CEO Stefan Schulte’s Speech for Fraport Annual Common Assembly

Upfront of Fraport AG’s upcoming common Annual Common Assembly (AGM) of shareholders, the corporate at present printed on-line the speech to be offered by CEO Dr. Stefan Schulte on the occasion. Fraport’s 2023 AGM shall be held at 9:00 a.m. (CEST) on Could 23 in a virtual-only format.

Shareholders who’ve duly registered could train their proper to request info from the administration in the course of the AGM by submitting questions through a dwell video hyperlink.

On the day of the AGM, a dwell stream of the opening by the AGM’s chairperson and the speech from CEO Schulte shall be accessible to most of the people on this web site.

Expensive Shareholders, Girls and Gents,

I warmly welcome you to Fraport AG’s Annual Common Assembly.
Each in Frankfurt and internationally, a particularly dynamic yr with sturdy demand for air journey lies behind us. Development was clearly within the double-digit proportion vary and we’re happy that this pattern is continuous within the present enterprise yr. Following the speedy restoration on the airports in our worldwide portfolio, we at the moment are producing greater than half of our working revenue exterior Frankfurt. This exhibits how we now have transitioned over the previous 20 years from being the operator of Germany’s largest aviation hub to one of many main international airport firm. We’re presently lively at 28 airports on 4 continents.

Earlier than I take a extra detailed look forward, please permit me to stipulate how we now have steered your organization via the third yr of the coronavirus pandemic over the previous monetary yr. We’ve got put a selected emphasis on positioning ourselves for continued progress and on advancing main future-focused tasks.

Evaluation of the 2022 monetary yr

Expensive Shareholders: The yr 2022 marked the long-awaited finish of the coronavirus pandemic. With journey restrictions being largely lifted, demand from leisure vacationers, particularly, rose sharply from March final yr. Whereas month-to-month progress charges of as much as 300 p.c are pleasing from a mere enterprise perspective, additionally they pushed us to our operational limits in Frankfurt. For the complete yr 2022, passenger numbers in Frankfurt surged by 97.2 p.c year-on-year, comparable to a complete of 48.9 million passengers. Even when progress was nonetheless largely pushed by the demand from leisure
vacationers, we did see a noticeable pick-up in enterprise journey within the second half of the yr. This pattern is continuous into the brand new yr.

One other pleasing facet: regardless of tough situations for airfreight, Frankfurt remained Europe’s main cargo hub in 2022.

Our primarily leisure-dominated Group airports worldwide continued to get well extra quickly than the Frankfurt hub with its extra advanced demand construction. The Greek 3 airports, particularly, carried out nicely: in 2022, they welcomed round 4 p.c extra passengers than in pre-crisis 2019 – a brand new all-time excessive. Antalya Airport in Turkey and our gateways in South America additionally made a big restoration.

At this level, please permit me to supply an enormous thank-you to all of our staff. Throughout your entire Fraport Group, our staff went all out day by day to facilitate journey for our passengers, regardless of the general difficult situations. Their dedication to “pitch in” and work collectively makes me assured that we are going to quickly be capable of supply the standard once more that you simply, our shareholders, anticipate from Frankfurt Airport, as do our clients, and naturally we ourselves. We’ve already carried out lots to make this occur. Consequently, we had been in a position to preserve operations noticeably extra secure over the current Easter journey peak and lengthy weekends.

Expensive Shareholders: final yr’s sturdy visitors progress additionally offered a serious enhance to our monetary outcomes. Group income rose by 49 p.c year-on-year to €3.19 billion.

The working consequence elevated at a slower tempo, rising by 36 p.c. Working progress was dampened by the non-recurrence of constructive particular results, together with the pandemic compensation funds acquired in 2021, and by elevated power prices, in addition to increased operational bills. These had been pushed particularly by the hiring of latest employees aimed toward stabilizing operations at FRA. Greater than 57 p.c of the working consequence, i.e. earnings earlier than curiosity, taxes, depreciation and amortization, was generated by Fraport’s worldwide enterprise. That equates to spectacular progress of 40 p.c over the earlier yr, in comparison with round 31 p.c progress from predominantly Frankfurt-related enterprise segments. This underscores how economically important our international operations now are to us as an airport firm.

Our Group consequence or internet revenue surged by 81.5 p.c year-on-year to €166.6 million in 2022. We even exceeded the forecast we set ourselves – regardless of the write-off of a shareholder mortgage in reference to our funding at Pulkovo Airport in St. Petersburg, Russia. We additionally significantly improved our internet debt-to-EBITDA ratio. This key determine improved to a worth of 6.9 from 8.4 in 2022, supported by the expansion in operational revenue.

