El Estado

In connection with the Financial Analysis of the Lleida - Alguaire Airport, as recommended, it has been carried out for a period of 30 years, thus from 2010 to 2040. Moreover, it has to be noted that this project is only based on the “Profit and Loss Account of 2014” (which can be found in Annex 3) owing to the fact that it is the only financial analysis available in the official website of Aeroports de Catalunya.

Therefore, in order to overcome this lack of information and as explained forwards, some of the profit and loss account’s items have been estimated depending on the amount of passengers that used the infrastructure each year and, in addition to this, it has been assumed that most of the items remain constant throughout the analysed period of time.

As the Lleida - Alguaire Airport’s director Mr Antoni Serra stated in the interview, the profit and loss accounts vary very little from one year to another due to the fact that none significant structural modification has been carried out in the infrastructure since it was inaugurated in 2010.

Hence, the different items of the profit and loss account have been set as follows:

- Investment:

As aforementioned, the Lleida - Alguaire Airport had an initial investment of 90 millions euros and it was managed by the Generalitat de Catalunya. As can be shown in Annex 3, it is only considered as a cost in the first year of the analysed period of time.

- Residual Value:

In relation to the residual value of the infrastructure, it is considered as an income in the last year of the analysed period of time (Annex 3)

Hence, lineal amortization has been applied in order to compute the residual value of the airport, which usually has 50 years of lifetime and has been analysed for a period of time of 30 years. Therefore, the following computation has been carried out, assuming the aforementioned investment of 90 million euros:

𝐿𝑖𝑛𝑒𝑎𝑙 𝐴𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛: 90.000.000 €

50 𝑦𝑒𝑎𝑟𝑠 · (20 𝑦𝑒𝑎𝑟𝑠) = 36.000.000 € - Net import of the business revenue:

As aforementioned and from an optimistic point of view, a 3% increase of passengers per year has been considered. Hence, it has been assumed that the item Net import of the business revenue varies 3% from the previous year owing to the fact that the main factor that produces revenue is the amount of passengers that use the analysed infrastructure (whose variation per year has been assumed to be 3%). In addition to this, it has been assumed that air taxes remain constant throughout the analysed period of time (2010 - 2040).

- Supply:

Taking into account that a 3% increase in the annual amount of passengers that use the airport has been assumed when realizing the CBA, the same 3% increase of the required supply has also to be considered when computing the financial analysis of the airport. Therefore, the item Supply has been computed assuming an annual 3%

variation.

- Other exploitation revenue:

In relation to the interview, the Lleida - Alguaire Airport does not make benefits through the car parking area, which is free for the airport’s users. Therefore, the item

“Other exploitation revenue” is due to the advertisements that are both realized and recorded within the infrastructure, which have been assumed to remain constant.

- Staff expenses:

As aforementioned, the number of passengers that used the airport from 2010 to 2017 is real data, whereas from 2018 until 2040 has been predicted. Owing to this fact and in connection with the interview carried out to the Airport’s director, staff expenses in the period 2010 - 2017 have been assumed to remain constant. In fact, when the charter flights UK - Lleida Alguaire Airport began, the amount of staff had to be increased but with no cost increase, thus the office staff had to be formed so as to be able to manage aircraft operations. Therefore, staff expenses have been assumed constant from 2010 to 2017 but, as the airport will have more passengers, it will have more benefits so as to employ more staff. Consequently, staff expenses have been assumed to remain constant until 2030, when due to the passengers increase, more staff is necessary and, owing to the fact that a 3% increase of passengers has been assumed, in 2031 staff expenses increase a 3% in relation to the previous year, and they remain constant until 2040.

- Other exploitation expenses:

In connection with the item “Other exploitation expenses” and as the director of the airport stated in the interview, it considers the maintenance and operating costs of the airport. It has been assumed that there are no extraordinary maintenance costs, thus the item “Other exploitation expenses” is assumed to remain constant due to the fact that the maintenance of the airport has to be constant throughout its lifetime so as to ensure the appropriate and safe functioning of the whole infrastructure.

- Immobilized amortization:

Because of economic theory, it is assumed to remain constant throughout the analysed period of time.

- Provision excess:

According to the “Profit and Loss Account of 2014”, this item is null in 2014. Therefore, it has been assumed that the Airport did not require external financing in 2014 and, due to the lack of data, it has been assumed to remain null throughout the analysed period of time.

- Other exploitation results:

If the number of passengers varies, the benefits of the shops established within the airport will vary too (for instance, the bar or the magazine store). Owing to this fact, as it has been assumed that passengers increase 3% each year, the item “Other exploitation results” has been assumed to vary 3% in relation to the previous year too.

Therefore, in the Annex 3, the financial analysis carried out from 2010 until 2040 is shown.

Subsequently and in relation to the results obtained, the Net Present Value (NPV) and the Internal Rate of Return (IRR) have been computed.

- Net Present Value (NPV)

In connection with the Net Present Value (NPV), it indicates in monetary units the social benefits of the project. It is computed through the following formula:

𝑁𝑃𝑉 = ∑ 𝐵_𝑡

The NPV has to be higher than zero and, in addition to this, the higher the NPV is, the more socially profitable the project will be. In fact:

 If NPV > 0: The investment will produce more benefits than the required profitability.

 If NPV < 0: The investment will produce losses in relation to the required profitability.

 If NPV = 0: The investment will produce neither benefits nor costs.

(Guia per a l’avaluació de projectes de transport, 2010, Mcrit)

In connection with the financial analysis carried out, the following NPV has been obtained:

Discount Rate = r = 3’5% ^(SAIT)

In relation to the Internal Rate of Return (IRR), it is the discount rate “r” that makes the NPV zero, which is shown in the following formula:

𝐼𝑅𝑅 → 𝑁𝑃𝑉 = ∑ 𝐵𝑡

The computed IRR has to be higher than the social discount rate and, in addition to this, the higher the IRR is, the more socially profitable the project will be. In fact:

 If IRR > r: The project will produce a higher profitability than the minimum required profitability.

 If IRR = r: The project will produce the minimum required profitability so as to balance the opportunity cost.

 If IRR < r: The project will produce a lower profitability than the minimum required.

 If IRR = 0%: The investment is balanced, but not the opportunity cost.

(Guia per a l’avaluació de projectes de transport, 2010, Mcrit)

In connection with the financial analysis carried out, the following IRR has been obtained:

IRR = -9% < 0

Therefore, the Lleida - Alguaire Airport has a negative IRR (IRR < 0), which means that the necessary investment that was needed so as to have the infrastructure built cannot be

justified. In fact, the project will produce a lower profitability than the minimum required and neither the investment nor the opportunity cost will be balanced.