III Notes to the consolidated financial statements

Audit report

Report of the statutory auditor on the 2021 remuneration report (PDF)

Management Board

Members

Stephan Widrig

Daniel Bircher

Lukas Brosi

Stefan Gross

Daniel Scheifele

Stefan Tschudin

Daniel Bircher, Daniel Scheifele, Lukas Brosi, Stephan Widrig, Stefan Tschudin and Stefan Gross (from left to right)

In the year under review there were no management agreements associated with the assignment of management duties to third parties.

According to Article 19 of the company’s Articles of Incorporation, the number of additional mandates that members of the Management Board are permitted to hold in the most senior managerial and administrative organs of legal entities outside the scope of consolidation of the company is restricted to one mandate at listed companies and five mandates at unlisted companies, and to an additional five mandates at other legal entities entered in the Commercial Register.

Audit report

Statutory auditor’s report on the audit of the 2021 financial statements (PDF)

Audit report

Statutory auditor’s report on the audit of the 2021 consolidated financial statements (PDF)

Letter to shareholders

Dear Shareholders,
Dear Sir or Madam

Following pandemic-related restrictions and low passenger volumes in the first six months of the year, in the second half we reported a recovery and a positive business situation. We successfully concluded the major project The Circle and made progress on key infrastructure projects at the Zurich site and abroad. As a company we are continuing to develop and are looking ahead with confidence.

A mixed year with some bright spots

Low passenger volumes in the first half of the year followed by an upturn in the summer, constantly changing travel and quarantine restrictions, partial closures of shops and restaurants, coupled with home working rules all had a major impact on business at Zurich Airport.

At barely 15% of pre-crisis levels, traffic volumes were extremely low during the first six months. Over the summer and during the autumn break, passenger numbers picked up to 50% of these levels, occasionally rising to 65% on some days. The recovery was due in no small measure to the introduction and recognition of Covid certificates and good progress with vaccination rollouts. From November, the USA and some Asian countries opening their borders to vaccinated travellers likewise had a positive effect. However, the resurgence in Covid infection rates, the emergence of the Omicron variant and new travel restrictions imposed at the end of the year put a damper on recovery. As a result, Zurich Airport’s passenger volume for 2021 totalled 10.2 million.

Particularly challenging for maintaining airport operations were the short-term booking behaviour of passengers and additional time-consuming document checks which made resource and production planning more difficult. As always, the safety of our guests is a top priority. Accordingly, safety measures were carefully implemented, and our test center services offered in conjunction with external partners were significantly expanded during the reporting year.

Together with our aviation and commercial partners, we have been in regular communication with government and the authorities to represent our standpoint as regards travel rules and restrictions. We are of the view that risk-based safety measures involving testing, vaccination, face masks and certificates are a better solution than blanket travel restrictions and quarantine rules. The freedom to travel must be maintained wherever possible.

Commercial operations likewise suffered a substantial drop in revenues, albeit to a lesser extent than passenger operations. Owing to the officially ordered closures and home working regulations, there were fewer passengers, commuters, guests and employees at Zurich Airport.

Coronavirus was likewise the dominant story of the past year at our foreign subsidiaries. However, business in Brazil and Chile picked up strongly, primarily due to the high proportion of domestic flights there. The subsidiaries mastered the crisis independently by taking a variety of measures.

While the restrictions in place as a result of the pandemic caused Flughafen Zürich AG to incur another loss in the first half of 2021, the continuing recovery enabled it to post a profit in the second half of the year. Over the financial year as a whole, however, this resulted in a consolidated loss of CHF 10.1 million (prior-year loss: CHF 69.1 million).

In the past financial year too, we were able to deal with the crisis under our own steam. We did not apply for any state assistance, with the exception of short-time working.

Both Zurich Airport and the company continue to develop

Despite the difficult circumstances, Zurich’s route network encompassed some 150 destinations and 43 airlines when the winter timetable resumed. This means that around 80% of the airlines that had operated flights to Zurich Airport prior to the pandemic have returned. Europe remained the most important market, especially holiday destinations around the Mediterranean. Routes to North America reached close to pre-crisis levels again.

