Fraport AG

Thank you, Emma. And also warm welcome to everybody from my side, happy to have you on the call, Q1 Fraport Group.

I have with me at the table our CFO, Matthias Zieschang and he's ready to start the presentation.

Yeah. Thank you, Christoph.

Good afternoon, ladies and gentlemen also from my side and a warm welcome. Today we are unfortunately celebrating a set anniversary as we are having one-year negative impact from COVID-19 on our traffic and financial numbers.

The positive information however, is that we do not expect to have another second anniversary of COVID-19 for our group. The global vaccination campaigns are gaining momentum as more and more vaccines are being licensed, produced and rolled out.

In Germany, we meanwhile administered about 30 million doses and therefore reach almost 33% of the German population. Fully vaccinated are about 10% of the German population.

In addition, another 3% of the Germans have already been infected with COVID-19, keeping those run rates German scientists are expecting to return immunity in Germany, end of Q3. Also, the trends in key markets like the US or UK are very encouraging.

We also warmly appreciate the plans by the EU Commission to re-allow US tourists to fly into Europe for the summer again. Hence, we are on a good path to return to growth and leave the negative impacts of COVID-19 step by step behind us.

On my first chart of the presentation, you see how strong COVID-19 has impacted us here in Frankfort in terms of passenger numbers, but also in terms of group revenues. On the flip side, we managed to compensate large part of those negative effects.

And we were able to lay the cornerstone of a new Fraport to evolve. Despite the revenue shortfall of about EUR2 billion, we managed to achieve a positive underlying EBITDA in the past fiscal year as we did in the current Q1 period under review.

Moreover, on the back of the zero negative impacts of COVID-19, we started an unprecedented restructuring program with a target to reduce our Frankfort labor force by about 4000 people as you will also see on my next chart. Today, we can confirm that by year end 2021, we will be a minimum 4000 employees leaner company, as we already achieved 96% of our target value last month, so in April '21.

Simultaneously, we took out all non-essential cost items and reduced non-staff costs in a clear three-digit million euro amount. To preserve cash, we also streamlined and stretched our investment programs.

The new terminal in Lima for example, will turn out to be a clearly smaller and therefore cheaper terminal. We also secured significant amounts of cash to the group.

We increased our available liquidity from 1.7 billion at year end 2019 to almost 4.4 billion at the end of the first quarter this year. But before I go into too many details here, let me start my presentation with our restructuring chart first.

In the light of the negative financial impacts of COVID-19, we needed to react quickly and launched a 4000 employee staff restructuring program. The target was to recover our financial results even at a lower passenger number of 50 million to 60 million passengers in Frankfurt and to improve our financial and leverage situation.

Initially, the target was meant to be achieved in fiscal year 2023. And the financial impact was estimated at about EUR250 million lower staff cost for our Frankfurt operations.

Today, we can tell you that we will not just meet the target, but we will exceed the target. On chart four you see the progress of our Frankfurt restructuring program we took over the past 12 months.

We started with almost 20,800 employees at year end 2019. Our current Frankfurt staff level is about 3000 employees lower when compared to our starting point year in 2019.

Another 849 employees left the company on the April 1 this year and will be reflected in our Q2 results. Hence, our target achievement moved up so to say overnight from 75% end of Q1 to 96% on April 1.

Bearing the natural fluctuation and another roughly 100 employees in mind that have agreed to leave under the redundancy program will lead to a target achievement of more than 1.5% by the end of this year. And we are very satisfied with the progress taken in our restructuring program.

And now expect to move into the direction of 5000 employees' leaner company. Let me highlight here that this reduction does not assume any divestments or further restructuring that we still might take.

Having said this, I'd like to move on in my presentation to chart number five. Here, indeed, you see a further restructuring measure that we agreed for our Frankfurt operations just a week ago.

Before the corona crisis, the waiting times at the security controls were by far the biggest pain point for passengers and therefore for our airline customers at Frankfurt. As you know, we have long intended to take responsibility for the organization, control and implementation of the security checks.

We are firmly convinced that with the same safety standards, we can increase the efficiency of the controls if we gain responsibilities in the future. Under the new agreement this responsibility will contain the procurement of control devices, the structuring of processes and how the capacities and personnel are deployed.

To guarantee the necessary security standards, the Federal Ministry of Interior will continue to set the framework conditions and the Federal Police will continue to supervise the security checks. Hence, there will be no compromise in terms of security standards due to the agreed upon contract.

The contract itself will become effective on January 1, 2023. Moving on to our traffic update on slide number six, while the year-over-year comparison will certainly improve from here on, we continue to measure ourselves also against 2019.

When benchmarked against Q1 2020, there's a clear improving trend for basically all airports except for Fraport Brazil visible towards March this year. Measured against 2019, the present shortfalls nonetheless continue to range between 70% and 90% for large parts of our portfolio except for Fraport Brazil and our minority airport in Turkey, Russia, and China.

Indeed, our Chinese investment performed almost on the 2019 traffic level for the month of April, as we will report in only a few days from now. With regard to our traffic outlook for the group in the full year, we continue to stick to our guidance we provided you two months ago.

Here, it is essential to highlight the importance of the third quarter. The third quarter is by far the most important quarter for our group airports.

