Business Context and Reporting Period
Corporación América Airports S.A. (CAAP) is a Luxembourg holding company operating airport concessions through subsidiaries in Argentina, Italy, Brazil, Uruguay, Ecuador and Armenia. The filing is an audited annual Form 20-F for the fiscal year ended December 31, 2021, prepared under IFRS in U.S. dollars; it is not a quarterly filing. CAAP operated 53 airports at year-end and its common shares trade on the NYSE under “CAAP.”
Passenger traffic and results remained materially affected by COVID-19, although travel restrictions were eased during the second half of 2021. In December 2021, CAAP transferred its 50% interest in Aeropuertos Andinos del Perú S.A. and ceased operating the Peruvian airports.
Key Financial and Operating Metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Consolidated revenue | U.S.$706.9 million | U.S.$607.4 million | +16.4% |
| Loss from continuing operations | U.S.$159.8 million | U.S.$357.4 million | Loss reduced 55.3% |
| Net loss | U.S.$181.0 million | U.S.$361.9 million | Loss reduced 50.0% |
| Adjusted EBITDA | U.S.$149.3 million | U.S.$18.1 million | +U.S.$131.2 million |
| Adjusted EBITDA excluding construction services | U.S.$147.0 million | U.S.$16.7 million | +U.S.$130.3 million |
| Operating income | U.S.$6.5 million | Operating loss of U.S.$163.7 million | Improved U.S.$170.2 million |
| Cash flow from operating activities | U.S.$108.0 million | U.S.$0.8 million | Improved U.S.$107.1 million |
| Cash and cash equivalents | U.S.$375.8 million | U.S.$281.0 million | +U.S.$94.8 million |
| Total borrowings | U.S.$1,439.6 million | U.S.$1,344.8 million | +U.S.$94.8 million |
| Net debt | U.S.$1,063.8 million | U.S.$1,063.8 million | Essentially unchanged |
| Total equity | U.S.$773.6 million | U.S.$805.3 million | −3.9% |
| Passengers served | 35.7 million | 25.2 million | +41.5% |
| Aircraft movements | 497,200 | 352,900 | +40.9% |
Approximate calculated margins were 21.1% for Adjusted EBITDA, 0.9% for operating income and negative 25.6% for net income. These margins are affected by significant concession-related depreciation, financing costs, foreign-exchange effects and inflation accounting.
- Revenue mix was U.S.$262.8 million of aeronautical revenue, U.S.$362.1 million of commercial revenue, U.S.$79.8 million of construction-service revenue and U.S.$2.3 million of other revenue.
- Argentina remained the largest segment, contributing U.S.$362.9 million, or 51.3% of consolidated revenue. Armenia generated U.S.$98.4 million and was the fastest-growing segment, while Italy generated U.S.$70.5 million, Ecuador U.S.$65.2 million, Brazil U.S.$58.4 million and Uruguay U.S.$51.3 million.
- Adjusted EBITDA was strongest in Argentina at U.S.$65.6 million and Armenia at U.S.$44.3 million. Brazil improved to U.S.$19.0 million from a U.S.$6.5 million loss in 2020; Italy remained approximately breakeven at U.S.$0.2 million.
- Current borrowings were U.S.$421.3 million and non-current borrowings were U.S.$1,018.3 million. Net debt to equity increased to 138% from 132%.
- Approximately 33.6% of borrowings carried variable rates. A 10% increase in floating rates was estimated to reduce 2021 pre-tax results by approximately U.S.$4.9 million.
Material Changes Versus the Prior Comparable Period
- Traffic recovery drove higher aeronautical and commercial revenue, particularly in Armenia, Ecuador, Italy, Brazil and Argentina. Total passengers remained 57.6% below 2019 levels, indicating that recovery was incomplete.
- Construction-service revenue declined 36.6% as major airport projects incurred substantial costs in 2020, particularly in Argentina and Ecuador.
- Cost of services declined 4.8% to U.S.$622.4 million, helped by lower construction costs, lower depreciation in Argentina following the concession extension and continued cost controls.
- Financial loss declined to U.S.$131.3 million from U.S.$215.5 million, primarily because of lower Argentine peso depreciation effects, partially offset by higher interest expense and Brazilian concession-liability accretion.