The Circle celebrated its first birthday during the year under review, and this major project was brought to a successful conclusion with the opening of the two Hyatt hotels in April and December along with numerous other new tenants. Special events such as the Zauberpark festival of light and music, the Quartierfest and exciting new offerings from partners attracted new visitors and further enlivened this new and unique area of Zurich Airport. As borne out by booking numbers, the airport’s central location, good accessibility and attractiveness of its surroundings meet the needs of event organisers. Indeed, the Circle Convention Center already played host to several major events during 2021.

In Airport Shopping and the Airside Center too, a range of new retail and hospitality outlets enhanced the existing amenities and showed that even during the pandemic Zurich Airport remained an attractive location for retail and service businesses within the Zurich metropolitan area.

The airport infrastructure at Zurich continued to be systematically developed, first and foremost by upgrading and expanding the baggage sorting system and extending the landside passenger areas. Both projects are progressing on schedule. Preparations for the renovation of runway 10/28 were also launched. The runway extension project has a longer-term planning horizon. An important step forward was taken during the reporting year when the Zurich Government Council approved the project and paved the way for the matter to be debated in the Cantonal Parliament, in all probability followed by a cantonal referendum.

International business became established in its own division and is currently focussing on the two markets of Latin America and India. The biggest project abroad, the Noida International Airport greenfield airport in India, is making excellent progress. Financing was successfully secured, the land for the project was acquired and the ground-breaking ceremony was held during the year under review.

Sustainability now central to corporate strategy

We are committed to sustainable aviation and take our governance, environmental and social responsibilities seriously, both in Switzerland and in our projects abroad. By joining the world’s biggest initiative for sustainable development, the United Nations Global Compact, we are underscoring our ongoing commitment to sustainable corporate governance. We have signed up to the UNGC’s ten principles because we recognise our responsibility as a company in the key areas of human rights, labour standards, the environment and anti-corruption and wish to publicly affirm our support for these values. The company’s progress report details how we contribute to upholding these principles within our sphere of influence.

The most urgent task to be tackled in order to bring about sustainable aviation is the reduction of CO₂ emissions. We have set out our contribution to decarbonising the aviation industry in our energy strategy for Zurich Airport. We have already met the Paris Climate Agreement targets for 2030 and made a binding commitment to reduce our carbon emissions to net zero by 2050. To achieve this goal, among other things we plan to upgrade buildings and install a modern energy supply. The Circle is certified to LEED PLATINUM and MINERGIE standards, utilising efficient alternative energy sources, for example solar power or heat pumps with systematic heat recovery and underground thermal energy storage. In addition, we are gradually converting Zurich Airport’s vehicle fleet to electric vehicles and have greatly extended e-mobility services for travellers and guests too.

We are also committed to the use of alternative sustainable aviation fuels (SAF). It is greatly hoped that such fuels will significantly reduce aviation’s carbon footprint in future. Pure SAF cuts CO₂ emissions by at least 80% compared with fossil-based kerosene. We were able to take a major step forward in this regard during the reporting year: together with various partners, we succeeded in developing a process for importing SAF into Switzerland. As a result, amended customs regulations came into force on 1 July 2021 which enable alternative fuels to be imported into Switzerland on a regular basis. A blend of sustainable and fossil fuel is imported which is dispensed via Zurich Airport’s existing regular hydrant systems.

In India too, we are continuing our efforts to boost sustainability with the construction of Noida International Airport: Noida will be the first airport of its size to deliver net zero carbon emissions and consequently set a new standard for sustainable airport operations.

For the 2021 financial year, our company has written its first integrated report prepared in accordance with the Global Reporting Initiative (GRI) standards. These standards present uniform, recognised guidelines for public reporting on key economic, environmental and social impacts.

