Aer Rianta is a large, diversified and profitable State company which could be worth £700 million to £800 million if it was floated on the stock market. Pre-tax profits reached £45.5 million for 1997, profits after tax were £42 million and the group recorded a healthy return on capital of 20 per cent. It paid £15 million of these profits to the Government last year. Profits come from running the three airports at Dublin, Cork and Shannon, stakes in Dusseldorf and Birmingham airports, Aer Rianta International which has stakes in and/or manages duty free shops throughout the world and the Great Southern Hotel chain of eight hotels.
Against the background of a strong economy and a huge increase in passenger numbers, group profits have risen significantly in recent years - that £42 million figure in 1997 compares with £21 million in 1993. Some 13 million passengers passed through its airports last year, up from just over 8 million five years ago.
Aer Rianta has expanded geographically, taking stakes in airports in Dusseldorf and Birmingham and developing duty free operations in a wide range of locations including Bejing, Hong Kong, Moscow, St Petersburg, Kiev, Karachi and Damascus and at both ends of the Channel Tunnel at Felixstowe and Calais. It is constantly developing. The most recent initiatives include a move into the North American duty free market with the acquisition of United Cigars Stores for about £13 million and the start of construction of a business and development park at Cork airport. But the group is facing a number of challenges. Profits from its duty free shops within the EU will be significantly diluted if the plan to abolish intra-EU duty free sales next July comes into effect. Duty free sales at Irish airports account for about half group profits and replacing this lucrative source of income will be a major challenge for Aer Rianta.
Borrowing levels are rising with end 1997 debts of £90 million and a significant capital expenditure programme is underway which will have to be funded. Between 1997 and 2001 Aer Rianta expects to spend more than £200 million upgrading and expanding its airports.
