Fraport Interim Report – First Nine Months 2009: Fraport Continues Preparations for Traffic Growth

FRANKFURT, November 5 /PRNewswire-FirstCall/ — Fraport AG’s executive
board chairman Dr. Stefan Schulte presented an optimistic look into the
future for the airport company at today’s financial press conference for the
first three quarters of 2009. “The global economic and financial crisis
noticeably influenced Fraport’s financial figures in the first nine months of
the year. However, from month to month the decline in traffic is dwindling,
confirming our 2009 full-year forecast which was already positively revised
in September. Air traffic has bottomed out and is clearly starting to claw up
its way from recent lows,” Schulte stated optimistically.

Passenger and Airfreight Figures Recovering:

Approximately 38.6 million passengers used Frankfurt Airport (FRA) in the
January-to-September 2009 period, 2.5 million or 6.1 percent less than in the
same period last year. In the first quarter of 2009 passenger demand slumped
10.9 percent, while the decline in the second quarter lessened to 5.6 percent
and in the third quarter to only 2.8 percent. “Both Frankfurt’s passenger and
airfreight figures are clearly recovering. We expect passenger traffic to
increase again by the end of this year or the beginning of next year, at the
latest. Preliminary October 2009 traffic figures confirm these expectations,
showing a slip of only 1.9 percent in passenger traffic,” explained Schulte.
Airfreight tonnage at FRA, shrank by 16.6 percent to approximately 1.3
million metric tons in the third quarter. (This is an improvement on the
first quarter slump of 23.5 percent and the second quarter decline of 19.6
percent.) The number of aircraft movements sank by 5.5 percent to 348,119
takeoffs and landings.

The Fraport Group’s five majority-owned airports served approximately
55.4 million passengers in the first nine months, a drop of only 4.4 percent
year-on-year. Lima Airport (LIM) in Peru even recorded a 5.0 percent
increase, and Antalya Airport (AYT) in Turkey registered 1.3 percent more
passengers than in the comparable previous year’s period.

Slightly Declining Revenue:

In the first three quarters of fiscal year 2009, the Fraport Group
achieved EUR1,478.2 million in revenue. This represents a 7.6 percent or
EUR121.6 million decline year-on-year. After adjusting for the consolidation
effects from the sale of Fraport’s ICTS Europe security subsidiary and
Flughafen Frankfurt-Hahn GmbH as well as for the positive effect from the
higher proportionate consolidation of the Antalya investment starting January
2009, Fraport Group revenue reached EUR1,467.6 million – only 2.5 percent or
EUR37.4 million down from the adjusted previous year’s level.

“Of course, the still declining passenger figures at Frankfurt Airport
are affecting the Group’s revenue development”, explained Fraport’s CEO. In
addition, Group revenue development was curbed by price concessions under the
five-year ground-handling agreement with Lufthansa German Airlines.

Cost-reducing Effects Focus on Staff and Non-staff Costs:

Personnel expenses shrank from EUR706.4 million in the previous year to
EUR644.6 million in the reporting period – also primarily due to
consolidation effects. Adjusted for the effects from the acquisition and sale
of investment shares, personnel expenses rose by EUR8 million or 1.3 percent
in the reporting period because of higher pay rates. Here Fraport was able to
generate cost-reducing effects inter alia by adjusting personnel to the
declining traffic volume.

A similar counteractive development was recorded in non-staff costs,
which shrank unadjusted by EUR21 million to EUR451.8 million. Adjusted for
extraordinary effects, non-staff costs in the reporting period fell EUR2.1
million below the adjusted previous year’s value to EUR450.2 million, despite
increased expenditures, for example, at Lima Airport and higher energy costs
at Frankfurt Airport. This represents a 0.5 percent decline. Total operating
expenses, also adjusted for special effects, reached EUR1,093.9 million, only
EUR6.2 million more than in the first nine months of 2008.

Shrinking Traffic Volumes Depress Group EBITDA and Profit:

Although adjusted Group revenue slipped only 2.5 percent, both adjusted
and unadjusted Group EBITDA shrank by 10.3 percent and 10.1 percent
respectively. In absolute terms this represents an unadjusted EBITDA of
EUR441.8 million and an adjusted EBITDA of EUR428.1 million. This is a result
of the decline in traffic volume at Frankfurt Airport, which affected EBITDA
in full. In addition, depreciation and amortization climbed by EUR17.9
million to EUR176.2 million in the reporting period because of ongoing
capital expenditures at Frankfurt Airport. As a result, EBIT dropped
noticeably by EUR68.6 million year-on-year to EUR265.6 million. Adjusted for
special effects EBIT fell by EUR66.9 million to EUR256.8 million.

Group profit fell clearly below the adjusted previous year’s level of
EUR232.5 million to EUR131.8 million (-43.3 percent) in the reporting period
because of declining operating results and the non-recurring tax free payment
in the previous year under the German federal government’s investment
guarantee for capital invested outside of Germany in connection with
Fraport’s Manila engagement. After adjusting for the federal guarantee
payments, the loss in Group profit still amounted to 30.9 percent.
Correspondingly, basic earnings per share decreased by 44.7 percent to
EUR1.36.

Agenda 2015 Presented:

Schulte emphasized that the financial and economic crisis noticeably
depressed traffic at airports worldwide. However, Schulte is optimistic
because “even in these times of crisis airline demand for slots at Frankfurt
Airport clearly exceeds FRA’s capacities.” To meet this demand in the future
realization of the planned capital expenditures is essential. “We will
implement our central strategic investment projects in order to be optimally
prepared for future growth,” underscored Fraport’s CEO.

