Fraport Fiscal Year 2008: Record EBITDA Despite the Start of the Economic Downturn

In fiscal year 2008 the Fraport airport company again achieved growth in revenue, which increased by 3.8 percent after adjusting for special effects.  In absolute terms, revenue declined by 9.8 percent to €2.1 billion.  This loss in revenue versus 2007 was due to the sale of Fraport's ICTS Europe security subsidiary on April 1, 2008, and to revenue received in 2007 from finance leasing of the Airrail Center Frankfurt project.  The Group operating result – EBITDA (earnings before interest, tax, depreciation and amortization) – reached the new record figure of €600.7 million, up 3.5 percent compared to the record year of 2007.  As announced, the 2008 net profit of €180.2 million was below the previous year's figure of €213.7 million.  Fraport's executive board is recommending an unchanged dividend payment of €1.15 per share.

Fraport executive board chairman Dr. Wilhelm Bender said  that the strong downturn in the global economy led to declines in passenger and airfreight traffic at the Group's Frankfurt Airport (FRA) home-base in 2008.  With nearly 53.5 million passengers, Frankfurt Airport registered 1.3 percent fewer passengers than in the record year of 2007 – although the particularly attractive intercontinental passenger segment still reported light growth.  Cargo throughput (airfreight and airmail) dropped by 2.7 percent to 2.1 million metric tons.

At the Group level, traffic development for 2008 was more positive than in Frankfurt.  Peru's Lima Airport saw passenger traffic jump by 10.4 percent to 8.3 million and airfreight volume climb by 6.1 percent to almost 240,000 metric tons.  Antalya Airport on the Turkish Riviera recorded   9.1 million passengers, up 8.5 percent year-on-year.  In total, Fraport's majority-owned airports welcomed about 78.2 million passengers and handled nearly 2.5 million metric tons of cargo (airfreight and airmail).

Even in times of crisis, air transportation maintains its leading role for the global mobility of people and goods and continues to be a prerequisite for the economic prosperity of "Export Nation Germany", stressed Bender.  Moreover, the development of traffic in previous decades shows that crisis-related declines have been followed by over-proportional growth in the succeeding recovery phase.  "There is no doubt that globalization and internationalization of the division of labor  will intensify further," said Bender, and "this is why the world economy needs a high-performance global air transportation industry – that links the growth centers of the world together."

Thus, explained Bender, the temporary drop in traffic figures is definitely no reason to forgo FRA's capacity expansion.  The demand from airlines for take-off and landing slots at Frankfurt has remained stable for many years, above and beyond the limited capacity available.  "After a long ten-year planning and approval phase, we are finally constructing the new Runway Northwest– a decisive step for the future," said Fraport's executive board chairman.

Bender indicated that he was satisfied with the tree clearing and preparatory work for FRA's Airport Expansion Program, which is running on schedule.  He stressed that Fraport is securing the airport's future not only with the new landing runway, which is expected to go into operation during the 2011/2012 Winter Timetable.  Progress was also made last year in strengthening, modernizing, and expanding FRA's existing infrastructure.  In 2008, Fraport invested nearly €500 million:  for example at Terminal 1, for building the new Area C, for redeveloping International Pier B, and for recently starting Pier A-West – all areas where new terminal docking positions for the Airbus A380 superjumbo are being created.

Fraport's chief described Frankfurt Airport's expansion as one of the largest investment projects in Europe:  "In total we will be investing about €7 billion here at FRA between 2007 and 2015.  On top of this, billions of euros will be invested by numerous other companies, that want to profit from the dynamic Frankfurt Airport City in the future."  This privately financed program will have considerable impact on the economic development of Frankfurt/Rhine-Main and far beyond our region.  It will secure many thousands of jobs and, through catalytic effects, will create approximately 100,000 new employment positions throughout Germany.

Despite all of these positive developments, "it is difficult to provide an outlook of our expected business development in 2009," said Bender.  Fraport expects Group traffic figures to drop because of the global economic situation.  At FRA, the  stabilization of air traffic is expected during the third quarter.    By no later than the second quarter of 2010, Bender sees a sustainable recovery trend firmly taking hold — led by renewed growth in air traffic figures around the globe.  For the Fraport Group, Bender is expecting decreases in traffic and revenue in 2009 – which, through strict cost management, will have only an under-proportional impact on EBITDA and Group results.   In conclusion, Bender stated  that uncertainty about the economy and air traffic development currently made it impossible to quantify precisely how Fraport's  business results will develop.