Combining continuity and change

International Airport Review interviews Dr. Schulte and Dr. Bender as he hands over the Fraport Chairmanship to Dr. Schulte.

IAR: Dr. Bender, how will change at the helm take place. Will you open the safe, take out a dossier and hand it over to your successor Dr. Schulte?

Dr. Bender:

And he must not open the envelope until the following day. No, seriously the focus is on continuity. Stefan Schulte has been a member of Fraport’s executive board for six years now. He knows all of the key issues. Despite the prominent position the chairman of the board formally holds, I never made any solitary decisions during my term of office. Decisions were always made on a collegial executive board basis.

IAR: Dr. Schulte, what do you believe characterises the Bender era at Frankfurt Airport?

Dr. Schulte:

The company is greatly indebted to him for transforming a public organisation into a private entity, a process that was visibly concluded with the Fraport’s IPO in June 2001. You cannot really appreciate how transparent and controllable the company is today unless you know how everything was grinding along twenty years ago. I have to pay a great compliment to Dr. Bender for this achievement. Add to this the company’s globalisation strategy, the development of the external business for which he was responsible and, of course, the preparations for expanding Frankfurt Airport’s capacity. FRA’s expansion means a quantum leap for the company and the Frankfurt/Rhine-Main region in terms of future viability and competitiveness.

IAR: Dr. Bender, why is Dr. Schulte a good successor?

Dr. Bender:

Well, let me return the praise. When Dr. Schulte joined Fraport in 2003, in his capacity as Chief Financial Officer (CFO), he strongly spurred the professionalising of investor relations. At that time, our then supervisory board chairman Roland Koch asked me to recommend three or four candidates for the position of CFO. When I first met Dr. Schulte I quickly recognised that he was the best person for the job.

IAR: Dr. Schulte, as Fraport’s new chairman how will your management differ from Dr. Bender’s?

Dr. Schulte:

Any handover of management inevitably involves changes, including a cultural change. For Fraport it also represents a generational change. My motto is: “If you only want to preserve, you will lose everything.” Therefore, I will try to combine continuity and change. Thanks to Wilhelm Bender, Fraport is extremely well positioned and there are plenty of challenging tasks ahead. Let me mention just a few: FRA’s massive Airport Expansion Programme with the new runway and passenger terminal, the further development of our retailing business, our international activities, and let’s not forget the challenge of making the company even leaner and more customer-oriented.

Dr. Bender:

Many people say that poor Stefan Schulte is taking over the Fraport chairmanship at a difficult time (during a major downturn in air transportation and the global economy). But I think we both agree that this is also a phase when you can really prove that you are not only a fair-weather captain.

IAR: Lufthansa, your key customer and system partner at FRA, is under great pressure. The trend is towards lower-cost flying. Lufthansa’s premium model no longer seems to function as it is (like other legacy carriers are experiencing too). Will there eventually be a new “system partner” in Frankfurt by the name of Ryanair?

Dr. Bender:

Most certainly not. Our “production system” at FRA alone is contrary to that. Frankfurt Airport plans to remain an intercontinental hub, with a growing tendency. From my point of view, our relationship with Lufthansa is robust and good. Robust enough to endure the current dispute with the airlines about landing charges. Our system partnership will also weather difficult times. Meanwhile, in view of its ailing premium strategy, Lufthansa is treating Ryanair as a competitor.

Dr. Schulte:

Without a doubt, Lufthansa has been and will continue to be the backbone of Frankfurt Airport’s success. Therefore, our strategy in the future remains to serve as the number one hub for the Star Alliance, with Lufthansa playing a leading role. I do not believe that Lufthansa will develop in the low-cost direction. Rather, I believe it will improve its competitiveness by further optimising its structures and processes.

IAR: Which role will the external business play for Fraport in the future? Dr. Bender, you have repeatedly complained that analysts concentrate too heavily on Frankfurt and not enough on the external business.

Dr. Bender:

Next year the external business will contribute around €140 or even €150 million to Fraport. This is one quarter of last year’s Group EBITDA from operations. Precisely because business at Frankfurt Airport is currently suffering due to the economic crisis, we have to seize our opportunities abroad and export our “Made in FRA” operational and management expertise.

Dr. Schulte:

The board has jointly built our well positioned external business in the last few years. The goal is to more intensively market our expertise around the globe. In the next five years we plan to double the results of our international business.

IAR: What parts of the world are of particular interest?

Dr. Schulte:

The first new step will be Polkova Airport in St. Petersburg, Russia. However, we also plan to improve the performance of our existing investments.

Dr. Bender:

Chancellor Merkel was present when I signed the tentative agreement with St. Petersburg a few months ago. I am sure some day she will ask Dr. Schulte what became of it.

IAR: What lesson did you draw from the costly engagement in Manila?

Dr. Bender:

Mainly that we now look very closely at the political and economic framework conditions of future projects. However, there will always remain an element of risk if you are active in an entrepreneurial way.

IAR: Back to Frankfurt, will the dialogue with neighboring communities end after the expansion of Frankfurt Airport?

Dr. Schulte:

No, on the contrary, we will intensify our dialogue. We want to be open and curious about what happens in the Frankfurt region. The active noise-protection issue is of great concern for me. I consider it the duty of the company to consistently commit itself to this cause. Therefore, we will continue our dedicated work in the “Airport and the Region” forum.

IAR: Dr. Schulte, You have been responsible for airport expansion for two years. Will this remain a top priority when you take over as CEO?

Dr. Schulte:

Yes, my schedule of responsibilities stipulates this. Moreover, this is a strategic corporate development project par excellence.

IAR: Doesn’t the plan for opening the new runway in 2011 meanwhile seem too optimistic? After all, hasn’t the date already been postponed several times?

Dr. Bender:

Construction is actually ahead of schedule. We have no reason to believe the date has to be postponed.

IAR: Does the next expansion programme start right after this one is completed?

Dr. Bender:

Definitely not. This depends on a variety of factors, especially on how high-speed train traffic develops at FRA. At Frankfurt we have made capital expenditures to ensure that short-haul air traffic is transferred to the rail. The best instrument to answer this question is the Intraplan Forecast to 2020, which anticipates about 88 million passengers for Frankfurt Airport by that time.

IAR: Does that mean renewed ages of discussions about expansion?

Dr. Bender:

If the competitive situation leads to the renewed question of further expansion, it is ultimately up to the region to answer this question. The region must then decide whether it wants to remain a centre of mobility and logistics and enjoy the benefits connected with this and whether ­it is willing to bear the associated burdens. This is not a question of technical capacity.

Dr. Schulte:

The new executive board has been appointed for five years, effective September 1, 2009. During this time we will focus all of our energy on opening Frankfurt’s new Runway Northwest and exhausting the growth potential it offers our customers. To put it very precisely: There are no plans for further expansion after the expansion.