In 2019 Fraport Greece ended about 50% full year traffic during the third quarter. For Fraport Bulgaria, the importance of the third quarter was even higher in about two thirds of the full year traffic.

For Antalya, Q3 represented also a higher 45% share of the full year traffic. Hence, despite the lockdown extension for large parts of our portfolio into Q2, we remain confident to see more traffic momentum up from June, July and stick to our traffic outlooks.

The financial performance of the group in the past quarter is shown on chart number seven. It's no major surprise to see that total revenues continued to suffer due to the negative traffic performances to we recorded in the past quarter.

At close to EUR380 million, total revenues were down by 39%. Here it is important to highlight that the adverse traffic impacts were dampened by the steady performance of our Frankfort real estate business.

But also by more stable landing and takeoff charges, maximum weight related charges and settlement of a long-lasting legal dispute with the German government about the billing of security services in Frankfurt. The latter one led to an extraordinary effect on revenues and EBITDA of about EUR58 million.

Taking an additional effect of EUR17 million higher income from the settlement into account meant an extra ordinary effect on EBITDA and net result of about 75 million. Adjusting for the EUR58 million revenue effect, our total group revenues would have declined by just under 50%.

If we were not able to influence the traffic performances during Q1, our top priority remained to control cost items in the past quarter. As a consequence, we focused on all cost items and took out costs in the amount of about EUR150 million or 30% on a group wide basis.

Thanks to our cost focus, but also due to the security settlement, we were again able to achieve a positive group EBITDA of EUR40 million in the period under review. Bottom line we saw broadly stable D&A charges, hence an improving financial result.

Despite the higher indebtedness and therefore higher interest expenses, the financial result was supported by the before mentioned EUR17 million positive interest effect from the security settlement as well as an improving result from our equity consolidated investments mainly thanks to Xi'an in China. Our group result after minorities therefore was only down by EUR36 million despite a revenue reduction of about minus 236 million, so a good job from our employees whom I'd like to think at this point.

Moving on to our free cash flow reconciliation and our group indebtedness on slide eight, due to the low operating results, and the cash out for interest payments, our operating cash flow was negative in the period under review. Here, two factors are clearly important to highlight.

Firstly, the cash inflow from the settlement of the security costs dispute with the German Federal Police took place in April and therefore is not reflected in our Q1 operating cash flow, as well as in our group indebtedness at the end of the first quarter. Secondly, the operating cash flow was clearly adversely impacted by cash outs for severance payments in the period under review.

In total, we used EUR260 million of the provision we booked last year. Cash wise, this resulted in outflows of about EUR150 million in Q1 and will lead to another EUR50 million in the second quarter.

Adding those two topics to our cash flow statement means that a positive operating cash flow would have been possible as you will most likely see it in Q2. Regarding our cash out for CapEx, we clearly see that expansion CapEx in Greece and Brazil ended.

From here on we will be discussing only two large CapEx programs, Terminal 3 and the expansion of Lima Airport. In total, our free cash flow therefore stood at a negative EUR495 million at the end of Q1.

Here again, cash outs of about EUR150 million euro for the severance payments are included. Adjusted for the severance payments would have meant a negative free cash flow of about EUR350 million in Q1.

Translating this number on a monthly basis was negative free cash flow of about EUR110 million to EUR120 million. Looking forward, we now expect clearly reduced cash flow numbers, thanks to positive effects from our cost control and CapEx measures as well as more traffic momentum as of June, July plus the positive proceeds from the settlement agreement with the Federal Police.

Due to the negative free cash flow in Q1 net debt moved up to a level of about EUR6 billion. On the flip side, our group liquidity increased, which is shown on my next chart.

On slide number nine, you will see the development of our group liquidity and available cash reserves during the past quarters. Despite the clearly negative free cash flow of 1.4 billion we recorded in fiscal year 2020 and the negative EUR495 million in Q1 2021, our group liquidity moved up by about 2.7 billion.

Besides the negative free cash flows, this amount factors in repayments that we made last year and during Q1 this year. In addition to the increase in group liquidity, it is also important to point out that we were able to achieve a reduction in our average interest rates.

While end of 2019 we faced an average interest rate on group level of 2.4%, the new borrowings reduced our group interest rate to an average level of 2%. Indeed, our current funding rate is even below that level.

The additional finance we assumed in Q1 of 1.9 billion were secured at an average rate of about 1.5% at an average tenure of just under six years. The additional debt raising meant that our all-in cash - all in cash reserves of firepower moved up to almost 4.4 billion by end of Q1.

Assuming our conservative business plans, the high cash reserves will clearly bridge us into the fiscal year 2024. Moreover, the high level of fixed rate borrowings of about 85% protects us against any rise in the interest rates there might be over the next few years.

How do these additional borrowings fit into our repayment profile? I'm now on slide number 10.

Despite the new funding, our repayment chart remains well balanced. On average, we need to pay back about EUR400 million to EUR800 million per annum over the next few years.

Indeed, the repayments over the next three years are well covered by our EUR4.4 billion liquidity reserves at the end of Q1. From today's perspective, the biggest repayments will start in 2024 and then in 2027 and 2028 due to our bond issuances.

Let me now move on to our segment performances in the first quarter starting with Aviation on slide number 11. For our segments, we provided you the financials compared to Q1 2020, which were already slightly impacted by the pandemic and also compared to Q1 2019.

