The Irish Aviation Authority (IAA) last year recorded its first ever pre-tax loss, arising from the collapse in international air traffic brought about by the Covid-19 pandemic.
According to the newly-published 2020 IAA annual report, the IAA recorded a pre-tax loss of €164,000 following a pre-tax profit of €32.86 million in 2019 — a negative swing of €33.1 million.
The IAA recorded the pre-tax 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 the authority recorded the pre-tax loss due mainly to net interest payable and similar charges.
Last year, air traffic volumes managed by the IAA decreased by almost 60 per cent and recently appointed chairman, 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”.
Appointed to the role on January 12th, Ms Hynes stated: "This will mean that the current difficult financial position will continue and the IAA will have to maintain its focus on cost containment in 2021."
The financial challenges faced by the IAA resulted in the board on March 24th this year proposing to slash its dividend to €40,500, compared to a dividend of €7.8 million paid out last year.
In his report, IAA chief executive Peter Kearney revealed that the IAA’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.
Mr Kearney stated: "Managing our own cost base and preserving our liquidity was a key response to Covid-19 and the immediate loss of income."
He added: "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 in 2020 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.
The financial review states: "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.”
In 2019, the IAA managed a record number of flights at 1.17 million and in his report, Mr Kearney stated that by the end of 2020, "we 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”.
Since our establishment in 1994, we have never faced the level of operational and financial challenge that we faced since March 2020
He said: "Since our establishment in 1994, we have never faced the level of operational and financial challenge that we faced since March 2020, as a direct result of the Covid-19 pandemic.”
The report states that 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.
Numbers employed at the IAA last year increased from 714 to 725 as its 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.
A note attached to the accounts states that the company is availing of the Government’s Employment Wage Subsidy Scheme (EWSS) and the amount due in respect of 2020 was €1.79 million.
The salary of CEO Peter Kearney reduced from €225,000 to €217,000 due to a company wide 4.5 day week from April to December. Mr Kearney’s total 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 for IAA’s air traffic management functions from its safety regulations functions and Ms Hynes stated that 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.