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ATHENS INTERNATIONAL AIRPORT (AIA) | Bond proxy with a twist

FY25: the cap in action… – FY25 results neatly illustrated the core mechanics of the model. Passenger traffic rose by a robust 7%, yet total revenues increased by just 2%. The reason is structural, since aviation returns are capped at the 15% regulatory ROE, with only a limited carry-forward balance left to utilize during 2025 (c€20m). As volumes strengthened, aeronautical unit revenues adjusted downward for AIA to remain within the cap, diluting operating leverage. At the same time, non-air unit revenues were flat, a bit more resilient than we had expected despite rising congestion and ongoing works (although the latter are likely to weigh on spend per passenger in 2026). As a result, net profit declined 12% yoy settling at €207m, in line with the outlook provided by mgt at the start of the year (and a tad above our €204m estimate).

What drives this business really? – At its core, AIA is not a traffic-beta story but a regulatory equity story with a commercial overlay. Aviation profitability is structurally capped at 15% on inflation-indexed regulatory equity, meaning that after the almost full carry-forward depletion in 2025 (just €2.6m remaining), earnings growth will be primarily driven by inflation and changes in the regulated asset base (e.g. through the scrip dividend) rather than by passenger upside. Traffic matters, but mainly for the non-aviation segment (e.g. retail, F&B, parking) – where returns are uncapped and operating leverage pronounced. As such, the true value driver is the expansion and monetization of commercial space over time, while the air segment provides a defensive, inflation-linked cash flow backbone. This runs counter to a widespread market perception that earnings move in tandem with passenger flows. We believe several market participants tend to overestimate elasticity both on the upside, as evidenced in 2025, and on the downside following the recent Middle East flare-up (c7.5% of pax), overlooking the regulatory buffer embedded in the aviation segment.

2026 net profit guided at €200m, little-changed yoy; we see c4.5% net profit CAGR over 2027e-2035e – In our view, net profit is the most relevant metric for this business, given the explicit 15% ROE cap on aviation. EBITDA can fluctuate due to timing effects and opex, but equity value is ultimately anchored to post-tax returns within the regulatory perimeter. Post 2026, we expect air activities to grow at c3.3% annually, reflecting inflation plus the uplift from the enlarged regulatory equity base (scrip dividend) and the expansion program. Non-air activities (uncapped) are set to grow faster, at c5.8% CAGR between 2027e and 2035e, as commercial space expands and operating leverage builds. Taken together, these dynamics translate into a group net profit CAGR of c4.5% over 2027e–2035e, underscoring the medium-term nature of value accretion once regulatory normalization is complete.

Valuation – We make only marginal adjustments to our estimates, reflecting slightly stronger non-air performance on more resilient yields, alongside a modest uplift in our inflation assumptions, which translates into a slightly higher PT. We continue to frame AIA as a bond-like, income-generating asset with CPI linkage, complemented by a traffic-sensitive non-air component. We maintain our Hold, as we believe the current valuation – broadly in line with EU peers – already discounts the merits of the thesis.