It is no surprise that the revenues in the Aviation segment were clearly impacted in light of reduced passenger numbers in Frankfurt. However, at EUR139 million or minus 26% of Aviation revenues in total performed better than the pure passenger development in Frankfurt of minus 78% compared to 2020.

Key drivers for the better revenue performance were non-directly passenger linked charges, such as landing and takeoff charges. In addition, and even more important this quarter, other revenues from security services, which increased, thanks to the settlement with the Federal Police EUR550 million.

Thanks to our counter measures. We also managed to save around 46 billion or 24% of the OpEx compared to Q1 2020.

All in all, based on the cost savings and security settlement, we reach an EBITDA close to break even and an EBIT of minus 34 million. Moving on to our Retail & Real Estate segment on slide 12, looking at the revenue streams once again, we see the different drivers of the segment.

Starting with real estate, we are happy to see the continuous resilience of this subdivision at more than EUR40 million. Based on six rental contracts, we can rely on the payments from our customers, which support the segment even in times of crisis.

In contrast to that the retail revenues were down by 73%. Despite this clear shortfall, the retail subdivision still performed better than the pure passenger development in Frankfurt.

With the help of more stable revenue streams, such as advertising, but also due to an increased spending behavior of the remaining passengers, our retail passenger key indicator grew remarkably by 40% to EUR5.06. This represents an all-time high also on a very low passenger number.

Parking revenues also were more resilient due to corporate parking as well as car rental companies. At EUR63 million segment revenues all in all declined by 38% compared to Q1 2020.

Thanks to the resilient revenue performance and the remarkable cost reduction of 40%, we were able to realize clearly positive EBITDA of EUR49 million. The financial performance of our third Frankfurt segment Ground Handling is shown on slide 13.

As with the other two segments revenues in Ground Handling were more resilient than the pure passenger development in Frankfurt. At EUR67 million the segment revenues were only down by 52% compared to Q1 2020.

The key drivers for the better revenue performance were again charges which are not based on passenger numbers such as maximum takeoff weight and movements related charges. Still on absolute numbers, we lost revenues of around 70 million against 2020.

On the other hand, we were able to save operational expenses of about EUR15 million. Despite those savings, EBITDA was clearly negative at minus 32 million in Q1 2021.

To further restructure our Ground Handing business, we already informed you with our full year results that we will establish a new Ground Handling subsidiary. We are optimistic to have the new structure in place as of 2022.

Of course, we will keep you informed about the progress. On Slide 14 you find the summary of our achievements in Frankfort for the Q1 period.

If we compare our operational expenses to prior years, we clearly see that our quick and determined measures are bearing fruit. All in all, we achieved total Frankfort savings in the amount of more than 110 million, or close to 40 million per month compared to Q1 2019.

This means a cost reduction of around 30%, which is mainly driven by staff cost savings. These figures show that we are well on track to achieve our goal to reduce total cost by up to EUR500 million in the full year 2021 compared to the base year 2019.

On Slide 15, you see the financial performance of our major international holdings in Q1. The very positive message is that despite the massive impact of the pandemic on passenger numbers, all holdings together contributed some EUR30 million to the group EBITDA in Q1.

Except for Fraport Greece, which is as always in the low season in Q1, all investments generated a positive EBITDA or an EBITDA close to breakeven. This proves a strong effort that also our group companies worldwide are taking to minimize the financial impacts of the crisis, extraordinarily high or certainly the contribution from Fraport USA, which was EUR14 million.

Here, we recorded a special effect in the amount of 12 million from the waiving of minimum lease payments to compensate for financial losses due to the pandemic. Looking now at the segment performance as a whole on slide 16, so including for the services part in Frankfurt, you see a clear revenue drop by more than 50% if excluded for IFRIC 12.

On the other side, we've significantly reduced the underlying OpEx. Like this, we saved around EUR50 million or more than 40% compared to Q1 2020.

Compared to Q1 2019, we even saved 45% of total OpEx. In total, the segment therefore managed to achieve a positive EBITDA of 24 million, which again, was positively impacted by the one off with Fraport USA in the amount of 12 million.

Having said this, ladies and gentlemen, I would like to conclude my presentation with our outlook on chart 17. I can go through this quite quickly as you already know this slide from our full year presentation.

Here, we did not make any changes to it. All of you know that we still have low visibility when it comes to the performance of this year.

There's still uncertainty in the market about how and when the air traffic markets are really opening materially. However, based on the current developments, we stick to our expectation that traffic levels in Frankfurt might see a recovery as of Q3.

In addition to that, we are happy to see that Greece wants to open up for travelers' within the next few weeks. To remind you of our outlook for 2021 for Frankfurt, we expect passenger numbers of below 22 million up to 25 million passengers and traffic recovery to 2019 levels is expected by around 2026.

Financially, thanks to better traffic performance within our international airports. We expect a clear improvement this year, which means an EBITDA between around EUR300 million and EUR450 million.

Based on an increasing efficiency, we expect to see EBITDA levels of 2019 already by 2023. With this I would like to thank you for your attention and look forward to your questions.

Good afternoon. Thank you for taking my questions.

Three, please. First, you indicated that a higher number of employees is likely to leave the group.

