Fraport on a steady course for growth and success reports CEO Schulte

At Fraport AG’s 10th Annual General Meeting (AGM) today, executive board chairman Dr. Stefan Schulte presented the results of the successful 2010 business year: “In every respect, 2010 can be characterized as a year of strong growth for our company. This growth momentum resulted in significantly improved profitability – which is important for dealing with the financial burden of Frankfurt Airport’s (FRA) huge expansion program.”

All of Fraport’s business segments are on the right course. “Thanks to FRA’s capacity expansion resulting from the new runway to be inaugurated later this year and to our continuously improving operational performance, we are well-positioned as one of the leading global aviation hubs to meet the competition for the expected growth in traffic,” stressed Schulte.

In 2010, Fraport AG’s Frankfurt Airport home base achieved a noticeable increase in passenger figures and cargo tonnage. Both FRA’s capacity expansion and the comprehensive program for enhancing overall service quality are making tremendous progress. The Group’s international business is also developing positively.

According Mr. Schulte, Fraport’s success is driven by the increase in traffic volumes as well as the good performance of the company’s international investment airports. With a total of about 53 million passengers at FRA in 2010, Fraport saw traffic climb by more than four percent year-on-year, even though European flights were grounded for several days due to the ash cloud crisis as well as the severe winter weather at the beginning and end of the year. The growth trend has also been continuing throughout the first months of 2011. Air cargo recorded an even stronger increase, rising by more than a fifth to 2.2 million metric tons last year. Frankfurt Airport not only achieved the highest cargo figure in its history but also confirmed its position as Europe’s leading air cargo hub.

Last year’s markedly climbing traffic figures led to a 9.2 percent rise in Group revenue to almost €2.2 billion. EBITDA (earnings before interest, tax, depreciation and amortization) improved by almost a quarter to €710.6 million – primarily due to the positive development of the Antalya Airport investment, the significant upward trend in the Ground Handling segment, as well as continuously growing results in the Aviation segment and the Retail and Real Estate segment. Group profit of €271.5 million clearly exceeded the previous year’s level due to the positive operating development and a release of provisions. “Thus, 2010 has been the most successful year in the Fraport Group’s history,” stressed Schulte. Therefore, the company will recommend to the AGM to raise the dividend by 10 euro cents to €1.25 per share.

In view of the ongoing heavy investments at FRA – almost €775 million in 2010 for airport expansion – the increase in the operating result (EBITDA) was necessary to enable the company to bear the rising interest and depreciation costs resulting from these investments. Net debt amounted to €2.0 billion at the end of 2010. Thus, gearing was approximately 78 percent, with equity amounting to about €2.7 billion and the equity ratio at 28.4 per cent.

Schulte described the forthcoming opening of the new Runway Northwest as the most important contribution to securing Frankfurt Airport’s competitive future. Meanwhile, the concrete surface and the taxiway bridges have already been completed. The first official landing of an aircraft on the new runway is scheduled to take place on October 21, 2011. Until then, the instrument landing system (ILS) still has to be installed and various test flights conducted. When the new runway becomes operational, Frankfurt Airport’s capacity will increase from about 82 today to 90 aircraft movements per hour. In the medium term, plans call for raising FRA’s capacity to about 100 movements per hour by 2015. With passenger traffic expected to increase by four to seven percent per year, Frankfurt Airport could be serving some 65 million passengers annually within four years.

To cope with this growth, other areas of the airport infrastructure will be systematically expanded. For example, Schulte mentioned the westward extension of Terminal 1, known as Pier A-Plus. Construction of this mega pier is progressing on schedule and is expected to be completed by the summer of 2012. Increasing the terminal’s annual capacity by six million passengers, Pier A-Plus will provide seven new parking positions for wide-body aircraft, including four Airbus A380 superjumbos. Plans are also under way for the construction of a third terminal. The first phase of Terminal 3 is scheduled to be completed in late 2016 or early 2017.

Along with the expansion of the airport’s infrastructure, Fraport will also continue with its “Great to have you here!” initiative to enhance customer service and the airport experience at FRA. During the past year, the focus of the initiative was on shortening waiting times at security checkpoints in the terminals. More than 90 percent of all passengers now have to wait less than 10 minutes at the checkpoints. Newly designed waiting and rest areas also provide a significantly enhanced passenger experience. In addition, cleanliness throughout the terminals has been improved. Projects for 2011 include improving signage and wayfinding, redesigning the Terminal 1 forecourt and upgrading sanitary facilities. In addition, Schulte announced the launch of a new FRA smartphone app to help passengers navigate their way through the terminals.

Regarding Fraport AG’s international airport projects, Schulte said that investing in growth markets had already paid off. All 13 airports, where the Group is now engaged, recorded in some cases significant growth in passenger numbers last year. In total, the Group’s airports welcomed nearly 200 million passengers in 2010. Schulte highlighted the positive development at Antalya Airport, Fraport’s largest investment. After Fraport took over operations of Antalya’s second international terminal, the number of passengers doubled compared to 2009. Antalya served a total of 22 million passengers in 2010. This represents an underlying increase of more than 18 percent.

Schulte forecasts that passenger numbers will continue to grow by four to seven percent in 2011. Revenue is expected to exceed €2.3 billion, while EBITDA is forecast to increase by 10 to 15 percent. The current growth trend is very likely to continue in 2012. “Naturally, this will only be possible if there are no traffic dips or constraints caused by unpredictable events,” explained Fraport’s CEO.

“Certain weather conditions can restrict normal flight operations despite the best planning and contingencies. The volatility of today’s global economy can cause turbulence in the markets, with an immediate negative impact on air traffic. And politicians can make ill-considered decisions causing flourishing industries to de-rail from the track to success,” Schulte said. For this reason, Schulte called on national and European decision makers to avoid imposing unilateral burdens on the air transportation sector. These burdens would impair the sector’s global competitiveness with negative impacts on companies and employees, as well as on the primarily export-driven economies. “Air transport is one of the top industries in Germany and we achieve good results and create new job opportunities. We are committed to fulfilling this role in the future,” concluded Schulte.