May 12, 2021
TORONTO, CANADA - The Greater Toronto Airports Authority ("GTAA") today reported its financial and operating results for the first quarter of 2021. Passenger activity decreased 88.8 per cent during the first quarter of 2021 as compared to the same period of 2020. This decrease is due to the impact of the COVID-19 pandemic on the GTAA and the global aviation industry generally.
"The COVID-19 pandemic continues to impact Canada's aviation sector severely, and Toronto Pearson's first-quarter financial and passenger results are representative of the challenges that the industry at large is facing," said Deborah Flint, President and CEO, Greater Toronto Airports Authority. "We thank the federal government for several positive initiatives to support air travel and tourism in its April Federal Budget announcement, and we look forward to a plan for aviation that will permit the restart of air travel when the time is right."
With continued global intermittent lockdowns, travel restrictions and mandatory emergency order safety precautions, the COVID-19 pandemic and resulting economic contraction has had, and is expected to continue to have, a material negative impact on demand for air travel globally. Toronto Pearson has experienced material declines in passengers and flight activity during the first quarter of 2021, as compared to the same period in 2020. Due to the pandemic and the resultant travel restrictions including border closures, severe financial impacts and economic contraction, there have been multiple flight and route cancellations by air carriers. The reduced activity is having a material negative impact on the GTAA's business and results of operations, including aeronautical and commercial revenues and airport improvement fees.
Key Financial and Passenger Information
During the first quarter of 2021, passenger activity through Toronto Pearson and resultant revenues were materially lower as a direct result of the impact of COVID-19, as compared to the same period of 2020.
The Government of Canada has deferred the GTAA's Ground Lease rent payments in respect of 2021, with such payments to be made over a ten-year period commencing in 2024. The GTAA is also participating in the Canadian Emergency Wage Subsidy ("CEWS") program.
Earnings before interest and financing costs and amortization ("EBITDA") during the first quarter of 2021 was materially lower, as compared to the same period of 2020, due to significant revenue reductions caused by the impacts of COVID-19 partially offset by cost savings. For these same reasons, the GTAA incurred a net loss of $127.0 million during the first quarter of 2021 as compared to the net income of $6.6 million in the same period of 2020.
From January 1, 2021 until March 31, 2021, the GTAA drew $85.0 million of cash from short-term borrowings in light of the continuing impact of the COVID-19 pandemic on the GTAA's revenues and operations. The GTAA's net liquidity position (including cash) as at March 31, 2021 was approximately $1.3 billion.
As a result of COVID-19, there is very limited visibility on travel demand given changing government restrictions in place around the world. These restrictions and concerns about travel due to COVID-19 are severely inhibiting demand. Management continues to analyze the extent of the financial impact of COVID-19, which is and continues to be adverse and material. While the full duration and scope of the COVID-19 pandemic cannot be known at this time, Management believes that the pandemic will not have a material impact on the long-term financial sustainability of the Airport.
Apart from the impact of the pandemic on GTAA revenues and operations, there may also be disruptions, including to air carriers, supply chains and third-party service providers. The pandemic may also impact the cost of capital and the ability to access the capital markets in the future which may arise from disrupted credit markets, and possible credit ratings watch or downgrade of GTAA debt.
The GTAA's first quarter 2021 financial results are discussed in more detail in the GTAA's Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis, each for the three-month period ended March 31, 2021, which are available at www.torontopearson.com and on SEDAR at www.sedar.com.
Caution Regarding Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable securities laws. This forward-looking information is based on a variety of assumptions and is subject to risks and uncertainties. These statements reflect GTAA Management's current beliefs and are based on information currently available to GTAA Management. There is a risk that predictions, forecasts, conclusions and projections that constitute forward-looking information will not prove to be accurate, that the GTAA's assumptions may not be correct and that actual results may differ materially from such forward-looking information. Additional detailed information about these assumptions, risks and uncertainties is included in the GTAA's securities regulatory filings, including its most recent Annual Information Form and Management's Discussion and Analysis, which can be found on SEDAR www.sedar.com.
NON-GAAP FINANCIAL MEASURES
Throughout this press release, there are references to the following performance measure which in Management's view is valuable in assessing the economic performance of the GTAA. While this financial measure is not defined by the International Accounting Standards Board ("IFRS"), and is referred to as non-GAAP measure which may not have any standardized meaning, it is a common benchmark in the industry, and is used by the GTAA in assessing its operating results, including operating profitability, cash flow and investment program.
EBITDA is earnings before interest and financing costs and amortization. EBITDA is a commonly used measure of a company's operating performance. This is used to evaluate the GTAA’s performance without having to factor in financing and accounting decisions.
About the Greater Toronto Airports Authority
The GTAA is the operator of Toronto Pearson International Airport.
GTAA Media Office (416) 776-3709