Thanks and outlook

Even if some uncertainty remains, we assume the recovery will continue this year. The crisis has shown that we are living in a global, mobile society. Since our country combines the advantages of a strong business and knowledge economy with a high quality of life, close links between Switzerland and the world will become increasingly important. As an airport operator we are making our contribution by planning and acting with a long-term horizon and focusing on sustainability impacts. In doing so we draw on the most valuable resources of a company: our committed workforce and a corporate culture characterised by a high degree of solidarity and mutual respect between employer and employees.

This crisis has brought us as a company even closer to the partner companies at our airports. We greatly value these good working relationships. Many thanks are due to all our partners and other supporters of Zurich Airport. We would especially like to thank our employees for their tremendous, untiring efforts. And naturally also you, esteemed shareholders, for the loyalty and trust you have placed in us over many years.

Zurich Airport, 3 March 2022

Andreas Schmid
Chairman of the Board of Directors

Stephan Widrig
Chief Executive Officer

Focus

The topic of sustainable business practices has been an important topic for the Zurich Airport Group for decades. In the fields of climate protection and noise mitigation in particular, the company has achieved a great deal at its Zurich site over the past thirty years. However, sustainable business management is not simply about minimising environmental impacts, it also requires taking a holistic view of all impacts on the environment and society.

With this report, the Zurich Airport Group has collated information about its environmental and social impacts for the first time. The report details both the positive and negative impacts of the business activities at its consolidated sites worldwide and sets out the action it is taking to mitigate negative consequences and enhance positive effects along its value chain.

Material topics

The Zurich Airport Group focuses its efforts on areas where it can have the greatest impact. In 2021, it therefore conducted a materiality analysis for the first time in accordance with the Global Reporting Initiative (GRI) Standards. This analysis identifies the main economic, environmental and social impacts of the company, not only at its Zurich site, but also at the companies abroad in which it has a majority interest.

In accordance with GRI’s methodology, these 15 sustainability topics were assessed over two dimensions. First the significance of the company’s impacts in relation to each topic was determined. Wherever possible this was done along the entire value chain to include both upstream and downstream processes. Secondly, the extent to which a particular topic influences stakeholder perception of the company was rated. The two dimensions were quantitatively evaluated for each of the topics, with the five having the highest scores being deemed material. This helped set a clear focus within the sustainability topics.

Many experts from various divisions across the group were involved in the process of identifying and evaluating the topics. The viewpoint of stakeholders was taken into account both as estimated by experts internally as well as on the basis of specific feedback.

The following diagram shows all the sustainability topics identified, grouped into local, ecological and social impacts:

Overview of sustainability topics

Overview of material topics

Our contribution to attainment of the Sustainable Development Goals

The 2030 Agenda for Sustainable Development was adopted by the member states of the United Nations (UN) in 2015 in order to ensure that development was sustainable on an economic, ecological and social level. At its heart are the 17 Sustainable Development Goals (SDGs) and 169 accompanying targets. The ambition is for all member states to have attained these goals by 2030. Along with governments, companies are also called to action to help achieve these goals.

Switzerland and all the other countries in which the Zurich Airport Group operates have pledged to support Agenda 2030 and the SDGs. By conducting business responsibly, the Zurich Airport Group is also contributing to attainment of the SDGs. This report sets out how the Zurich Airport Group enhances positive impacts and mitigates negative ones. Contributions to 15 of the 17 goals were identified, and six where the group can make an especially valuable contribution were prioritised.

Overview of SDGs

More on the six prioritised SDGs:

Good health and well-being

The Zurich Airport Group strives to ensure the health and well-being of everyone at all its airports. Avoiding ill health following accidents or other causes is a top priority. The company achieves this by instilling a culture of rigorous safety management, establishing high-quality infrastructures and offering opportunities and programmes to improve the health of employees. It also seeks to avoid potentially harmful emissions arising from air pollutants and noise, waste or waste water, for example.

Decent work and economic growth

The airports in the Zurich Airport Group make a major contribution to wealth creation in their home regions. They offer employment and a source of income for variously skilled employees, and award contracts not subject to public procurement rules to other businesses in the region wherever possible. By providing flight connections for passengers and freight, they contribute to positive business growth locally. The Zurich Airport Group takes its responsibilities to its workforce seriously and, as a reliable employer, contributes to sustainable growth.

