Glasgow Prestwick Airport Stakeholder Statement 2023
Diverse Distinct Delivering
Message from the Chair
Forsyth Black
I am pleased to report another year of improving performance at Glasgow Prestwick Airport. Ian Forgie and his team have done a sterling job in steering the company through the post pandemic recovery into a period of sustainable growth. Our Board was enhanced during the reporting period with Jamie Ross joining and bringing a fresh, engaging commercial viewpoint. He replaced Valerie Scoular, who left the Board with our very best wishes for the future.
Together with the Executive Team, the Board has charted a path towards a new strategy, built around strong commercial principles and financial discipline. Our Shareholder, the Scottish Government, has a long-term stated aim of returning Glasgow Prestwick Airport to private ownership and the Board is of the firm belief that in order to do so, at the greatest benefit to the Scottish taxpayer, it ensures that the business is set up the best it can be for a bright future. Of course, saying that and doing it are two entirely different things. Ian and the executive team have set themselves up to deliver on that commitment and I believe that shows through in the results presented in this document. The Board firmly believes that there is more progress to come and the fantastic asset that is Glasgow Prestwick Airport will develop further in the years to come. We are investing in new security equipment, new ground equipment – some electric where appropriate, we are upgrading our cargo facilities with cold stores and specialist X-ray equipment and we are revitalising some of the more tired corners of the airport with remedial and cosmetic work. The Board has ensured that disciplines around capital allocation and appropriate investment controls are being put in place more rigorously than ever. Alongside the work of investing in, renewing and upgrading our facilities and equipment, we are bringing a fresh energy to our team of dedicated people in all areas of the business. There is a palpable feeling that positive change is in the air, and that is heartening to feel. Our business development efforts are yielding results with more cargo charter aircraft being attracted to the airport, and a new deal with Ryanair, our primary passenger airline is complete and is proving to be mutually beneficial. We have built links with overseas airports in terms of joint marketing arrangements and intelligence sharing, and we have reached out to the industrial communities around South Ayrshire and the wider Scottish market to ensure they know what our teams are capable of. All of these seeds take time to germinate, but green shoots are in evidence. All of this does not come without investment in people and resources to deliver, and the executive team has taken a prudent approach to that, ensuring that modest cost increases result in marginal financial benefits accruing. None of what I describe is without risk, but in the case of Glasgow Prestwick Airport it is measured and controlled risk, and I am pleased to report that there are many other strands to our growth plans that are taking shape behind the scenes, and I look forward to reporting further growth and progress in years to come.
Our Strategic Pillars Customers & Growth To protect and grow our customer base by providing a diverse and distinctive rage of services.
People & Culture To devlop and invest in a team that is agile, passionate and focussed on customers and operational excellence.
Stakeholder Engagement & Communication To build relationships among local, regional and national stakeholders as a recognisable and trustworthy catalyst for the development of the Ayrshire economy.
Sustainability To have a clear plan to be a sustainable airport...achieving net zero by 2045.
Health, Safety, Security & Quality To achieve the highest standards in health and safety, security and quality standards.
Land, Facilities & Assets To maximise the value from our assets, 880 acre site, facilities, working with customers and the community.
Message from the CEO
Ian Forgie
Once again, the Airport demonstrated its key strength in offering a diverse range of services to different markets and has returned a steady operating profit in challenging conditions. At the start of 2022 the travel sector predicted a strong summer season with unrestricted travel, but the impact of Brexit on the UK labour supply and the tightening of CAA regulations created a shortage of skilled labour for the aviation industry.
However, the Airport managed to adapt and recruit, avoiding passenger queues and delays, with our staff working hard to deliver a safe, secure and efficient service with passenger numbers substantially up on the previous year. We are pleased to confirm a new five-year agreement with Ryanair and we look forward to working with them to grow passenger services. The Airport remains an important base for Ryanair with an Aircraft Maintenance, Repair and Overhaul facility on site employing over 500 people. As anticipated cargo volumes dropped back in 2022/23 from the peak in 2021/22, which had benefitted from the reduction in belly hold capacity and increased charters supplying vaccines, test kits and medical equipment in response to the Covid pandemic. The last twelve months have been a challenging year for cargo growth with global belly hold cargo capacity returning and the ban of the Russian registered fleet impacted movement of heavy equipment and out of gauge cargo. The 2023/24 global market for general freight remains sluggish with a downturn in production in Asia and slowdown in economic growth in the USA impacting demand. However, we are encouraged by the growth seen by our Prestwick Aerospace Aviation Cluster companies. The Board is focussed on growing our cargo business over the next few years and we will continue to invest in equipment and expand our facilities to meet demand, building on Prestwick’s reputation for a fast, efficient and well connected 24/7 cargo service. We continue to provide excellent service to our military customers with most nations operating aircraft using our airfield and facilities, most notably the RAF, USAF and the Royal Canadian Air Force (RCAF) which recently celebrated its 80th anniversary of its connection with Prestwick and RCAF personnel are now firmly established at the Airport. The Airport has a reputation for hosting and supporting key training events and in recent months we supported a NATO training exercise held in Germany, which was a credit to our staff who delivered excellent operational service. Achieving a horizontal Spaceport facility has been an ambition of the Airport for a number of years. It is a complex and specialised operation with the barriers to entry high and we continue to work closely with South Ayrshire Council, Scottish Enterprise and our launch operator partner to make this a reality.