What does this mean in terms of cost savings and that's the additional employees working in the Ground Handling or in the administrative area? Second complex topic, could you please run us through your different businesses and explain what are the main risks and opportunities for revenues and costs in a scenario with increasing inflation over the next year?

And third, could you talk about the railway infrastructure at Frankfurt airport? To which extent does it allow for further improvement of the railway network?

And do you see the opportunity to maybe enlarge your catchment area by improving the high speed connectivity going forward? Thank you very much.

Yeah, thank you, Miss. Haradau-Doser for this very interesting question.

So I would like to start with topic one, cost savings. I think these are well balanced or the reduced number of employees are well balanced between Ground Handling, on one side and the administration on the other side.

And in my presentation, I said that we will not stop with 4000. So it's clear that end of 2021, we will see a number, which is clearly above 4000.

So we are over fulfilling our target. And as I said, we tried to achieve as much as possible.

And we are attacking everywhere in the company. And it is clear that the main focus also for further improvements or further reductions on the personnel side, primarily on the admin sector, because here we have - I wouldn't say the guys who are not productive, but at the end of the day, our passengers say they feel reduced comfort levels on the baggage side, but not whether we have one or not controllers, or just AD controllers in the controlling department.

So again, it's everywhere but with a clear focus on admin, because this is sustainable. And when the traffic is picking up again, we do not have recovery effect on the admin areas and the admin departments.

Second, question, risks and, and opportunities also, regarding inflation rates, so we can go through. Let's start with Retail & Real estate because it's very simple.

On the retail side, we know that our revenue proceeds come from a percentage of the revenues in the shops. So if there would be higher inflation, prices will go up, revenues will go up.

And our share of this increased revenue is going up in a balanced way. So we have - on the retail side we have a full inflation protection by the percentage of revenue, which we are collecting from our tenants.

On the real estate side, it's more or less the same, because in most contracts, we have an inflation escalator embedded not year-by-year, but in most cases after five years. So if in this period the inflation rate goes up by X percent, it can roll over or transfer these inflation increase via higher rental income, so also more or less 100% protection against higher inflation rates in this segment.

So both sub segments are fully protected. In Ground Handing, it's more or less the same.

In all or most of our Ground Handling contracts with airlines we have also used inflation escalator embedded, so also more or less a full inflation protection. The only segment where we do not have formal inflation protection is in Aviation.

Because we have a clear regulatory approach, we have regulated asset base on one side, we have the wake on the other side, you can say they have some indirect protection because if inflation rates would go up. I think there's a clear correlation that also interest rates normally must go up again, and via a higher wake, we can also collect more, more fees.

But this is more so far, the theoretical issue because in the moment, we are far away from any limitation by a wake so we have a clear upside potential on the Aviation segment, so that there's enough headroom to go up with higher fees in the case of an increasing inflation scenario in the Eurozone or in the world. And yeah, and outside - let me say outside Frankfurt, we have an increase.

We can always year-by-year, take the inflation rate times 0.9 as an escalator for the fees in the Aviation sector. We have the same phenomenon or the same elements in Brazil as well as in Lima.

There's only - in the US market, we are collecting also percentages from the revenues inside the shops. So that is just one airport, where we are fully exposed to inflation in the Eurozone, this is in Antalya where we can collect EUR15 per departing passenger.

And this is a fixed nominal amount, regardless how low or how high the inflation in the Eurozone will be. But you know that in 2026, this concession will end, you can say yes, this for the final five to six years, we have or see theoretically an exposure to higher inflation rates in Antalya, but this is the only risk the only exposure which we have.

So, third question was yeah, the intermodality here in Frankfurt Airport. You know, that's - and also on our presentation on Slide 36, you can see what is now intended to do to improve intermodality in Germany, especially in favor of the Frankfurt Airport.

Hence there are ongoing discussions and as a working group, a high level working group between Lufthansa, between us and between the German railways because there's a clear political expectation to do something in favor of an increase in the modality to substitute domestic flights by more and more railway links and feeder traffic to Frankfurt Airport. And due to the fact that we are in the middle - geographically in the middle of Germany, and we have this perfect access to the railway high speed link and we have this railway station on our on our site.

So there's a - the perfect let me say location to connect the high speed network of the German railways with our airport and this is the clear intention is the clear plan. You can see what will happen in the next couple of - in the next two years and we will get a lot of Sprinter trains going directly to the airport.

And by this we are shortening the distances to our airport. So to say we are increasing by this better connection to the high speed network our catchment area.

So that's from a theoretical perspective this move isn't favor of us. So we appreciate this.

We are working together with our system partners. And we think that in the long run when we will see more and more political pressure on this issue, we could be and we will be the winner of this policy.

So to combine that we say the German high speed network with our airport and to have - at the end of the day, Germany is our whole catchment area and combined by a lot of direct links with Sprinter trains going without any stop in between directly to the Frankfurt Airport. And on this slide, you can see this is intended to have direct Sprinter trains, from Bremen, from Hamburg, from Berlin, even from Munich, Munich city directly to Frankfurt, not to have to take the S-train from the city of Munich to go to the Munich Airport.

But you can take the ICE train to run directly from Munich center to Frankfurt Airport. And this is a huge advantage.

When you look for example, our competitor, or friendly competitor, Munich Airport has no direct access to the high speed network of the German railways. And this is one of our great advantages, which we are - which we have.

