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Fraport optimistic about future after toughest ever year


Fraport’s executive board chairman, Dr Stefan Schulte, will reveal the impact of COVID-19 on Frankfurt Airport and the group’s global airport portfolio, and confirm his optimism about aviation’s ability to bounce back, when he addresses shareholders at the company’s virtual Annual General Meeting on Tuesday.

Referring to last 12 months as “the most severe and longest crisis modern aviation has ever experienced”, Schulte will open his address by thanking staff for their “enormous commitment and dedication”  – many have agreed to reduced working hours while others have accepted redundancy packages – that have helped keep the company afloat.

“Despite all cost-saving measures, we continued to pursue key projects for the future, including the construction of the new Terminal 3.

“We have also reached an important agreement on the reorganisation of security controls at Frankfurt Airport. And we are making progress toward our goal of further reducing carbon emissions.”

Fiscal review

Frankfurt Airport handled 18.8 million passengers in 2020, its lowest annual total since 1984, and a huge 74.4% drop on the gateway’s 2019 performance.

Passenger numbers at the Fraport Group’s airports worldwide were also significantly down last year compared to 2019, although the level of performance varied significantly from country to country.

Schulte will tell the AGM, “It was not only traffic volumes that slumped dramatically last year. Revenue also more than halved year-on-year to just under €1.7 billion. Despite our rapid and comprehensive cost-saving measures, we posted a significant net loss. The Group result (net profit) reached minus €690 million. This is the first annual loss since 2002, in other words for almost two decades.

“The operating result shows that the cost-saving measures we have introduced are taking effect. Although Group EBITDA was well into negative territory at minus €251 million this was mainly due to expenses of €299 million for personnel-reduction measures. Adjusted for these special items, we achieved a positive Group EBITDA of around €48 million.”

“As of March 31, 2021, our net financial debt amounted to some €6 billion. When set in relation to equity, this translates into a debt-equity ratio of around 170%. This so-called gearing ratio had still been around 93% as of December 31, 2019.

“As you can see, the coronavirus crisis is straining our balance sheet. Nevertheless, we are confident that in the longer-term we will be able to return the gearing ratio to a normal level again thanks to our earnings power.

“To ensure this, however, we must keep as wide a range of financing options open as possible. That is why the Executive Board and Supervisory Board are today proposing to you, our shareholders, the creation of authorised and conditional capital.

“At present, however, and let me make this quite clear, there are no plans to actually use these options. We are currently seeing clear signs of recovery and are therefore optimistic about the future.”

Impact on staff

Schulte will tell shareholders: “In order to reduce personnel costs, we continue to apply Germany’s short-time working (Kurzarbeit) scheme. For most of last year and also in the first quarter of this year, around 80% of the permanent employees of Fraport AG and our main Group companies in Frankfurt were on short-time working, with an average of around 50%. This also gives us the necessary flexibility to be able to quickly ramp up staffing levels again if necessary.

“However, it soon became clear during the crisis that short-time working alone would not be enough. As it will take us several years to return to pre-crisis levels, we initiated the socially responsible reduction of around 4,000 jobs.

“This reduction target has now been almost fully achieved: by April 1, 2021 around 3,900 employees had left the company through severance payments, natural attrition and other measures. As a result, we will reduce annual personnel costs in Frankfurt by around €250 million compared with 2019.

“In the last few months, we have also taken many other measures to prepare Fraport for the time after the pandemic. All measures are aimed to make our company even more customer-oriented, more efficient, and at the same time more digital.

“To this end, over 300 individual measures are currently being implemented. They are contributing to making processes in the company leaner and organising them in a more focused way. We are bundling tasks, reducing red tape and fostering faster and more flexible cross-divisional co-operation.”

International assets and the future for Frankfurt Airport

Dr Schulte will highlight the success of infrastructure development projects in Brazil and Greece and ongoing expansion work at Lima’s Jorge Chavez International Airport in Peru.

“With our international portfolio, we are ideally positioned to benefit from the restart of global tourist traffic,” he will tell the AGM on June 1.

“Already this year, we expect to generate more than half of our earnings from our international business. Over the next few years, we also expect to see significantly faster traffic growth at our Group airports with a large share in leisure travel than at those airports with a higher proportion of business customers, such as Frankfurt.

“But we are also optimistic about our home-base Frankfurt Airport – both in the short and long term. Last year, Frankfurt Airport benefited from its size and high connectivity. Many airlines have bundled their long-haul flights from Frankfurt. As a result, we even gained market share during the crisis – albeit at a very low level. This is because airlines deploy their planes where they have a good load factor.

“Our expectations are confirmed by a recent air traffic forecast conducted by Intraplan. We commissioned this company to evaluate future scenarios. The key result of their expert research is that long-term growth trends in air traffic will only be moderately slowed by the crisis.

“Frankfurt Airport is excellently positioned in the market. We have a large and economically flourishing catchment area in the Frankfurt Rhine-Main region. Thanks to our central location in the heart of Europe and excellent intermodal links by road and rail, we are still in an excellent starting position. Since our business is based on both passenger and freight traffic, we have two important pillars that complement each other very well.

“Looking ahead, we are overall optimistic, even if the pandemic will continue to impact our business for a while. This optimism is based, above all, on the ongoing progress of the vaccination programmes. Here, not only Germany but also many important key countries are making very good progress.

“At the same time, there are now established concepts for COVID-19 testing, so that a significant easing of entry restrictions in many EU countries is foreseeable. German politicians are also sending clear signals that summer vacations will once again be possible outside the country’s borders.

“In the best case, this will be supported by a standard digital EU vaccination certificate that also shows negative tests and recovered infections. We therefore expect tourist and other private travel to recover fastest, especially within Europe.

“Business travel also has a lot of catching up to do. However, we expect this sector to remain below previous highs in the longer-term. Intercontinental traffic will also bounce back significantly, although it will be heavily dependent on vaccination progress and infection rates in the respective regions.”


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