Aéroports de Montréal (ADM) is a not-for-profit corporation serving the Montréal community. It is financially autonomous and receives no annual or statutory government subsidy.
ADM finances its capital investment programs through cash flows from operations and debt. To this end, ADM in 2002 implemented a platform for accessing capital markets which allows it to use a variety of debt securities and loans, including revolving lines of bank credit and revenue bonds. On average, ADM invests $150 million to $200 million per year to keep its facilities in good order, improve customer service and increase the capacity of its airports based on demand.
The governance model of Canadian airports is based on the user-pay principle. Local airport authorities such as ADM charge aeronautical fees to airlines using their airport facilities, as well as airport improvement fees (AIF) from passengers on commercial flights. AIFs, which are included in the price of airline tickets, are currently $35 per departing passenger.
It is important to note that a large and growing share of the Corporation’s revenues comes from non-aeronautical activities: commercial concessions, parking operations, rental of land and buildings, sales of advertising space, consulting, etc. This income helps to maintain competitive aeronautical rates.
Since it doesn’t have share capital, ADM does not pay dividends: all excesses of revenues over expenses are reinvested in the Corporation. However, ADM pays rent to Transport Canada calculated as a percentage of its gross revenues. In addition, it pays municipal taxes based on the property value of its airports. These transfers total about 20% of its gross revenues.
ADM has made significant investments since 2002, especially to modernize and expand the Montréal–Trudeau airport terminal. Since the newly established facilities have a long lifespan, it was possible to finance a part of these investments through long-term debt. To date, ADM has issued a total of $1.6 billion in long-term bonds with major financial institutions such as pension funds.
ADM exercises prudent and disciplined financial management. Like many companies, ADM considers EBITDA (excess of revenues over expenses before financial expenses, income taxes and depreciation) to be the best indicator of its financial performance. The Corporation’s debt securities have excellent financial ratings, allowing it to finance itself on favourable terms:
- Moody's: A1, negative
- DBRS: A, negative
Although not subject to the governance rules and continuous-disclosure requirements that regulate public companies, ADM complies with the practices required of public companies, adapting them to its status of corporation without share capital.
Among other things, the Corporation publishes an Annual Report, including audited financial statements, a strategic five-year plan and quarterly press releases on its interim results. In addition, regular meetings are held with credit rating agencies to keep them informed of the Corporation’s developments.