And if you think about the next election, coming in September, and I think with a high probability that the Green Party will be part of a coalition, whether they are heading the coalition or not, is open. But it's clear there will be - if you look into the programs of the parties, you can't find a topic that the domestic traffic is not any longer allowed to take the train, but there's a clear preference to improve the access from the train to the airport as much as possible.

And we feel very comfortable with this progress.

Thank you very much.

Welcome.

Hi, good afternoon. Thanks for taking my questions.

Can I ask first about the near-term traffic expectations what you're seeing for - from bookings for this summer from the airline side? And do you have any expectations that you can give us in terms of quality of recovery for the next - for the remaining of the year?

Second, could I ask about the retail center pack, I mean, obviously, we are at all-time high in this quarter. It probably altered by the lack of traffic.

So should we expect a normalization of this trend in line with - by your classic recovery for the remaining of the year? And could you explain to us why you see limited pressure on contracts from retailers, maybe versus other European peers?

And lastly, can I ask about Paris. When you really you make your proposal for next year's tariff and how are you thinking about that just on a yearly basis?

And would there be any time to actually look at negotiating a five-year agreement at this stage? Thanks.

Yeah, thank you for your questions. Starting with the traffic expectations, you know, our guidance below 20 up to 25, this is a broad range.

As of today, I expect about 20 million for Frankfurt Airport. So to be at the lower end, this has to do that.

In the first month of this year the speed and the rollout of the vaccines was very low. Now it's gaining momentum and today now we have about 1 million vaccinations per day here in Germany.

So it's now we are - it's speeding up. But let me say the main - month of May is more or less gone.

So we expect an increase up from June and then a good momentum up from July. So with other words, Q3 is and will be key as always.

And now we have to see how far we are with the year so to say herd immunity or how many percent not just of the Germans, but of the European population then is vaccinated or has already received the first vaccination. But in the moment, it looks relatively good.

We know for example from Greece. Greece is opening on the - I think on the 18th of May and the incidences are very low.

And they expect really stormy impact from UK where we have nearly reached herd immunity and because, as always, the people from UK are the number one passengers going to Greece. So with regards to Greece, we expect a good third quarter.

In Frankfurt itself, also, again, up from the third quarter, a strong increase, we know from all the airlines that they are preparing for a significant passenger increase more or less overnight or in a couple of weeks, which is from an operational perspective, not very simple to do this, and - but on the other side, when let me say when this - what we expect will come through, we have a strong second half of the year. But if you just look on the already realized numbers, in the beginning of '21, we have these - let me say this burden from low numbers, so that when I say 20 million for Frankfurt for the full year means a strong second half and a very weak first half.

And then end of the year or end of Q3, everybody expects that then Germany as well as most of the other European countries, then are reaching herd immunity so that then the corona topic is more or less over. And then we can come back to the old times.

With regards to our international assets, we - let me say - let's go through the portfolio increase, we expect always for the full year, about 50% of the 2019 passenger numbers, as well as for Bulgaria perhaps, Bulgaria a little bit lower number, in Brazil, as well as in Lima, clearly more than 50%. Regarding 2021, in Slovenia, it's about 40% for the full year.

And in Turkey in the moment, it's a little bit difficult to predict, because in the moment the corona numbers are extremely higher. And the question is whether you can trust these official numbers or not.

This is a secondary issue. And we have to say when and how they are coming down.

That's the reason with regard to it. Normally in Antalya the season would be a good one because we know there's an extremely strong demand especially from Russian tourists coming to Turkey, but in the moment, it's forbidden to fly from Russia to Antalya to Turkey, but again, we have to look now on these numbers at Turkey especially at Antalya.

So this is the traffic forecast as we see it in the moment, but all these expectations you can say are direct link to the progress regarding the vaccination in the European countries. And then also a very important impact is the situation in the US market because the US market is on one side key for the Lufthansa intercontinental traffic from the US to Germany and also from Frankfurt to the US.

You know that the vaccination rates in the US market are much higher. And we expect that perhaps up from June, the US market will reopen again that in the first step it's allowed - US passengers can fly from North America to Frankfurt, which would be a great success for us and for Lufthansa.

But here we are also dependent from the - from political decisions in the US market, but we are relatively optimistic that in the next couple of months there will be a change or an opening of the US market, minimum in one direction. So this is the traffic situation.

Then we had the retail situation. Yeah, we have - in the moment it's all time, it's fantastic.

Let me say three reasons why the numbers are so higher. On one side, we still are collecting some minimum annual guarantees, which is supporting this KPI.

Second, we have still strong proceeds from advertisement. And which is not related to the passengers number, this is stabilizing or improving this number.

And third from the remaining passengers, which we have and we are not talking about Russians or Koreans or Chinese people, we're just talking about Germans and Europeans, their spending behavior in the moment is better than before the crisis. This can be this is directly linked to the crisis because these guys which are today flying in a relatively relaxed mood, why relax because they're happy that they are healthy.

Second, there's no stress at process items at the airport, so everything is seamless, is working very nice. There's room in place in the terminals, so everything is really relaxed.

And perhaps that's the reason why then they also may have times on the waiting times and security lines, and then they are spending money. And that's the reason why the number is so high.

