Fraport continues to profit from worldwide growth in air traffic

The Fraport Group’s revenue, operating result (EBITDA – earnings before interest, tax, depreciation and amortization) and Group result continued to improve during the first half of 2011. Revenue rose by about 11 percent year-on-year from €1.015 billion to €1.126 billion, while the Group’s operating result (EBITDA) advanced by 17.7 percent from €304.6 million to €358.4 million. The Group result more than doubled from €52 million to €105.2 million compared to the first six months of last year.

“In the first half of 2011 the Fraport Group also benefitted from the good positioning of its airports in the global air transportation market,” explained Fraport AG executive board chairman Dr. Stefan Schulte. Along with the Group-wide jump in passenger traffic, Fraport’s key financial figures were positively affected by base effects, resulting from the revenue drop precipitated by the volcanic ash cloud crisis in April 2010.

Personnel expenses rose in the reporting period by some three percent or €14.5 million to €462.9 million. This can be attributed to the ongoing upward increase in traffic figures, which has resulted in the need at Frankfurt Airport (FRA) for more operational personnel in particular – with almost 600 new jobs hirings. “This development reflects the Fraport Group’s strong economic position and underscores Frankfurt Airport’s significance as a job engine,” stressed Schulte.

Non-staff costs (cost of materials and other operating expenses) climbed by 11.4 percent from €304.6 million to €339.2 million due to the higher traffic-related concession fees for Fraport’s external business activities and because of special effects resulting from the sale of real estate at the Frankfurt location. Thus, total operating expenses increased by 6.5 percent from €753 million to €802.1 million year-on-year. Compared to the development in revenue, this increase is disproportionally lower and led to a €53.8 million rise in the operating result (EBITDA) to €358.4 million.

The financial result also grew positively from minus €92.6 million to minus €59.8 million. The decisive factors contributing to this included the rise in the market value of derivatives, higher interest income, as well as increased capitalization of interest costs for construction of major projects such as the new Runway Northwest and the new Pier A-Plus expansion at Terminal 1. Along with the positive operating development, this contributed to the Group result increasing from €53.2 million to €105.2 million. Basic earnings per share rose correspondingly by €0.58 to €1.13.

The continuing growth in traffic figures during the second quarter of 2011 contributed noticeably to Fraport’s solid half year results. Fraport AG’s five majority-owned airports welcomed about 43 million passengers during the first half of 2011, up 11.4 percent year-on-year. Frankfurt Airport served 26.5 million passengers (up 8.3 percent). Passenger growth rose even faster at Lima Airport (LIM) in the capital of Peru and Antalya Airport (AYT) in the Turkish Riviera holiday region – the Fraport Group’s two most important foreign investments. LIM recorded 5.6 million passengers (up 18.7 percent), while AYT registered nearly 10 million passengers (up 16 percent).

Fraport’s “Aviation” and “Retail and Real Estate” business segments each accounted for more than one-third of the revenue growth. Greater passenger volumes led to higher revenue from airport charges and also resulted in positive effects from the Retail and Parking businesses. The net retail revenue per passenger increased from €3.02 to €3.15. The sale of a building site at the Mönchof logistics park near FRA provided further positive effects.

“I expect that the company’s positive development will continue in the second half of 2011 – if our industry does not have to face any prolonged labor strikes,” said Schulte confirming the Group’s 2011 forecast. “We currently expect passenger growth to reach the upper range of our four-to-seven percent forecast for 2011.” On this basis, explains Schulte, we expect revenue to grow from about €2.2 billion last year to more €2.3 billion in 2011. As in the previous year, Group EBITDA is forecast to grow by 10 to 15 percent (2010: €710.6 million). As with passenger growth, Schulte also expects EBITDA to reach the upper range of the forecast. Despite higher special effects in 2010, the overall result is expected to be slightly below the previous year’s level.

At the same time, Fraport’s CEO warned about the burden of including aviation within the European emissions trading system. “A one-sided introduction of emissions trading for aviation will not only weaken the German air transportation industry but also the competitive power of our export-oriented economy as a whole. It is already a competitive distortion when other important aviation regions remain blocked out. Clearly, intercontinental passengers will then have an economic incentive to fly around or bypass Europe,” emphasized Schulte.

To include aviation in emissions trading is completely unacceptable when other third-party states – as they are threatening – levy punitive duties against European airlines. Therefore, in the interests of the air transportation industry Schulte is appealing to German and European politicians to abandon this plan and to engage in new negotiations.