LFV Annual Report 2019 1
L F V 2019 C OMMENT S ON THE INC OME S T ATEMEN T
COMMENTS ON THE INCOME STATEMENT Unless otherwise stated, all amounts are shown in million SEK. Information in brackets concerns the previous year. The operating loss in the LFV group (LFV) after financial items is SEK - 40 million (5). The result before taxes is SEK 44 million better than the budget, which was SEK -85 million, but at the same time SEK 46 million lower than the previous year. The result for the year after tax equivalent is SEK -31 million (1). Lower other operating revenue, higher operating expenses and lower interest expenses attributable to pension provision are what primarily influenced the result in comparison with the previous year. The income statement for 2019 has also been affected by the closure of NUAC HB, which involved LFV resuming operations for en route operations under its own management and thus no longer contracted and invoiced expenses to NUAC during the entire year, which was the case in 2018. Moreover, LFV has larger operations directly funded by the state in 2019, with higher appropriation and operating expenses as a result. OPERATING REVENUE Operating revenue is SEK 3,071 million (3,156), a decrease of SEK 84 million. Aviation revenue Aviation revenue has increased by SEK 50 million to SEK 2,205 million (2,155). Of the year's aviation revenue, approximately SEK 117 million (200) is attributable to effects related to the financing of costs exempted from risk sharing (uncontrollable costs) within the charging system for en route air navigation services and Terminal Arlanda. En route charges and terminal fees are defined by the European Commission for reference periods of several years. The latest reference period (RP2) is defined for the period 2015-2019. Discrepancies from the defined fees are only permitted in certain specific cases. A permitted discrepancy is uncontrollable changes with respect to pension costs. Pension costs for 2018 and 2019 increased substantially due to the changing discount rate that is used to calculate the pension liability in comparison with what was used as a basis 46 for the plan. The parts of the pension cost increase that affect route charges and terminal fees for 2019 were SEK 82 million lower than 2018, which contributed to lower aviation revenue related to uncontrollable costs. LFV's revenue for en route air navigation services is based on the number of service units, which increased by 0.1 per cent in comparison with 2018. The established route charges and terminal fees for 2019 decreased by 5.7 per cent and 4.8 per cent respectively in comparison with the previous year. Traffic increases provides LFV with additional revenue for route charges, but with the regulations that apply, there is a built-in traffic risk sharing mechanism. It means that LFV can retain all income for a traffic increase of up to 2 per cent in comparison with the performance plan for 2015–2019. For traffic increases between 2 and 10 per cent, LFV can retain 30 per cent of the increased income. The remaining share goes to the benefit of airlines in the form of reduced charges. For traffic increases over 10 percent, LFV is not permitted to retain any of the revenue. At the end of 2019, the traffic volume was 11.5 per cent over the performance plan. The outcome that terminal fees was SEK 7 million lower than the previous year depended primarily on lower charges. There is no traffic risk sharing mechanism for terminal fees, which means that LFV's income is not influenced by changes in traffic volumes. Compensation for local air navigation services at state-owned, military, municipal and private airports is significantly higher than the previous year, which can be explained primarily by higher income with respect to tasks for the Swedish Armed Forces. Work performed by the company for its own use The value of work performed by the company for its own use is SEK 45 million (35). Appropriation An allocation of SEK 93 million (25) was received for government commissons in 2019, which equates to the year's appropriation framework for civil defence. Other operating revenue Other operating revenue amounted to SEK 728 million (942). This includes compensation from the associated company NUAC HB with SEK 511 million (723). The equivalent amount was also reported as an expense under Miscellaneous External Costs, because LFV purchases air traffic management services from NUAC and simultaneously receives compensation for personnel and services rendered. The decrease is because operations returned to LFV on 1 September 2019, which is why invoicing for 2019 only took place 8 months in comparison with the whole year in 2018. LFV has a receivable of approximately SEK 115 million, which, based on an ongoing discussion with a customer, has been reserved in the annual report with an equivalent amount awaiting the conclusion of the discussion and invoicing. Grant income amounted to a total of SEK 89 million (74). LFV received EU grants for the financing of investment and development activities during the year. The grants for research and innovation is received from The Swedish Transport Aministration, in addition to the EU, for the development and improvement of efficiency of air navigation services. OPERATING EXPENSES Operating expenses totalled SEK 3,070 million (3,013). Staff costs Staff costs amount to SEK 1,658 million (1,636), an increase of SEK 22 million. Costs for wages and salary were SEK 29 million higher than the previous year, while costs for social insurance contributions were somewhat lower thanks to somewhat lower pension costs. The result for 2019 has not been influenced by any affects of changed calculation bases.