Nevertheless, of course, when the traffic numbers are now - will go up again, the KPI will go down, that's for sure, absolutely, for sure. But in the moment, we think that even in an - let me say in a new equilibrium or known new steady state equilibrium, the new normal KPI will be higher than before.

And perhaps we will see numbers of still over about EUR4 which was our old target since years ago. So in the moment we are very optimistic regarding the retail business when the traffic were - is picking up again, so far, the answers.

Hi there. Can I come back to the labor reduction issue that you spoke about a bit with Ruxandra's questions?

But you mentioned that you might get the reduction in headcount as high as 5000. Would there be more provisions associated with that, if you were to get there?

And also, in your prepared remarks, you said that the - getting to 4000 or a bit higher, that would come with real reductions and would not include any divestment? What are you referring to with potential divestment?

Then can I ask about the taking control of the security lines, very excited to hear that news and the prospect of an improving process at Frankfurt. But then I thought I heard you say that wouldn't happen until the January1, '23.

Why such a long delay? And how will you manage through the pickup of traffic, at least hopefully in '22?

And then my final question would take us to Lima, and the political developments in Peru. I'm so old.

I had the joy of covering Fraport when it was first listed and when the incident in Manila happened. How confident can you be that we're not on course for a repeat of that?

Yeah. Mr.

Lobbenberg. Thank you for your questions.

First one was labor reductions and regarding provisions. So key answer, we - last year, we built provisions of 299 million.

As of today we have cashed out 230 - the cash out for the provisions is 230 million. We have booked already nearly 280 million.

This means we have an additional reserve of 20 million, which we can use for ongoing personnel reduction, but that's it. There will be definitely no further increase for provisions because it's fine.

And we know from - we have natural or we have still 100 people to leave based on severance payments contracts. In the next 18 months about 500 people will leave based on partial retirement plus natural fluctuation, which is permanent, if you have, let me say, 1000s of people, you have also a permanent natural fluctuation.

That's the reason why I'm relatively confident that we can continue the personnel reduction and I mentioned 5000. This is not an official target, but we tried to, to achieve as much as possible without any additional money to spend except the 20 million provisions, which we still have, and will lead, of course, to 20 million cash out.

Second, it's just an example we - it's a matter of fact that we are going to take over the responsibility for the security business. We have now - the contract is signed.

So it's not just a commitment, it's a done deal in a way that we - it's signed. And so formally, and finally, the responsibility will be transferred on the January 1, 2023.

But already before, of course, now we are collaborating with the police and the Ministry of Interfere, so with regard to ordering of new machines, new technology, et cetera. So it's so to say, a soft transfer of the responsibility, formally, and finally, it's the January 1, '23, but before it's an ongoing process, where more and more tasks will be transferred to us, so that you will see relatively soon also improvements on the side.

And one issue if you - this whole security topic is that in the moment, we have 1000s of people behind the security lines, we can say more than 50% of all this stuff comes from other companies, which are or from the police, but we are still also offering security people to the police, all these guys are deployed in our subsidiary called Traffic which is a company of nearly 4000 FTEs and 100% controlled pass and fully consolidated and more than 50% of these nearly 4000 FTEs are working on the security lines and to avoid any conflict of interest later on, when we are going into the market and let me say allocating the slots to these security companies, we cannot order ourselves. That's the reason why we are in the moment already in the market looking for a strategic partner or strategic investor taking over 51% of our subsidiary and then running and controlling these people in the process.

And we are already in negotiations. As of today, I would say end of this year, this deal is done.

So then we have a strategic partner so that up from the January 1 next year this company is deconsolidated from our balance sheet and our P&L. And then we are - at the end of the day we have to see how many of these employees then remain in these pure security line companies.

Some of them are protecting our fences, they will be carved out. So but clearly more than 2000 FTE then will leave the company or will be deconsolidated.

So, regarding the P&L, this has no impact because at the end of the day, the whole cost for these personnel is reimbursed from the ministry or finally from the airlines. But we are again becoming a leaner company.

So that looking into the future, at the end of the day we are the managers of these responsibilities. We are managing, we are controlling these security issues and all the stuff is provided by other companies.

This is a role model and let we say the deconsolidation, or the sell of these guys to a strategic partner is one of the steps which we are now rolling out. Then your question regarding Lima, we are in Lima since 2021.

And we have seen so many Presidents from all political wings. And I think there's one thing, which you always can see in Lima.

Let me say, during the elections, you see extreme positions of potential Presidents, and when they - afterwards they have been elected and they get the power, then in all cases in the past, they moved to the middle. And this is also what we expect now, regardless who will become in the final round, the new President.

At the end of the day he will, more or less, have a clear move into the middle and become so to say a normal President. So at the end of the day, we don't expect any threat for our or risk for our investment in Lima.

And we are looking positively forward as always in the last 20 years.

Fair enough. It's very hard to say and I think thank you for that.

Welcome.

Hi, good afternoon. Three questions for me.

I want to come back to one already asked question is about your conversations about tariffs for 2022. If you can share some insights as to how you believe things might pan out.

And the second question I wanted to ask you is about economic relief packages. And can you remind us of what additional benefits you may still get in countries like Greece, and whatever Fraport has not yet struck an agreement.

And lastly, and I understand this is perhaps early days, if you can give us an indication of the benefits of the new entity for the Ground Handling business. How is it going to be different from the current setup?