We’re additionally happy that we now have been in a position to scale back our carbon footprint beneath Scope 1 and Scope 2 by 6.5 p.c throughout the Group. Towards the backdrop of the sturdy visitors progress final yr, this discount underlines how critically we’re taking local weather safety and that we’re making seen progress. Later I’ll go into extra element about our local weather technique, since this can be a crucial future challenge for us.

Efficiency and potential of Fraport’s worldwide enterprise

As I simply talked about, greater than half of our Group EBITDA was generated exterior Frankfurt in 2022. A better take a look at this improvement reveals the sturdy place we now have gained globally as a profitable operator of airports.

We’re lively at 28 aviation gateways on 4 continents, protecting numerous enterprise segments. Of explicit curiosity to us had been and are tasks by which we are able to greatest put our in depth know-how to work within the operations, administration, and improvement of airports. Following this premise, to this point we now have efficiently targeted on investments in rising and growing markets.

Each time we purchase a brand new airport concession, we concentrate on leveraging that airport’s particular progress potential by
enterprise needs-driven modernization and growth measures.

The advantages of reworking Fraport right into a globally lively airport firm turned notably evident within the wake of the Covid-19 pandemic. Whereas our home-base airport in Frankfurt has been rising extra slowly from the disaster as a result of its complexity and better reliance on enterprise journey, our leisure-dominated Group
airports worldwide are recovering considerably quicker. Their better contribution to Group EBITDA in 2022 (in comparison with 2019) underscores this truth in a very highly effective manner.

We’re very happy that our worldwide portfolio continues to see ongoing natural progress. Let me offer you some examples to display this.

The efficiency of our 14 Greek airports has been spectacular. In Greece, we concluded the 2022 enterprise yr with a 4 p.c passenger improve – thus even surpassing the document from 2019. We at the moment are reaping the advantages from the great modernization and growth measures we undertook in any respect 14 airports. Consequently, we acquired the primary returns on from our Greek funding this yr. We’re additionally assured for the upcoming summer season season. Within the first 4 months of 2023 alone, the Greek airports achieved cumulative passenger progress of 29
p.c, clearly exceeding the speed from the identical interval of 2022.

Our Brazilian airports in Fortaleza and Porto Alegre additionally proceed to get well from the impacts of the pandemic. In Porto Alegre, we efficiently accomplished the final main infrastructure measure with the opening of the prolonged runway in 2022. We at the moment are specializing in lowering debt and predict to quickly obtain our first dividend funds from this funding.

At Lima Airport in Peru, growth work is in full swing. The primary growth section has been concluded as scheduled, comprising a second runway, upgraded taxiways, and the brand new air visitors management tower. The development of the brand new passenger terminal can also be progressing nicely, to be opened as scheduled in early 2025. We’ve got additionally efficiently concluded the venture financing wanted for the growth. By taking these steps, we shall be reworking Lima Airport into probably the most trendy aviation hubs in South America. Together with the airport’s growth, the introduction of
state-of-the-art know-how and course of optimizations may even contribute to attain this purpose. Not too long ago, DFS Aviation Providers took over apron administration in Lima.

We’re working with this new associate deploying location-independent cameras for monitoring floor visitors sooner or later. This might make us pioneers in Latin America.

Our Turkish Group airport in Antalya recovered to 92 p.c of 2019 passenger numbers in 2022. This yr, the intention is to succeed in pre-crisis figures once more. Everybody at our Turkish subsidiary continues to have this purpose firmly of their sights. Over the previous
few months, consideration in Antalya has been targeted on aid efforts following the horrible earthquake that impacted the east of the nation and Syria. The airport was and stays an essential hub for humanitarian assist transports. Within the weeks instantly after the huge earthquake, a number of assist flights operated day by day to and
from Antalya. The excessive degree of dedication proven by our staff in Antalya crammed me with delight, as did the monetary donations from lots of our employees in Frankfurt. The
aid efforts didn’t impression common flight operations. The growth measures launched in keeping with the brand new concession settlement to additional increase the airport’s capability are working to plan. They are going to kind the idea for sustainable progress in Antalya.

Summing up, we are able to see that, even when we aren’t presently planning any main acquisitions, the natural progress of our worldwide portfolio nonetheless provides loads of potential. We are going to constantly harness this potential to assist Fraport’s future progress.

Replace on Frankfurt Airport

Expensive Shareholders: Let’s now check out our home-base Frankfurt Airport. We’re making nice progress in Frankfurt too. As deliberate, we took over the administration of Frankfurt Airport’s safety checkpoints from the German Federal Police at first of 2023. The brand new duty provides us extra flexibility in the case of modernizing safety know-how. We now have seven trendy CT scanners in use.