Cargo Passenger
Message from the CEO We continue to invest and upgrade our buildings and equipment and are developing a fresh Master Plan to maximise the 880-acre site. Taking practical action to achieve Net Zero targets has been an objective for the Board and we are pleased with the progress made since 2018 when we first measured our carbon footprint. We believe we are well on our way to achieving our target of 50% carbon reduction by 2030. In the last 12 months we have undertaken more ‘fabric first’ projects and made good progress with plans to invest in roof and ground mounted solar energy projects on site, with the aim to become self-sufficient in electricity in the next three years. We are also working on supporting the change to sustainable aviation fuel (SAF) to establish the Airport as a key supply point for SAF in Scotland. The war in Ukraine has had an impact on energy and food prices in the last 18 months and recently inflation and interest rates have surged to levels not seen for many decades. The Airport continues to review and manage its cost base but inevitably we are seeing a rise in costs, not just in energy but in labour, maintenance and equipment costs. The ongoing inflationary background has fuelled a push for higher wages across the UK and although we were pleased to offer a substantial pay increase to our employees this year, this adds to our cost base challenges and future pay increases must continue to be based on affordability. Overall, the Airport returned an operating profit of £2.1m. This continues the positive trajectory of the group over the last five years. Despite the ongoing economic pressures and the prospects of a UK and Global recession the Board is confident that the Airport will be able to build on its good performance this year. We thank our customers and our employees for their passion and commitment to the Airport and look forward to continuing the progress made in recent years.
Performance KeyPerformance Performance Statistics
22/23
21/22
20/21
Total Movements (‘000) Key Performance Statistics Total Passengers (‘000) Total Freight (Metric(‘000) Tonnes) Total Movements Total Volumes (Million Litres) Total Passengers (‘000)
20.1 459 22/23 13 20.1 44 459
19.2 118 21/22 18 19.2 36 118
14.6 47 20/21 13 14.6 19 47
Total Freight (Metric Tonnes) Revenue Total Volumes (Million Litres)
£m 58.1
13 44
£m 35.0
18 36
£m 18.9
13 19
Operating profit before Exceptional Items Revenue Exceptional Items Reversal of profit impairment on plant andItems equipment Operating before Exceptional
2.1
£m 58.1
1.9
£m 35.0
0.5
£m 18.9
1.9
5.0 0.2
0.5
5.7
5.0 0.2
Reversal of impairment on land Exceptional Items Reversal of impairment on plant and equipment Operating Profit Reversal of impairment on land
Operating Profit
2.1 2.1
1.9 2.1
1.9
The full annual accounts can be viewed here
5.7
Passenger Glasgow Prestwick Airport has been offering passenger connections for almost 80 years and, whilst the Airport enjoys a diverse and distinct mix of revenue streams, passenger services remain an important part of the business mix. 2022-23 saw the start of post Covid recovery, with passenger numbers back to 75% of their pre-Covid levels, and this number continues to grow. The Airport continues to enjoy a strong partnership with Ryanair and a new five-year agreement
was signed at the end of 22/23, and we look forward to working with Ryanair and other operators to develop more route connections and grow passenger numbers. The Airport is known for its high-level customer service, ensuring the ease and speed of the passenger journey through the airport. Our dedication to enhancing the travel experience for all passengers has earned our passenger handling team well deserved recognition and top rating in the CAA’s last five consecutive Accessibility Reports.
We are continually looking to make improvements to ensure Glasgow Prestwick remains our passengers’ first choice departure airport. Next year we will be focusing on improving our existing food and retail offerings as well as investing in other infrastructure and technology to ensure the passenger experience is the best it can be.