Thank you very much.

Yeah, first question was regarding tariffs 2022. We have now prepared all our files and the material and in the next couple of days, it will be forwarded to the regulator for us and regulators as always, the Ministry of Economic Affairs.

And in this proposal, there will be an increase of the fees in a single digit amount for 2022. And we do not expect any problem with the regulator whether there will be problems with the airlines, you never know.

But due to the fact that the increase will be modest, we do not expect big obstacles. And yeah, we are looking positively forward that it will be definitely improved by the regulator and this is a step for 2022.

And as we always said, you can expect a series of single digit fee increase in the next couple of years always fair, always modest, but they will come and we will start with 2022. Second question was regarding economic compensation packages.

We have - yeah, we have to go through first of all in Brazil say the so-called economic equilibrium as part of the concession agreement. So whenever there is an extraordinary impact so to say falls material, it will be an economically compensated by the government, it happened already from 2020.

That's the reason that the EBITDA last year in Brazil was more or less on the same level compared to 2019. And the same will happen for 2021.

So more or less, that's the reason why we expect an EBITDA in Brazil on the 2019 respectively 2020 level, because at the end of the day, you're looking what is a final realized EBITDA and on top, there's a compensation by the government to fill up these gap to 2019 level. So this is Brazil and this is always a done deal, because this economic equilibrium clause is a normal clause since years in all infrastructure concession agreements, in Brazil.

In Greece, we have also a similar clause in our concession agreement, and this means that we will also receive compensation. The compensation is not a cash payment from the government.

It's - and so far, it's a compensation in a way that normally we have to pay increase to concessions payments. First of all, we have fixed concession payments per annum of about EUR23 million per annum.

And on top of this comes a 28% share of the realized EBITDA. So two kinds of concession payments to the government and as a compensation there is - so as long as we have corona, we are not going to pay any concessions to the government to compensate us for the losses caused by corona.

In the US market and this is already included let me say in our forecast and our guidance. In Germany itself, we are expecting - or we claim the compensation for the - not just we all the German Airports for the second we claim to compensation for the full year 2020.

But let me say the answer of our government in Berlin was that we just will get the compensation for the second quarter of last year. All the airports which kept the airport open during this time.

And in our case, now there is an amount fixed from Berlin of exactly 160 million, 80 million or this amount will come from Berlin, and there must be a matching fund from the federal state of Hessen also 80 million. So in total, we will receive 160 million.

In the moment we are filing the application to get the money from the federal state. So in total 160 million I see a total probability of this compensation more than 90%.

So it's more or less a done deal. We expect the money in June, July this year.

Prerequisite for this is that we declared that we are not going to pay any dividends for the fiscal year 2020, which is given because there is no profit which we can transfer into dividends. And the second prerequisite is that there are no variable bonus payments to the board of directors and we also agreed that for 2020 we do not get any money on a variable basis.

So with other words, we will see 160 million as a direct payment in Germany into our P&L, which is not part of our guidance. So when we will receive the 160 million its cash in.

Its additional profit, additional EBITDA and will come on top of the range of EUR300 million to EUR450 million EBITDA in this year. In the USA, we also got a waiver for concession payments to the owner of the airports o14 million - 12 million in this year.

Whether we get money in the next year, it's an open issue. We tried to get it.

But there's no clause in the agreement. It is really on a voluntary basis.

And in Slovenia, we received already 5 million corona compensation from the state, which we - the money we received on the April 19. It's nice money for Slovenia.

And did I forget something? Yeah, in Turkey we already received an extension of the concession from end of 2024 to end of 2026, so an extension of two years.

And the last airport, which I have to mention is Lima. Due to the elections, there was no flexibility to help us by a direct compensation because it's also not part of the - there was no topic in the concession agreement.

But at the end of the day, now, it's in so far, let me say, some compromise that we agreed to build a smaller terminal than before and now using still the old terminal plus the new one, so that we could in total reduce the CapEx amount by roughly one third compared to the old CapEx numbers. So this is all in all, all the packages, which we received or which we will receive in the next couple of months.

[Technical Difficulty]

Excuse me, we can't understand you. So the line is not very good.

Hi, good afternoon. Hopefully you can hear me well.

First question, actually, just to confirm for the security deal that you have reached. So just to confirm, there's no savings in terms of OpEx, it more from operational side and also what kind of OpEx savings do you expect from the restructuring of the Ground Handling division by creating this new subsidiary?

Second question is around the activities. Clearly, you have good access to the market at the moment.

But I see that at the next AGM in June, on the agenda that is to request shareholders to approve a potential equity raise. So convertible bonds if needed.

So I'm just wondering what kind of scenario do you think you will need to raise equity and why at this point? That's it.

Thanks.

Yeah. Good afternoon, Arthur and thanks for the questions.

Number one was savings in the security business. So with this move - with this deal, we do not expect a P&L impact for us.

So it's just to improve quality, to improve efficiency because this was a - really the last couple of years when we reached our capacity limitations. This was the number one pain point for our passengers.

And everybody has said it's a nice airport, but your waiting times were not acceptable and the quality at the security line, so all the complaints about us focused on the security issue. And that's the reason why we try to overcome this problem, so to gain efficiency to improve service levels and to make it along cheaper for the airlines because there's also some special elements embedded in this deal before, because at the end of the day, the airlines are paying for security services per passenger.