At these checkpoints, our passengers profit from now not having to unpack their digital gadgets and liquids. This improves the standard of our service for passengers and results in considerably increased throughput on the checkpoints – with out
compromising safety. The subsequent 4 CT scanners are presently being put in and 4 extra are to comply with in July. We’re subsequently clearly forward of all different airports in Germany in the case of using this contemporary safety know-how. We are going to sustain the speedy tempo of the roll-out. In whole, we’re planning to have 40 CT scanners within the Terminals by the primary half of subsequent yr.

Since March of this yr, passengers have additionally been in a position to ebook a timeslot for safety checkpoints. Even when that is nonetheless in a trial section for now, the brand new service is getting used to nice satisfaction by our clients and is offering us with essential insights for additional optimization of our companies.

We’re additionally specializing in enhancing different processes. By the summer season this yr, 20 new hybrid check-in counters shall be put in in Concourse B of Terminal 1. As well as, 40 baggage drop-off factors are being added. The brand new counters could be operated with out the involvement of employees, and passengers can use them across the clock. The brand new counters will embrace biometric ID capabilities from the outset. This implies clients who want to use this new know-how will be capable of determine themselves utilizing their face, as an alternative of their passport or ticket.

The brand new counters kind a part of the primary accomplished stage of the “Reworking Terminal 1” venture at Frankfurt Airport. The second stage of this venture, which contains the rearrangement and centralization of the safety checkpoints in Concourse B, continues to be within the preliminary section. The area gained by the deliberate rearrangement within the rear space of Concourse B shall be enhanced with expanded retail and eating choices. Airside passengers will sooner or later be capable of transfer considerably extra simply between concourses A, B and C. Presently, passengers have to alter ranges when transferring between A and B, due to the safety checkpoints positioned between the 2 concourses. The development work required to implement this venture will develop into increasingly more seen in Concourse B over the approaching yr.

The modernization will present a big improve to Terminal 1 within the coming years, with simplified processes and an general enhanced passenger expertise.

Building works on the future Terminal 3 within the south of our airport are considerably extra superior. The flowery glass facade of the primary constructing is now completed. The parking constructing and the roughly 10-kilometer-long new highway hyperlink are about to be accomplished. The main focus is now shifting increasingly more on putting in the technical fittings within the inside of the brand new terminal. The primary trials for the brand new Sky Line folks mover shall be a selected spotlight within the second half of the present yr.

Expensive Shareholders, as you should have observed within the video that we performed simply earlier than the beginning of this yr’s AGM, local weather safety is one other prime precedence we proceed to concentrate on at Fraport. With the “decarbonization masterplan” that was agreed upon at first of 2023, we now have specified quite a few measures in nice element that we are going to proceed to advance as a part of our dedication to be carbon-free by no later than 2022.

One very pleasing discovering has emerged: we’ll make quicker progress on a lot of points than beforehand calculated. The present goal is for the Group to generate solely 95,000 metric tons of CO2 emissions by 2030, as an alternative of the beforehand deliberate 120,000 metric tons. In Frankfurt, solely 50,000 metric tons of carbon shall be emitted, as an alternative of 75,000 metric tons. Which means by as quickly as 2030, we shall be emitting lower than 25 p.c of the CO2 volumes that had been produced within the 1990 reference yr. By 2020, we had already diminished our emissions by 50 p.c in contrast with 1990 ranges. These figures underscore that local weather motion is not only a short-term precedence for us. Quite the opposite: for a few years, we’ve been pursuing a step-by-step method to attain our local weather objectives.

Let’s now check out the busy summer season journey interval we anticipate for 2023. Final yr, we elevated our employees numbers by over 1,000, primarily in operational roles, and this yr we’re planning to maintain up this hiring tempo. The German employment market is exceedingly tight, notably in the case of certified employees. For that reason, lots of our new staff come from different EU international locations. In response to the low qualification ranges presently accessible on the labor market, we now have considerably expanded our coaching capacities. This features a bigger providing of fundamental skills comparable to German language certificates and car driving licenses.

We’ve got additionally labored to increase capacities for “on-the-job” skills. Particularly, we are able to now practice potential candidates as plane loaders inside a one-year timeframe with out making any compromises on security and safety. Usually, this qualification takes not less than two years. As a result of vary of measures we now have launched, we anticipate to be again at 2019 ranges for plane loader numbers by mid-summer this yr.

