Tourexpi
Fraport AG's business
performance improved significantly in fiscal year 2022 (ending Dec 31). In the
wake of the ending Covid pandemic and the gradual lifting of travel
restrictions during 2022, high travel demand boosted all of the Group's key
financial figures. The Group result (or net profit) climbed by 81.5 percent
year-on-year to EUR166.6 million, surpassing Fraport's own guidance set at the
start of the year.
Dr. Stefan Schulte,
Fraport's CEO, said: "We're moving in the right direction. In the past
fiscal year, we've seen particularly strong demand for air travel from leisure
passengers and vacationers. Our Group airports worldwide also benefited from
this trend. While demand was still restrained at the start of the year,
passenger numbers in Frankfurt saw rapid growth of up to 300 percent from April
onwards. In mid-2022, traffic surges with three-digit growth rates, combined
with staff shortages, occasionally brought us to our limits when ramping up
operations. Hence, I wish to extend my sincere thanks to all our employees for
their commitment and dedication, and to our partners at Frankfurt Airport for
their continuous support, including - and first and foremost - Lufthansa. All
of us have worked hard every day to keep disruptions for passengers to a
minimum." For the full year 2022, accumulated passenger numbers at
Frankfurt Airport (FRA) achieved nearly 100 percent growth compared to 2021.
Looking ahead to the current year, Dr. Schulte stated: "During the summer
we expect passenger traffic to further grow by about 15 to 25 percent compared
to 2022. All process partners continue to be fully committed to ensuring that
more resources are available for the upcoming travel season. Our primary goal
is to maintain stable operations and enhance our resilience in responding to
irregular situations. This remains a challenging task in view of the structural
factors we are facing, such as the geopolitically-related airspace restrictions
and the current constraints on the German labor market." Another key issue
highlighted by Dr. Schulte is Fraport's ongoing decarbonization program:
"We're further intensifying our climate measures. Having successfully
progressed with decarbonization in 2022, we are now aiming to reduce CO2
emissions in Frankfurt to 50,000 metric tons by 2030. This corresponds to a
reduction of 78 percent compared to the 1990 reference year. Our goal is to
become carbon free across the Group by 2045."
Passenger growth
boosts business performance
Dampened by the
spread of the omicron variant of the coronavirus at the start of the year,
traffic rebounded strongly from March onwards, as travel restrictions in many
countries were lifted. In Frankfurt, passenger traffic jumped by up to 300
percent year-on-year in April and subsequent months. During 2022, some 48.9
million passengers traveled via Germany's largest aviation hub, an increase of
97.2 percent year-on-year (but still 30.7 percent down compared to pre-crisis
2019). The airports in Fraport's international portfolio also reported rising
passenger numbers. Fraport's Group airports serving holiday destinations
recovered even more quickly than the FRA hub with its more complex travel
demand patterns. Ranking first were the Greek airports, serving nearly four
percent more passengers in 2022 than in pre-pandemic 2019 and achieving a new
all-time record.
FRA's cargo
throughput (comprising airfreight and airmail) reached about 2.0 million metric
tons in 2022 - a 13.3 percent decrease compared to 2021. Main factors
contributing to this decline included the discontinuation of air traffic with
Russia in line with EU measures related to the war in Ukraine and the
zero-Covid strategy pursued by China for almost the entire year, as well as the
overall economic slowdown. Despite this difficult market environment, Frankfurt
Airport was still able to outperform its European competitors, defending its
position as the continent's number-one freight hub.
Driven by strong
passenger demand, Fraport's Group revenue climbed by 49.0 percent year-on-year
to EUR3.19 billion in fiscal 2022. Adjusting for revenues resulting from
construction and expansion measures at Fraport's subsidiaries worldwide (in
line with IFRIC 12), Group revenue increased by 50.6 percent to EUR2.86
billion. Group EBITDA (earnings before interest, taxes, depreciation, and
amortization) rose by 36.0 percent year-on-year to EUR1.03 billion. Fraport's
Group result (or net profit) improved significantly by 81.5 percent to EUR166.6
million in fiscal 2022 (from EUR91.8 million in 2021), despite the negative
one-off effect from the complete write-off of the investment in Russia.