- CAAP recorded U.S.$69.1 million of income-tax expense, compared with a U.S.$14.3 million tax benefit in 2020. The increase reflected higher current taxes, Argentine tax-rate changes and higher earnings in certain subsidiaries.
- Loss from discontinued operations increased to U.S.$21.2 million, principally reflecting the Peru transaction. CAAP received U.S.$5 thousand for its interest in AAP but assumed approximately U.S.$17.2 million of liabilities and future capital-expenditure commitments.
- Other comprehensive income of U.S.$138.7 million was driven mainly by currency translation, reducing total comprehensive loss to U.S.$42.3 million despite the U.S.$181.0 million net loss.
Guidance, Outlook, Commentary, Risks and Unusual Items
The filing does not provide formal earnings or revenue guidance. Management expects traffic to continue improving during 2022, citing industry expectations from ACI and IATA, but emphasizes that the pace and durability of recovery remain uncertain. Management concluded that existing financial resources were sufficient to fund liquidity requirements for the following 12 months, subject to traffic recovery, concession-fee outcomes, financing conditions and potential collateral requirements.
- Argentina commitments: AA2000’s concession was extended to 2038, but the extension requires substantial investment and funding commitments, including availability of approximately U.S.$406.5 million and additional investment of approximately U.S.$200 million during 2024–2027. Failure to comply could result in fines or concession termination. The Argentine Government may also buy out the concession for public-interest reasons.
- Brazil liquidity and covenant risk: ICAB did not pay the full 2021 fixed concession fee. A federal court injunction temporarily suspended enforcement actions, but the outcome remains uncertain. The BNDES minimum-rating requirement was not met after March 2022; a 1% annual penalty applies, and BNDES may require approximately R$333 million, or U.S.$59.7 million, of additional collateral.
- Brazil fixed-fee expense: CAAP recognized U.S.$108.8 million of losses in 2021 from accretion and related effects on the Brasilia fixed concession-fee liability and expects similar amounts in the following years.
- Capital commitments: Planned investments include approximately U.S.$67 million for Uruguay’s six new regional airports, U.S.$86.2 million for Carrasco and related projects, U.S.$18.5 million of mandatory Brasilia investments and approximately U.S.$9.5 million in Armenia over the next five years.
- Peru exit: The sale of AAP was part of a strategy to concentrate resources on core concessions, but CAAP retained payment obligations and guarantees until the assumed liabilities and commitments are settled.
- Russia-Ukraine conflict: Armenia is exposed to reduced traffic from Russia. Revenue from international flights to and from Russia was approximately U.S.$42.4 million in 2021; the ultimate impact of sanctions and travel disruption was unclear.
- Other risks: Key risks include COVID-19 or future health crises, passenger-volume volatility, inflation and currency devaluation, concession termination or non-renewal, regulatory fee changes, cybersecurity incidents, labor disputes, environmental claims, tax disputes and high customer concentration.
- Internal controls: Management and PwC concluded that internal control over financial reporting was effective as of December 31, 2021. The critical audit matters included Brazilian concession-asset impairment testing and COVID-19 liquidity analysis.
Important Facts for Investors to Verify
- Confirm the status and funding plan for AA2000’s U.S.$406.5 million availability commitment, preferred-share redemption and required capital expenditures.
- Monitor the Brazilian injunction, ANAC proceedings, BNDES penalty and any demand for approximately U.S.$59.7 million of additional collateral.
- Reconcile reported cash of U.S.$375.8 million with restricted cash, subsidiary-level liquidity and the ability to upstream funds to the Luxembourg parent.
- Review debt maturities, including U.S.$524.3 million of undiscounted principal and estimated interest due within one year, and the terms of Argentine refinancing.
- Assess whether passenger recovery, tariff increases and concession compensation are sufficient to offset ongoing losses, concession-fee accretion and mandatory capital spending.
- Review the accounting and valuation assumptions for the U.S.$2.7 billion concession-asset balance, especially passenger growth, tariffs, operating costs and discount rates.
- Track the final outcomes of Argentine environmental and tax matters, Brazilian tax and regulatory proceedings, Ecuadorian tax claims and the Peruvian arbitration.
- Confirm the effect of the Russia-Ukraine conflict on Armenian traffic and the effect of inflation, devaluation and foreign-exchange controls on reported U.S.-dollar results.