a very pushy board member and he is convinced that the ambitious targets in sustainability are important for Aena and the world.”

Although Aena may have navigated the crisis better than some of its rivals, there is little doubt that the pandemic is squeezing the aviation industry and will continue to do so for years to come.

And making expensive climate change commitments could put further pressure on Aena’s finances.

Lucena Betriu admits that some will be costly, with a trade-off between the promises and profitability. “But when you consider it overall, this trade-off vanishes,” he says.

He uses the example of a €350m project to install solar panels over the next six years to power all of the company’s Spanish airports.

“When you take into account the evolution of the technology, it is for sure that we will save costs.

“There is another profitability aspect. We will pass through almost all of the savings to airport charges. This means we will reduce the tariffs… so airlines will be more attracted by our charges, so they will use Spanish airports more and this will produce more business for us in terms of flights and commercial activity.”

Compared with many of his peers, Lucena Betriu strikes a more upbeat tone.

Testing times

But such optimism cannot be maintained when considering the failure of governments to implement a Europe-wide testing regime. The UK’s decision to remove Spain from its list of travel corridors at the peak of the summer season was a hammer blow.

Despite the increasing popularity of more exotic destinations, it remains Britain’s favourite place to holiday.

A testing regime is crucial to reviving the fortunes of tourist hotspots before a vaccine is rolled out, Lucena Betriu explains.

He says the reputations of Aena and the destinations its airports serve have been “damaged” by political inaction on testing. “For many, many tourists and travellers, the airport is the first door that they open when they enter Spain. I am a little bit upset about this.”