Monitors connected to cameras on the runways, computer systems to identify aircraft taking off or landing. Let's fasten our seat belts and get ready to say goodbye (albeit gradually) to many of the old control towers: arrivals and departures will be monitored remotely, a single tower to control several airports with a NASA-style room. And then a new platform for recording and controlling drone traffic, which is expected to grow dramatically, as are traditional air traffic estimates. The technology changes and Enav, the public company (53,28% Treasury, the rest on the market) in charge of managing routes and air traffic in Italy, changes its skin. And it is preparing to hook with one eye in the present and the other already projected into the future the technological transition in which we are all immersed and which ranges from artificial intelligence to self-driving cars, professions that disappear and new jobs that burst onto the scene. No jolts, however, guarantees the CEO Roberta Neri who has recently presented the 2017 accounts with record profits and launched the 2018-2022 business plan. Five years that will change the world? They will certainly set the march towards the new Enav as Neri explains to us in this interview with FIRST online.
Female doctor Blacks, we are in full technological transition, a revolution that is already changing our lives. Enterprise 4.0, artificial intelligence, big data will change – for better or for worse – our way of living and working. What impact will they have on Enav and how is the group projected towards these new scenarios?
“We are certainly immersed in a world undergoing strong technological transition and our vision, in the new industrial plan that we have presented, not only takes it into account but has planned 650 million investments as a fundamental development driver for the next five years to introduce new systems technologies, push on digitization and focus on remote traffic management at low-traffic airports. We need a more agile organizational model to combine effectiveness and safety and seize the opportunities of the market which is increasingly placed in a European dimension".
Today Enav operates with four control centers on routes in Rome, Milan, Brindisi and Padua and 45 towers scattered throughout the various Italian airports that manage traffic around the airports. Specifically, what will change?
"We intend to consolidate the control activity on the routes - we are talking about flights in transit over the national airspace - concentrating it on two large centers in Rome and Milan, while Brindisi and Padua will be reconverted into remote control technological sites for the management of several airports less traffic. Padua will take longer. Let's start with Brindisi which today ensures monitoring of one of the four areas into which Italian airspace is divided. At the end of the period it will become a remote Hub, able to control the traffic of various airports. The en route activities it carries out today will be concentrated on Rome. This involves investments both in the upgrading of existing technologies, in new systems and again in new infrastructures. From the current national model, widespread and divided into 45 towers even where traffic is not high, we will thus move on to a more agile and flexible model. This is not a downsizing: on the contrary, the better use of both the control centers and those converted into hubs allows us to enhance - for example by guaranteeing the management of the airspace even at night - those airports that would otherwise be weakened, with benefits in terms of performance and competitiveness”.
There are examples of management of stopovers remotely in Europe and where?
“London City Airport has already announced that it will complete the remote management of the airport by 2019, a site is already operational in Sweden, Germany is very active on this front. As for us, we invested heavily in experimentation in November and December 2016, managing over 100 flights to Milan Linate from Malpensa and successfully. He was the forerunner of the path that today sees us committed to the new goals. European and national regulators are also establishing new rules in parallel with the development of remote management".
How does all this impact on ENAV's human capital?
"It is a sensitive subject. At the local level there is fear that the reorganization will impoverish Brindisi but it will not be like this. It should be clarified that there will be no layoffs, we will leverage natural turnover and incentivized exits towards retirement. It will be a gradual path at the end of which, at the end of the plan, we will have a balance of around 300 fewer resources than today overall. Our project also improves the professionalism of the air traffic controllers and the personnel involved with an education and training effort that will go beyond the normal training activity that is already carried out today. Finally, in a sector in which geographical mobility is very strong and contractually recognized - it has involved 600 units in the last three years - the new organizational model will offer more opportunities for professional growth at the headquarters".
2017 ended for Enav with a profit of increase of 32% which benefited from the general growth of international air traffic. How do you expect to ensure this level of performance in the coming years?
“It is true that the scenario is favourable: air traffic is growing and will continue to do so. And this is certainly a positive stimulus. On the other hand, the EU Commission is also pushing a lot on the performance side. For example, the target for average delays per assisted flight - 0,011 average minutes per assisted flight - we reached and exceeded, closing 2017 with a punctuality index of 0,009. This allowed us to collect a bonus of 6,5 million. We have every interest in maintaining this primacy. The competitive context is increasingly heated and the containment of fares is another factor on which we aim: the new route management method Free road. - which allows airlines to plan optimal routes above 11 meters – has seen us launch early in Europe with excellent results. Furthermore, the growth in the margin was not only driven by the growth in traffic but also by a strong focus on cost reduction through a renegotiation of contracts and the continuous optimization of internal processes between the various Group companies".
Almost two years afterIpo, the Enav share rose from the 3,3 euro of the placement to 4,3 euro. The dividend has gone from 17,6 to 18,6 cents and the business plan promises a 4% annual increase. The profit of 101 million was entirely allocated to the remuneration of the shareholders who will be satisfied with it. How will you finance the 650 million planned investments?
“Enav has a significant capacity to generate cash, higher than the distributed profit. At the placement we had indicated a dividend not less than 80% of the cash flows generated year by year, starting from the 95 million last year. The 2017 results led to a 6% dividend growth, the plan guidance is set at 4% per annum. We are able to self-finance our investments while maintaining a very solid capital structure and low leverage”.
We mainly talked about the regulated activity of Enav. The plan indicates new lines of business: are you talking about drones? What contribution do you expect in terms of turnover?
"ENAV has been identified by ENAC, the national regulatory authority, as a provider in drone flight management. This too is a sector expected to experience strong growth and the aim is to ensure orderly management of the traffic of these aircraft - from registration to remote flight planning - in a logic of space safety, albeit underlying the air. For this reason we have foreseen the creation of a Newco 60% controlled by ENAV and we have launched the tender for the selection of the industrial partner. We hope to finish it in the coming weeks. We plan to seize other business opportunities outside the regulated market by providing our consultancy and experience in those markets where there is a demand for new services: South East Asia, the Emirates, Africa. We aim to grow in these areas with new contracts, also consolidating existing relationships".
Un'last question: in recent years, since it joined ENAV in 2015, Italy has benefited from relative stability politics and government. After the elections, the political framework has profoundly changed and we are moving towards a more unstable period. Are you concerned as a director of a public company?
"Enav provides a strategic service for the country, linked above all to guaranteeing the safety of flights in Italian airspace. From this point of view, the political-institutional context and the risk of instability can have little impact on the management of security, which cannot be discussed, and on the strategic nature of a sector that has an increasingly European scope with the Single European Sky directive. These are elements of guarantee on the company's management objectives”.
