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Report on operations

Reference scenario and results of operations

In 2015 the Italian economy showed signs of recovery with respect to previous years,
notwithstanding the fluctuating trend of the main economic indicators. According
to the Bank of Italy (Economic Bulletin of January 2016), exports that sustained
economic activity in the last four years have now started to reflect the weakness of
extra-European markets, while a new boost for the economy is coming from internal
demand, in particular from consumer demand and stock replenishment. Investment
prospects however are negatively influenced by the uncertainty of foreign demand.
Inflation has fallen to 0.1 percent (Eurostat) over the last twelve months. As regards
employment, the latest data indicates recovery, even though youth unemployment
is still rather high. The Gross National Product should register +0.8% for the year
(ISTAT). The European economy also shows signs of weakness having registered a fall
in the last few months of the year in inflation and growth, linked also to the fall in
the cost of oil and a progressive weakening of foreign demand.
This scenario also affected the domestic air transport market, which had lower than
expected growth in traffic volumes with respect to the previous year.
Even though national airports registered an increase in the number of passengers of
4.5% in 2015 with respect to 2014, such increase is not reflected in en-route service
units, which registered -1.7% with respect to the previous year.
The latter result was particularly conditioned by an extended period of uncertainty
in the European and national macroeconomic framework, as well as the effect
generated by the closure of Libyan air space. Indeed, the same thing happened as in
the third quarter of 2014, i.e. the no-fly zone conditioned the operational choices
of airline companies operating between Europe and Africa to opt for routes that do
not pass through the national air space. In terms of overflight traffic, i.e. the en-route
traffic component that is historically most profitable for the Company in terms of
development of en-route service units, in 2015 there was a -3.9% fall in service units
with respect to the previous year against a +0.8% increase in flights.
National en-route traffic also registered a reduction of -8.7% in terms of service
units, a result that is conditioned by the performance of Italian air transport where
the Alitalia Group and Meridiana share of service units decreased.
Financial Year 2015 is therefore a particularly complex year that is influenced by
marked instability in air traffic and the introduction of a new community reference
regulatory period which, on the one hand subjects even terminals to the rules of the
new performance scheme, and on the other hand had the European Commission call
the attention of the major European States to submit economic plans for the 2015–
2019 reference period in line with the European economic performance for routes
set at an annual average of 3.3%. In this respect, in March 2015 the Commission
returned a non-compliance decision for the plans submitted in 2014 by the major
European States, including Italy, requesting a revision with the objective of rendering
them fully compliant with EU objectives.

20 ENAV - Annual financial report 2015