COVID-19 IMPACT ON BUSINESS
The COVID-19 pandemic emergency has had major repercussions on the world’s economies and the air traffic sector in particular.
The European regulatory system
It is worth noting that ENAV operates within a European regulatory system that, in order to ensure the availability of airspace capacity even in the presence of significantly reduced traffic flows, provides ANSPs with a traffic risk protection mechanism that significantly limits the possible impact of a steep fall in air traffic, enabling the recovery of a large portion of turnover in future charges through the Balance mechanism.
In this context, the European Commission has proposed an amendment of the regulation governing the performance and charging scheme for the Third Regulatory Period (2020-2024) with the introduction of a series of temporary and extraordinary measures to support the air transport sector, especially in 2020 and 2021.
Among the various changes, the most important concern the modification to the traffic risk-sharing mechanism (balance), the assignment of new cost-efficiency targets, and the introduction of an obligation to spread the costs borne by airlines due to the loss of traffic incurred in 2020 and 2021 over a minimum of five years. Other changes include the introduction of a series of new deadlines for the member countries and service providers to develop their initial cost and traffic estimates for 2020-2024, the publication of the targets by the Commission and the submission of new performance plans.
The consensus text of the regulation on the performance and charging scheme, which acknowledges the requests of the representatives of the member countries, was approved and subsequentially published on 4 November 2020.
In this environment, the ENAV Group is implementing a series of management measures and actions to mitigate the impact of the crisis on operations. A series of initiatives are already under way to lower costs not directly related to maintaining air traffic capacity and safety and reduce the variable and ancillary components of the cost base. In particular, the measures taken have concerned the variable portion of personnel costs and focused on the use of holidays, the containment of overtime, travel, availability and bonuses, as well as the rescheduling of hiring planned for the year.
At the same time, further actions were taken to mitigate overall expenditure, with measures impacting external costs for non-operational maintenance, consulting services, utilities and general costs not directly related to operating the business.
As regards the financial aspects related to the emergency, the Company has taken steps to manage the Company's inward and outward cash flows.
As regards actions taken to safeguard the health and safety of our personnel and to contain the spread of the pandemic, the ENAV Group immediately adopted a series of measures to limit staff mobility by extensively adopting flexible working practices for all people engaged in activities that do not require their physical presence in company offices and suspending business trips, meetings, training courses, etc.
For operating personnel, given that the activities of ENAV and Techno Sky fall within the scope of essential public services, three separate operating teams have been created at each of the Air Control Centres, where the first team provides services, the second takes over if the first team is quarantined for contagion, and the third acts as a reserve. If there are no positive cases within a team, which would trigger home quarantine, the three groups alternate roles cyclically every 14/15 days.