Artist’s impression
Prestwick Aviation Services Prestwick Aviation Services (“PAS”) is our Fixed Based Operator (“FBO”) managed by our inhouse handling team, specialising in supporting nonscheduled aircraft operations at the airport including military, trans-Atlantic tech stops, aircraft delivery ferry flights, executive jet charter and general aviation traffic. As well as handling aircraft and providing fuel services we manage all aspects of the pilots’ and passengers’ needs from catering to accommodation and transport and we work together with local businesses to make their visit to Prestwick a memorable experience. The team continue to excel in handling military aircraft, with regular visits from the
United States Air Force and the Royal Air Force who operate out of HMS Gannet. We also continue to support the Royal Canadian Air Force “Air Task Force Prestwick” detachment with three based C130J aircraft as well as transient RCAF C17 & A310 aircraft. The relationship with Canada and Prestwick goes back 80 years and the bonds with the current generation are now firmly established at the Airport and in the Ayrshire community. This summer the team delivered a record month for aircraft visits whilst supporting its largest ever NATO training exercise to date “German Air Defender 2023” . Our General Aviation business continues to attract a wide variety of customers and
aircraft and we are very proud of the level of service we offer. Ayrshire remains a popular destination to access Scotland with international visitors playing at the three nearby Open championship venues and enjoying easy uncongested access to Glasgow. We also regularly welcome business charters servicing industry in the local area, which operate year-round. Work is underway to develop an exciting new FBO building to enhance the offering to our customers. The new building will increase our lounge capacity as well as create a world class facility for pilots and passengers to utilise whilst flying from Prestwick.
Cargo Following a surge in air cargo demand during the Covid-19 pandemic, the global industry experienced a substantial decline in volumes as a result of worldwide economic factors, including soaring inflation, a sluggish Chinese economy, and the conflict in Ukraine. This coupled with the return of cost-effective belly capacity on passenger aircraft over the year has brought significant challenges for dedicated freighter operators. However, in recent months there are encouraging signs of recovery with our scheduled carriers starting to see a slow down in this decline and the
outlook for them and for our non-scheduled operators is positive, with new business opportunities across a number of specialist sectors which bodes well for our future growth and diversification. Handling cargo is one of the strengths of Prestwick and is a key part of the Airport’s strategy for growth. The Board has approved a comprehensive revamp and a fresh approach to our cargo operations. Key to this transformation is our commitment to investing in both our workforce and equipment to achieve our objectives. In the past year we have invested in a dedicated business development
team and bolstered our office support resource. We are also upgrading and adding to our cargo facilities and have invested in state-ofthe-art high loaders, dollies and temperature control capabilities, as well as enhancing our X-ray screening equipment to meet the needs of our expanding business portfolio, and the high standards of security expected in screening specialised cargo. This is significant investment not seen for many years and the business is positive about growth opportunities emerging post Brexit as it relaunches its services to the market.
Cargo
Cargo Investment: Investment:
Temperature-controlled unit for perishables and extra wide loading platforms to accomodate the new Airbus 350 freighter.
Property Glasgow Prestwick Property offers tenants a diverse range of accommodation from office space to aircraft hangars and is therefore distinct from other commercial landlords operating in the local area. Occupancy levels remain high with almost all our properties now tenanted. In the last 12 months we have completed some key improvements to our tenanted estate as well as operational airport properties. Liberator House, which is home to 24 leased office spaces, recently underwent a full window replacement
programme, and the first phase of the Air Traffic Control Tower refurbishment programme has begun and will continue into next year. Key operational areas have also benefited from mechanical and electrical infrastructure upgrades. We continue to invest and improve our facilities and have plans to expand both airside and landside facilities to cater for MRO and aircraft hangarage as well as much sought after industrial space.
Diverse Portfolio
Safety, Security & Quality Creating a safe environment for our employees and Airport users is at the core of everything we do. The Airport is distinct in that it provides all front-line services both above and below the wing, and from kerbside to airside our teams strive to deliver a safe and compliant environment which is responsive and agile in dealing with our customers’ requirements. From Passenger Handling and Security teams to our Air Traffic
Controllers, Airport Fire Service and Aircraft fuelling teams – they are all there to deliver a safe and trusted service. Robust risk assessments and risk identification systems, coupled with regular external audits and oversight by our Safety & Assurance team and Safety and Security committee ensure we will always strive to improve.
We set high standards and we achieve them. At the end of August our Performance Based Oversight Assessment earnt us the highest rating of Outstanding from the CAA External Quality Assurer. Members of our team are CAA Approved Security Training Providers.
People and Culture Our vision is to be an airport that is thriving and distinctive, offering a diverse range of services and our people are key to achieving this, and so developing and investing in a team that is agile, passionate and focussed on customers and operational excellence is one of our key strategic pillars. Our Management and staff are passionate about the future of their airport, ensuring our customers have the best
experience, working together and embracing innovation. The Airport prides itself on developing staff, recognising talent, and supporting employees to build rewarding careers in aviation. Many of our senior managers started their Glasgow Prestwick careers in entry level operational roles and worked their way up, and in the last 12 months we have invested significantly in structures, including internal
promotions and new roles in key areas to support the Airport’s growth strategy. We have also stepped-up our investment in training post pandemic, not only to ensure the highest levels of safety and compliance but to ensure we continue to develop our people. Our people and colleagues matter and make a difference.