Industry, innovation and infrastructure

The Zurich Airport Group builds, maintains and operates high-quality, durable infrastructures. The development of airports also leads to the creation of other infrastructures such as roads, railways, energy production, wastewater treatment plants, communications infrastructure, etc. Airports are drivers of innovation and new technologies.

Sustainable cities and communities

Airports help shape cities and stimulate regional dynamism. The Zurich Airport Group contributes generally to raising the amenity value for people living near its airports. These airports perform important everyday functions, be it as a place of work, as a transport hub, or simply as a place for meeting and shopping. Flughafen Zürich AG makes every effort to minimise the negative impacts of air pollution and noise.

Climate action

Aviation is in the spotlight as a major contributor to greenhouse gas emissions in industrialised and developing countries. As airports also emit greenhouse gases as a result of their electricity, heating and cooling requirements, they are working to reduce their CO₂ emissions. Flughafen Zürich AG has been successfully doing so for many years, focusing on measures to lower its energy needs for both buildings and vehicles. Flughafen Zürich AG also works with partner firms at its airports to reduce greenhouse gases across the entire spectrum of airport operations.

Peace, justice and strong institutions

The Zurich Airport Group conducts business fairly and complies with the law at all times. It works transparently in partnership with the authorities in the countries in which it operates, where it helps to strengthen institutions and combat corruption.

UN Global Compact progress report

The company became a signatory to the United Nations Global Compact during the reporting year. This commits it to uphold the ten principles in its business activities and to report on progress every year. The CEO’s statement in support of the Global Compact can be found in the Letter to shareholders.

After signing up, Flughafen Zürich AG also added the commitment to sustainability at the top of its strategy house (see Strategy). In particular it acknowledges its obligation to anchor the ten principles even more firmly in its International division. The precepts of the Global Compact also align with the positions hitherto taken by the Zurich Airport Group. The company’s Code of Conduct already includes these points and commits all employees to act in accordance with them in their daily work.

This report represents the company's progress report for the Global Compact. The following list indicates the sections of the integrated report where the respective information may be found.

Human rights

Principles 1 and 2:

See Human rights

Labour

Principles 3, 4, 5 and 6:

See Responsible employer, Equality of opportunity and freedom from discrimination, and Human rights

Environment

Principles 7, 8 and 9:

See Energy and climate, Waste and circular economy, Air quality, Biodiversity, and Water

Anti-corruption

Principle 10:

See Business ethics and Anti-corruption

Noise

It is not possible to altogether avoid exposure to noise from flight operations in the vicinity of airports. The Zurich Airport Group is aware of this and is making a concerted effort to minimise negative impacts.

Relevance

Noise from aircraft taking off and landing poses an annoyance to many people living in the vicinity of airports. Where noise arises and how loud it is perceived to be depends on a variety of interrelated factors. One is the orientation of runways and flight paths, which depends on the nature of the terrain and the prevailing weather conditions. Another is the flight timetables of airlines, with the aircraft fleets they deploy being a further major factor. Urban development, too, cannot be disregarded as this is bringing ever more residents into areas affected by noise in Zurich. Aviation noise exposure was on the wane until 2004, and the latest breakthroughs in technology as deployed in new aircraft types are set to bring a reduction in noise once again. A key factor here are advances in engine technology. However, this is in the hands of the airlines and can only be indirectly influenced by airports (through noise charge incentives for example).

Since the volume of air traffic is lower, noise is less of an issue for the company’s majority-owned subsidiaries in Brazil and Chile. Also, most take-offs and landings in Brazil are over the sea, while the airports in Chile are sited well away from large conurbations.

Approach and progress

Communication with local residents

Besides individuals, a number of bodies including adjacent municipalities, the Canton of Zurich and other neighbouring cantons, districts across the border in Germany and a variety of agencies and citizens organisations concerned with air traffic noise make representations to Zurich Airport. The company maintains regular dialogue with these groups too. Exchanges are more frequent ahead of changes affecting take-off and landing operations.

