Borispol airport cuts losses by 16% in 2023 but will continue making losses until end of martial law - Ukraine's Finance Ministry

MOSCOW. Oct 29 (Interfax) - Ukraine's state-owned Borispol International Airport cut its losses by 16% in 2023 to 1.5 billion hryvni, the Ukrainian media reported, citing Ukraine's Finance Ministry.

"In 2023, the Borispol airport continued making losses, because it remains closed to commercial aviation. In 2023 it had losses of 1.5 billion hryvni, versus 1.8 billion hryvni in 2022. The company took steps to cut spending, but to keep the possibility of returning to work within 24 hours, it continues to spend to maintain its infrastructure, licenses and specialists," the ministry said in an evaluation of the financial state and stress testing of major state enterprises.

In 2020 the airport also reported losses as a consequence of its closure due to the covid pandemic. In 2021 the airport only slightly restored performance before being closed in March 2022 because of the start of a crisis.

The Borispol's liquidity was weak in 2022 and worsened further in 2023. The current ratio points to the inadequacy of current assets for fulfilling short-term liabilities, at 0.36 in 2023 and 0.72 in 2022.

In addition, during 2023 the airport received 44.1 million hryvni in government funding, which it used, along with own reserve money, to pay salaries.

"Paying employees remains one of the biggest challenges faced by the enterprise. Potential risks may arise because the enterprise may be unable to retain key employees with necessary skills. Workers receive around two-thirds of their salaries and work under the rotation principle. At the same time, part of the staff are on idle time, some quit voluntarily," the ministry's analytical note said.

The Borispol airport did not sustain major damage, but because the end of martial law is expected later than previously envisaged, the resumption of its work will be postponed.

"The Borispol International Airport state enterprise will remain loss-making till the end of martial law in Ukraine. Under the base scenario, the enterprise is expected to restart work in 2025 and is predicted to become loss-free in 2027," the ministry's analytical note said.

Under the base scenario the ministry is contemplating, the Borispol needs 0.47 million hryvni in state funding in 2024 against the backdrop of its capital expenditures increasing to 8 billion hryvni in 2026 and decreasing to 2.6 billion hryvni in 2028. A negative scenario involves 0.47 million hryvni in state funding in 2024 and 0.73 million hryvni in 2025 against the backdrop of capital expenditures analogous to the base scenario. A positive scenario, with equal capital expenditures, involves a subvenition of 468,000 hryvni.

The Borispol is expected to fund its capital expenditures with borrowed money.