Willie Mackie Skills Hub Opening, Ayrshire College
Stakeholder Engagement The Airport management team works closely with multiple stakeholders - from our own staff, customers and suppliers to tenants and aviation businesses large and small. As the beating heart of an aviation cluster in Ayrshire, we are proud to support over 4,000 jobs in aviation, engineering and hospitality industries, attracting international businesses who are innovative and growing, as well as supporting national defence and rescue services vital to protecting Scotland and the UK. We are also actively collaborating with key partners such as South Ayrshire Council, Ayrshire College and Scottish Enterprise and the Airport is
playing a key role in facilitating pro-active dialogue across key sectors – STEM, Space and Aerospace and developing the regional economy of Ayrshire, assisting to unlock strategic projects within the Ayrshire Growth Deal. There are a number of exciting developments already underway or planned for the next 12 months and clear stakeholder communications and engagement will ensure our vision is supported and realised. Our recently appointed Communications and Marketing Manager is implementing a new communications and stakeholder engagement strategy, refreshing our website and marketing
materials which will reflect the diverse and distinct nature of Glasgow Prestwick Airport and deliver brand messaging to stakeholders. The nature of operational work means many employees are not office based and support 24/7 operations. Ensuring timely and consistent communications reach all our staff is essential and, to support this, we plan to launch a new internal communications platform which will allow more cohesive and collaborative communications across all departments.
Sustainability Sustainability is one of Glasgow Prestwick Airport’s six strategic pillars and we are pleased we are on track to exceed our 2030 carbon reduction target of 50% with a projected 59% reduction. We have committed to reach net zero by 2045 and our Project Zero Steering Group meets regularly to review progress on carbon reduction projects. Membership of various sustainability and environmental forums has opened up effective networking opportunities, facilitated mutually beneficial engagement with other organisations and allowed the sharing of best practice across the industry.
We are progressing rooftop and ground mounted solar projects and exploring other green energy technologies and energy efficiency opportunities, which will assist us in achieving our net zero goals. To deliver reduced carbon emissions and improved energy efficiency across our extensive buildings network, a fabric first approach underpins all our infrastructure upgrade projects. These projects include high efficiency LED lighting upgrades, installation of occupancy sensors, full rewiring of older buildings, windows replacement, heating and ventilation upgrades, including replacement
of oil-based heating systems and installation of air conditioning heat pumps. A programme of internal environment surveys is being rolled out, which is focussed on improving employee awareness of environmental impacts and carbon emissions in the workplace and highlighting opportunities for reduced waste recycling and reduced water usage.
TS PRESTWICK HOLDCO LTD Group Statement of Comprehensive Income For the Year Ended 31 March 2023
Notes 3
2023 £’000
2022 £’000
58,126
Cost of Sales
(53,318)
35,004 (30,664)
Gross Profit
4,808 (2,720)
4,340 339 (2,812)
Revenue
Other operating income Administrative expenses Operating profit
5
2,088
1,867
Finance costs Other gains and losses
9 10
(1,727) 475
(1,078) 425 1,214
11
836 836
1,214
Profit before taxation Income tax expense Profit and total comprehensive income for the year
-
TS PRESTWICK HOLDCO LTD Group Statement of Cash Flows For the Year Ended 31 March 2023
Cash flows from operating activities
Notes
2023 £’000 £’000
24
6,236
2,680
6,236
2,680
Net cash inflow from operating activities
£’000
2022 £’000
Investing activities Purchase of property. plant and equipment
(2,276)
(1,120) (2,276)
(1,120)
Net increase in cash and cash equivalents
3,960
1,560
Cash and cash equivlalents at beginning of year
15,671
14,111
Cash and cash equivlalents at end of year
19,631
15,671
Net cash used in investing activities
TS PRESTWICK HOLDCO LTD Group Statement of Financial Position As at 31 March 2023 2023 Notes
£’000
2022 £’000
Non-current assets Property, plant and Equipment
12
Investment property
13
7,596 15,015 22,611
6,165 14,540 20,705
Current assets Inventories Trade and other receivables Cash and cash equivalents
14 15
314 3,979 19,631 23,924
225 5,208 15,671 21,104
23,924 43,400 59,785
23,924 43,400 55,887
(35,861)
(34,783)
875
883
Net liabilities
(14,125)
(14,961)
Equity Retained earnings
(14,125)
(14,961)
Current liabilities Trade and other payables Borrowings
18 17
Net current liabilities Non-current liabilities Trade and other payables
18
Diverse • Distinct • Delivering