The foremost issues we’re going through in the case of filling vacant positions are clearly reflecting the impacts of a tightening labor market ensuing from demographic change. We take this shift very critically. To fulfill the problem of the speedy modifications within the labor market, my Govt Board colleague chargeable for human assets, Julia Kranenberg, has launched “HRneo”. That is the largest employment program we now have launched in recent times. The intention of the strategic repositioning of HR is for us to stay a horny employer for our present employees and new staff, in addition to to provoke needed modifications. To take action, we’ll considerably increase the qualification choices all through the Group. Going forward, we’ll place a very excessive worth upon life-long studying. Measures comparable to job rotations are to develop into a part of on a regular basis working life. They assist employees to realize a unique perspective, whereas increase helpful cross-qualifications on the identical time.

We may even proceed to additional professionalize and digitize the recruitment of latest staff. This is applicable each to processes, but additionally to focused recruitment campaigns in international locations inside and out of doors the EU. Present employment realities within the ‘New Regular’ can’t be in contrast with the interval earlier than the pandemic. We’re utilizing HRneo to organize Fraport for the challenges associated to this new scenario.

Whereas HRneo is fairly geared towards medium and long-term enhancements, the brand new collective wage settlement which was lately reached in mediation for the general public service may have a right away impression. The result is difficult for us economically, given the clearly rising personnel prices. On the identical time, important wage will increase are unavoidable. Larger salaries are an essential think about serving to us stay a horny employer for our staff and to face out amongst different corporations in a extremely aggressive labor market.

The measures we now have taken to date are essential notably in view of the upcoming summer season season. We anticipate passenger numbers throughout this yr’s summer season to extend by 15 to 25 p.c in comparison with 2022.

Leisure vacationers will proceed to be the primary progress driver.

Out there seat capability will improve to round 85 p.c of 2019 ranges in the midst of the present summer season season. On routes to and from Central America and Africa, the variety of flight choices already exceeds pre-crisis ranges, whereas North America is shut behind. Solely the Asian market and particularly China are nonetheless lagging considerably behind. Nonetheless, because the opening-up continues, we anticipate an extra enhance for Asia over the course of
the yr. Throughout the summer season holidays, passenger numbers are anticipated to succeed in peaks of as much as 200,000 vacationers day by day.

Throughout the current Easter journey interval, we handed this yr’s first check sustaining general secure operations. Within the first three weeks of the Hessian faculty holidays alone, some 3.8 million passengers traveled through Frankfurt Airport. Throughout the subsequent busy vacation weekends, operations additionally ran easily. This makes me cautiously optimistic in regards to the peak summer season journey interval that lies forward of us.


I’m additionally assured about our monetary efficiency for the present enterprise yr. With passenger numbers in Frankfurt anticipated to succeed in between 80 and 90 p.c of 2019 ranges, our earnings scenario will additional enhance. This may even be supported by the anticipated ongoing visitors progress at our subsidiary airports. Consequently, we venture Group EBITDA to additional advance to a variety between roughly €1,040 million and €1,200 million. The higher finish of this scale would imply that we are going to attain 2019
ranges once more. We anticipate the Group consequence to extend considerably, to a variety of between round €300 million and €420 million. Resulting from our excessive debt ranges, as of at present we aren’t proposing any dividend funds for 2023. Solely as soon as your organization comes nearer to a internet debt-to-EBITDA ratio of 5 can we plan to renew
dividend funds.

Expensive Shareholders: Let me shut with a forecast for the medium time period. A very powerful message is that our progress traits are intact. We anticipate passenger numbers at our worldwide subsidiaries to get well to pre-crisis ranges throughout this monetary yr, and we’ll see the identical rebound in Frankfurt in 2025, or in 2026 on the newest. At our home-base airport, we shall be well-equipped for additional substantial natural progress from 2026 onwards when the brand new Terminal 3 will develop into operational, as scheduled. This can present us with a serious aggressive benefit in Germany and can assist us to learn from the expansion anticipated right here over the approaching years and a long time. The German Federal Ministry of Transport and Digital Infrastructure lately printed a really insightful examine on how totally different modes of transport in Germany would develop in coming years. For aviation, the ministry
expects progress of 67 p.c by 2051 from the degrees seen in 2019.

Because the absolutely constructed Terminal 3 may have further capability for round 25 million passengers yearly, your organization will largely be well-equipped to deal with this improve each landside and airside.
This implies we’re soundly positioned each internationally and inside Germany.

This can be a constructive outlook for you as our shareholders and for all of our staff throughout the Group.

Thanks for the boldness you place in us. We recognize your loyalty to us and to Fraport AG.

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