Fraport’s interim results for first half of 2021 makes for better reading
Global airport operator, Fraport AG, today unveiled its interim results for the first half of 2021, and it makes for better reading than its end of year 2020 accounts, with traffic “markedly picking up” in the second quarter of the year.
Indeed, despite a weak first quarter, for the first time since the outbreak of the coronavirus pandemic, Fraport again achieved a positive Group result (net profit) in the reporting period – supported by rising demand and reduced costs, as well as a pandemic compensation payment from the government.
Fraport AG’s CEO, Dr Stefan Schulte, said: “The pandemic compensation from the German and State of Hesse governments strengthens our equity base. This enables us to continue our investments in climate protection and infrastructure development projects.
“At the same time, we have reduced our costs significantly. Consequently, our operating result is now back in the black again. Also thanks to our broad and diverse international airport portfolio the Fraport Group is well positioned to benefit from the expected recovery in air travel.”
Passenger traffic rebounds noticeably
In June 2021, passenger numbers at Fraport’s Frankfurt Airport (FRA) home base rebounded noticeably – rising by almost 200% year-on-year to about 1.8 million travellers. Preliminary figures indicate that this trend continued in July, with traffic growing by some 116% to about 2.8 million passengers.
The airport’s passenger traffic on peak days currently reaches about 50% of the level registered during the pre-pandemic record year of 2019.
Referring to the effects of traffic growth and surges on airport operations, Schulte explained: “The sharp increase in traffic is causing operational challenges for Frankfurt Airport, because traffic is heavily concentrated during several peak times of the day.
“In addition, the current anti-COVID measures require significantly more time and resources for terminal processes and aircraft ground-handling operations. Working closely with our partners, we are continuously enhancing processes, while adapting our capacities to fluctuations in demand.”
Despite the positive trend seen in the last few weeks, FRA still registered an overall traffic decline of 46.6% year-on-year to nearly 6.5 million passengers for the entire January-to-June 2021 period. This is due to the fact that, during the same six-month period last year, the COVID-19 pandemic only began to have a strong negative impact on traffic from mid-March 2020 onward.
Compared to the record figures achieved in the first half of pre-pandemic 2019, FRA even registered an 80.7% drop in traffic in first-half 2021.
In contrast, Frankfurt Airport’s cargo throughput (airfreight + airmail) grew by 27.3% year-on-year to nearly 1.2 million metric tonnes (+9%) from January to June 2021. At Fraport’s Group airports worldwide, traffic also grew noticeably again in June 2021, but overall traffic for the first half remained well below the previous year’s level.
Revenue decreases slightly – Positive one-off effects from government compensation payments
Reflecting the overall traffic development, Fraport’s Group revenue decreased by 10.9% to €810.9 million in the first half of 2021. Adjusting for revenue from construction relating to capacitive capital expenditure at Fraport’s subsidiaries worldwide (based on IFRIC 12), Group revenue dropped by 8.9 percent to €722.8 million.
Fraport’s “other income” was positively affected by the agreement of the German and State of Hesse governments to grant Fraport compensation for maintaining FRA’s operational readiness during the first coronavirus lockdown in 2020. The full compensation amount of €159.8 million had a corresponding positive effect on Group EBITDA.
Fraport expects to receive the payment in the second half of 2021. This cash inflow will then have a positive effect on the Group’s liquidity and net financial debt.
Also the Greek parliament approved compensation to Fraport (under the concession agreement) for the operational losses incurred in 2020 at the Group’s 14 Greek airports due to the pandemic. Specifically, the Greek State agreed to waive the fixed concession fees for Fraport, based on the amount of passenger traffic received.
Moreover, Fraport was granted a temporary suspension of the payment of the variable concession fee. For the first half of 2021, this translated into a positive impact of €69.7 million on Fraport’s other operating income and Group EBITDA.
In addition, an agreement reached in the first quarter 2021 between Fraport and the German Federal Police on the remuneration of aviation security services – provided by Fraport in the past – generated revenue of €57.8 million, which positively impacted Group EBITDA by the same amount.
Operating expenses significantly reduced – Positive Group result achieved
In view of recently rising traffic volumes, Fraport markedly reduced short-time work for operational staff at Frankfurt Airport (introduced under Germany’s Kurzarbeit programme in response to the pandemic).
Airport infrastructure temporarily unused due to the pandemic has largely been taken back into operation – including FRA’s Terminal 2. Despite these recent measures, Fraport was still able to reduce overall operating expenses in Frankfurt via strict cost management by about 18 percent in the first half of 2021.
At Fraport’s fully-consolidated Group companies worldwide, operating expenses were reduced by about 17% in the reporting period.
Supported by the one-off effects from compensation payments, Group EBITDA reached €335.3 million, exceeding last year’s first-half EBITDA of €22.6 million by €312.7 million. Excluding these special one-off effects, the Group still achieved a positive operating result in the first half of 2021.