Noise exposure is less of an issue in Brazil and Chile. A digital hotline for noise complaints was set up at Vitória Airport in Brazil to comply with its environmental licence, and in 2021 it was obliged to submit a report on these to the authorities for the first time.

Noise monitoring

Noise contours for various years (Leq=60dB(A) from 6 a.m. to 10 p.m.); sources: Empa, swisstopo

The diagram above shows changes in exposure to aircraft noise at Zurich Airport over time. 2019 was chosen as the last benchmark year with a normal level of flight operations prior to the pandemic. Comparing noise contours from the past 20 years shows a fall in noise exposure despite steady or increasing amounts of air traffic. This can be attributed to technical advances in aircraft design resulting in lower noise emissions.

Flight path monitoring

Night flights and special authorisations

Use of the noise protection hangar

Noise charges and Airport Zurich Noise Fund

In the past, all income from noise charges was credited to the Airport Zurich Noise Fund (AZNF). AZNF funds are used primarily to cover the costs of noise mitigation measures, in particular the sound insulation programme, and the costs of meeting compensation claims for noise and overflying. As the law currently stands, the AZNF has sufficient assets to cover the known future costs for these purposes. Since 1 January 2021, therefore, revenue from aircraft noise charges has been reallocated to the “Aviation” segment. Further details about AZNF can be found in Note 20.

Sound insulation

To prevent local residents being awoken by early-morning inbound flights from the south, Flughafen Zürich AG installs automated window-closing systems or sound-absorbing ventilators in bedrooms in the areas affected. At the request of owners, these window-closing systems or ventilators can also be paid for and installed in areas where permitted night-time noise levels are exceeded.

As part of the now completed phase 1 of the south-side sound insulation concept, around 1100 window-closing systems and 900 sound-absorbing ventilators were installed between the middle of 2016 and spring 2018. On 19 January 2021, the Federal Office of Civil Aviation (FOCA) published its decision on phase 2 of the south-side sound insulation concept with a larger perimeter. The new perimeter encompasses around five times as many properties as phase 1.

Noise compensation (formal expropriations)

Noise statistics for Zurich Airport

2. Remuneration paid

The following table shows the remuneration that was actually paid for the given financial year:

1. Remuneration of the Board of Directors

a) for the reporting period (2021):

b) for the prior year (2020):

No severance payments or other long-term remuneration payments were made in 2021 or 2020.

Purpose, strategy and values

The purpose, together with the strategy and values, constitutes the basis for the success of our company.

Purpose – Strategy – Values

Our purpose – what drives us

We connect people and places, creating positive experiences.

Our purpose guides our actions and drives us. Our airports connect people and places – regionally and across continents. In everything we do, we aim to create positive experiences.

Our strategy – how we realise our purpose

A strong foundation

Our entrepreneurial success is based on motivated and professional employees, well-planned and well-maintained infrastructures, healthy finances, and a smart use of digital technologies.

Mobility hubs at the core

We connect countries and regions with the world – in Switzerland, India and Latin America. We see our airports as state-of-the-art mobility platforms that seamlessly connect all modes of transport.

Commercial centers and experiences

A diverse commercial offering creates lively places where people can spend quality time and with high footfall. Top-class commercial centers provide attractive locations for brands, events and as destinations, creating a positive experience.

High-quality real estate as attractive business locations

We invest in high-quality real estate with direct access to our mobility platforms, which serve as an attractive business location. The revenue generated from this contributes significantly to the economic stability of our company.

Adding value by acting sustainably

We are convinced that the long-term increase in our corporate value as an overarching goal can only be achieved in connection with sustainable corporate management. That is why we set high standards for our corporate, ecological and social responsibility.

Our values – how we work together

We practise five values that connect our employees and create a strong community and corporate culture. These values foster a constructive and respectful dialogue, a culture of openness and willingness to change. They enable us to continuously develop as an organisation and as leaders, teams and individuals.

C: COLLABORATIVE

O: OPEN

A: AGILE

C: COMMITTED

H: HUMAN