Debt situation
improves thanks to profit increase
Thanks to the marked increase
in profit, also the ratio of net debt to EBITDA improved to a value of 6.9
(from 8.4 in 2021). Serving as a key indicator for a company's financial
stability, the ratio shows how many years it would take for a company to pay
back its debt, if net debt and EBITDA are held constant. Fraport aims to
achieve a net-debt/EBITDA ratio of 5.0. When this target will be reached, the
Group also plans to distribute dividends again.
Comprehensive
preparations underway to accommodate further growth
In response to the
rebound in traffic, Fraport took various measures to expand its operational
workforce at Frankfurt Airport. As a result, personnel numbers in Frankfurt
increased by 8.0 percent year-on-year to 19,211 employees (as of December 31,
2022). For the current year, Fraport plans to hire some 1,500 additional staff
members to be employed in aircraft ground handling. Simultaneously,
advanced-training opportunities have been significantly expanded and
accelerated to quickly meet the demand for higher qualified personnel. A
ground-handling agent, for example, must complete a two-year training program
to become a fully qualified load master. Fraport is well on track to achieve
pre-crisis levels again for this key qualification during the current year.
Fraport has also
launched or implemented a number of service improvements for passengers in
Frankfurt Airport's terminals. Specifically, these include the increased use of
CT scanners at the security checkpoints. The advantage of this new technology
for passengers is that liquids and electronic devices no longer must be
presented separately but may remain in the hand luggage. This speeds up the
overall control process at the checkpoints significantly, without compromising
security. FRA currently operates seven new CT scanners and is in the process of
acquiring 24 more scanners to be partly available in the summer. Furthermore,
the project for transforming Terminal 1 has been launched with the aim of
significantly enhancing the passenger experience. Already in the summer,
travelers can take advantage of 40 new baggage drop-off facilities at 20
upgraded check-in counters. The new facilities can be used for self-service
check-in around the clock, regardless of the departure time.
Climate targets
further tightened
Fraport is
accelerating climate action at Frankfurt Airport. By 2030, the aim is for a
maximum of just 50,000 metric tons of CO2 to be emitted in areas that fall
under Fraport's direct control in Frankfurt. Previously, Fraport had its sights
on an interim target that would have reduced carbon emissions at FRA to 75,000
metric tons by 2030. The newly set target corresponds to a 78 percent reduction
in carbon emissions compared to the 1990 reference year. What's more: across
the Group, Fraport aims to be completely carbon-free by 2045. In fiscal year
2022, Fraport AG lowered its CO2 emissions in Frankfurt by 3.9 percent
year-on-year to 113,199 metric tons. Despite rising energy demand, the airport
operator thus already achieved a 50 percent reduction compared to the 1990
base-year. More on this topic can be found here.
Outlook
For the current
fiscal year 2023, Fraport's executive board expects passenger traffic at
Frankfurt Airport to reach between at least 80 percent and up to about 90
percent of the level seen in pre-crisis year 2019. This would correspond to a
total of some 57 million to 63 million passengers for 2023. Group EBITDA is
projected to reach between approximately EUR1,040 million and EUR1,200 million.
The Group result (net profit) is forecast to be in a range of between around
EUR300 million and EUR420 million. The net debt-to-EBITDA ratio for 2023 is
expected to maintain the level of 2022, because of ongoing investments made for
expansion measures. In view of the continuing economic impact from the Covid-19
pandemic, the Fraport executive board will propose, as in 2022, not to
distribute a dividend for fiscal year 2023.Fraport's AG full Annual Report for
the 2022 fiscal year is available here.
Image Credit: ©
Fraport AG
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