Expansion Investments Secure Future Yields:

“We will take advantage of the future growth opportunities by completing
quickly and on schedule the modernization of Pier B, Pier A-Plus with its
innovative retail marketplace and – especially – the new Runway Northwest!
With these investments, we are creating the prerequisites for participating
in future worldwide traffic growth and for achieving corresponding yields,”
explained Schulte.

External Business Driving Growth:

Along with the capital expenditures at Frankfurt Airport and the
associated traffic growth, Schulte also sees growth opportunities in the
company’s external business. “For Fraport, the External Business is a real
growth driver,” he said. “We are providing our Fraport know-how on four
continents and plan to triple our operating results between 2008 and 2015.”
The most recent example of our successful external business: Just under a
week ago Fraport landed in the important Russian air transport growth market
of the future by inking a contract for developing, modernizing and operating
Pulkovo Airport in St. Petersburg. “Fraport and its partners in the Northern
Capital Gateway consortium can be proud of winning the concession bid and to
be taking over operation of Pulkovo Airport in April 2010,” said Schulte.

Package of Measures to Improve Profitability:

To shoulder these billions in capital expenditures at Frankfurt Airport
Fraport will need in the next few years a noticeable increase in earnings,
strict cost management and growth. “We are currently investing about EUR1
billion annually in the modernization and expansion of our airside facilities
- including the Frankfurt Airport Expansion Program – and each billion euro
we are spending requires roughly EUR100 million of additional expenditures
per year in interest and depreciation alone,” Schulte stated. These
expenditures must first be earned, especially through the expected traffic
increase and increasing proceeds from retail as well as through an increase
in airport charges. “In the current economic situation this is certainly not
easy for all parties. However, the additional capacities will ultimately also
benefit the airlines and their customers,” explained Fraport’s CEO.

However, Fraport is active not only on the revenue but also on the cost
side in order to improve the company’s profitability substantially. Thus,
negotiations on the future of ground handling services at FRA are well
underway. Both the works council and the Fraport management are pursuing the
common goal of keeping this business segment and the associated jobs within
the company. In this context, constructive talks are being held with the goal
of creating competitive structures — which will especially allow for
handling additional traffic even more efficiently.

Fitness@Fraport2011 to Strengthen Core Competencies of Business Units:

Through a changed pattern of responsibilities – both central and
de-central – the Fitness@Fraport2011 program will realize synergy potentials
as well as simplify structures and interfaces between the business units and
services units. “It’s a matter of being fit for expansion and of increasing
the speed and quality of our work,” explained Schulte. “We will make a clear
differentiation between central and de-central tasks and combine
cross-divisional and support functions in the Central unit. This will relieve
the business units of administrative tasks and allow them to concentrate on
their respective core competencies.”

Furthermore, the Fitness Program will create the ideal basic conditions
for working even more customer and service-oriented: clear responsibilities,
short distances, quick decision-making are in the interest of Fraport’s
business partners.

Fraport’s service campaign for passengers and the quality improvements of
recent years are increasingly being well received. Thus, Frankfurt Airport
has been able to improve substantially its position in the annual Skytrax
Airport Ranking, which is based on a worldwide passenger survey.

Schulte emphasized that the sustainability issue is the central theme of
the future for Fraport. It encompasses the company’s responsibilities
vis-a-vis its employees, its neighbors and the environment. “We are
responsible for the world that we leave our children. Fraport has already
adopted a number of measures to meet its responsibilities to employees and
airport neighbors and to conduct its business in an environmentally-friendly
way – but we want to do even better,” said Fraport’s executive board chairman.

Fraport Looks Positively into the Future

– EBITDA Forecast Slightly Higher:

Schulte gave an optimistic outlook for the full business year. The year
2009 was indeed marked by the effects of the economic crisis. However, the
signs of a sustained recovery in international air transportation are
becoming increasingly clear.

Fraport expects passenger volume at its homebase to decline by between
five and six percent. Schulte prognosticated a higher Group EBITDA than
forecast in Fraport’s last half-year interim report. Whereas three months ago
Fraport expected Group EBITDA to reach EUR500 to EUR530 million the airport
manager now anticipates EUR530 to EUR540 million versus the adjusted previous
year’s level of EUR590 million. As forecast at the beginning of fiscal year
2009, Group profit will fall short of the 2008 level.

Fraport is excellently positioned and its Frankfurt Airport homebase is
the number one hub for the Star Alliance. “We offer airlines and passengers
top products of high quality standard and boast an attractive airport
investment portfolio with growing financial returns. With our Agenda 2015 and
Fitness@Fraport2011 we will further enhance this already strong position,”
Schulte concluded.

Print-quality photos of Frankfurt Airport and Fraport AG are available
free for downloading via the Internet at http://www.fraport.com (Menu: select
Press Center > then Photo Service). For TV news and information broadcasting
purposes only, we also offer free footage material for downloading via
http://fraport.cms-gomex.com.

    For Further Information, Please Contact:
    Fraport AG Frankfurt Airport Services Worldwide
    Robert A. Payne, B.A.A. - Sr. Manager International Press
    Press Office (Dept. UKM-PS), Corporate Communications
    60547 Frankfurt am Main, Federal Republic of Germany
    Tel.: +49-69-690-78547; Fax: +49-69-690-60548;
    E-mail: r.payne@fraport.de; Internet: http://www.fraport.com

SOURCE Fraport AG