Fraport Expects Zero Growth At Frankfurt Hub
German airport operator Fraport predicted zero growth in passenger numbers at its main Frankfurt hub this year and lower net profit as a weak economic climate prompts airlines to reduce capacity.
Fraport said on Tuesday that net profit would shrink this year from the EUR€238 million (USD$310 million) reported for 2012.
The company said this reflected the impact of costs from a fourth runway opened in 2011 and expansion of one of two terminals at Frankfurt, Europe's third-busiest airport by passenger numbers.
Fraport's cautious outlook fell short of analysts' expectations, which had looked for an increase in Frankfurt passenger numbers this year after the airport's expansion.
"The macro-economic environment will also remain challenging in 2013," chief executive Stefan Schulte said. He also cited burdens on the aviation industry from a planned European emissions trading scheme and from Germany's air travel tax.
"I think they are very cautious after their harsh disappointment last year, when they had to lower their expectations for passenger growth by half," said Equinet analyst Jochen Rothenbacher.
CEO Schulte told journalists at a news conference that business had been "very good" so far in March and that an upturn in the economy could boost the number of travellers.
Airlines in Frankfurt plan to reduce flight movements by 1.4 percent in the European summer, Fraport said. Lufthansa, which accounts for more than 50 percent of Fraport's business in Frankfurt, had reduced its capacity by 3 percent in its European winter schedule.
Fraport forecast earnings before interest, tax, depreciation and amortisation (EBITDA) rising to between EUR€870 million and EUR€890 million from EUR€850.7 million in 2012.
For last year, Fraport reported a 6 percent rise in core profit (EBITDA), but its net profit fell by about 1 percent on financing costs as well as a slump in profit at its ground handling business.
The airport operator has made major investments to boost the number of passengers it handles at Frankfurt airport, driving up its interest costs by a quarter in 2012 and boosting net debt by 11 percent to EUR€2.9 billion (USD$3.8 billion).
The Frankfurt investments weighed on earnings at Fraport's aviation business, which generates about a third of group revenues but less than a quarter of operating profit.
The addition of 12,000 square metres of retail space at the expanded terminal boosted Fraport's retail income. Net revenue per passenger at Frankfurt airport rose almost 5 percent.
Fraport will pay a dividend of €1.25 per share for 2012, unchanged from a year earlier.