And these amounts in the past they paid to the government that was included VAT, so this was cost plus, plus 19% VAT and in this new construction, don't ask why we were able to take out the VAT so that overnight there isn't a cost advantage for the airlines of 19% on a like for like comparison just to take out VAT out of these business. So again, for us, it's no impact on the P&L, but we are taking out and so far, let me say deployment risk, because we are looking for an investor who will take over 51% in the first step and perhaps later on, he will take over 100% of our security company.

So we are leaner, we are more resilient on the cost side, but no direct improvement on the P&L side. Regarding the new ideas or the restructuring efforts in Ground Handling it's different.

Here we are founding this new company as 100% subsidiary. So, that all along today we have - still have subsidiary and we still have employees on the level of the AG.

So we have a world of different labor contracts. And of course, in the existing company, the wage level is lower.

At the AG level the - at the AG the wage level is higher. And now we are concentrating all activities and all employees in the new company.

This means whenever one of these existing guys on the AG with the higher wage contract is leaving the company. So he will be substituted and replaced by an employee in the new company with a much lower wage level.

Plus when you have a - just a company which is 100% focusing on Ground Handling activities, the flexibility inside because it's a pure play is much higher than if you are a segment in a huge company, which is doing a lot of services. So in the first step of course when we are carving out these activities, you don't see any impact on the P&L, but all along step-by-step we are growing, we are moving in a new scenario which lower cost units and then step-by-step you will see an improved P&L in the Ground Handling business.

Third question, equity, it's good that you raise these questions. So now on our next AGM, we are asking for authorized as well as contingent capital.

First of all the formal things on the authorized capital, we have the option to issue up to 46 million shares this is a theoretical maximum, which is possible. If you would translate this based on the current stock prices and market conditions, this means, theoretically, we could go for about 1.5 billion additional equity on the authorized side.

On the other side, on top of this, we have the contingent capital with a limitation of 13% of the existing shares and the maximum of 800 million. So with other words, if you take both things together 1.5 plus 800, there's a theoretical option for 2.3 billion, but this is just the theory.

Before we went or we are going to this AGM, we had intensive discussions with our shareholders, this means with the federal state of affairs on one side and the city of Frankfurt on the other side, we discussed this topic and we came to the following conclusion. So we need this option to have a life insurance in a way that if there would be an emergency case, we can go for this capital increase and we know from the commitment of our shareholders that in this case they are going to support us 100% This is a strong commitment, this is you can say an implicit guarantee and this is extremely helpful for us on the debt market, because the banks and the investors on the debt market know now there is a clear implicit guarantee, which is a fantastic backing and a strong commitment from our shareholders.

On the other side, we know or we discussed this issue and we adjust - theoretically we adjust going for this option if really, we are in a situation where we do not have any longer access to the debt market. So with other words to bring it on the point there's no intention to go for an equity increase.

It's just life insurance. And so we take the best of two worlds, we have a strong commitment and the implicit guarantee for the debt market on one side, and our shareholders on the equity side know that there is no threat and risk of dilution.

So you can say we are doing the best for both sides. And I think this is a brilliant move for everybody, for us, for the debt market, as well as for the equity market.

That's behind we are not Lufthansa.

Yeah, thank you.

Hi, Arthur Truslove from Credit Suisse. Sorry about the last time.

So I guess my first question was just on the government cost savings again. So obviously, you're talking about going slightly beyond 4000 employees out of the business.

And in terms of actual cost taken out versus 2019, how should we think about that at both 60 million passengers and 70 million passengers? The latter obviously being in line with what you delivered in 2019.

The second question I had was just on the Ground Handling. And what do you think is a sort of reasonable long term margin ambition for that business, given all of the costs that you are taking out?

And if you could just explain why if you think you should be able to do materially better than you were able to do in 2019? Thank you.

Yeah. I think the cost targets are absolutely transparent, we said we want to show up to 500 million per annum cost savings always compared to 2019 even if you ramp up with the passenger.

So this means if you take this 50, 60 million passengers, having in mind that we have them not - then we have already realized this significant cost reductions, this means that already at the level of 50 to 60 million passengers, we will end up with an EBITDA which is equivalent to this what we showed in 2019. And this was 1180 million EBITDA.

So this is a great advantage by our efforts on the cost side. And what was the second part of your question?

Sorry, can you repeat it? Ground Handling margin, yeah, first of all Ground Handling - in the moment it's terrible, Ground Handling margin, the disaster.

That's the reason why we are doing all these things and hoping that there will be a strong recovery, now, first of all by increased passenger numbers on one side, but also due to the fact that there was a significant reduction of employees, especially in this segment.

So just on the Ground Handling margin, what I meant was more around as you look forward, down the track somewhat. In terms of the reasons why you think you might be able to do materially higher margins than perhaps you were able to do in 2019.

So I was just wondering whether you could talk to the competitive landscape. And anything else that you think will support that?

Thank you.

Let me say first of all, it's clear that at the end of the day, we want to have higher margins, but the first step is now to come back into the black numbers and as soon as possible and when we are on the positive side then trying to gain as much margin as possible, but step by step in the moment we are deep in the minus numbers and now we have to do all to undertake all efforts to achieve first of all breakeven and then to bring in again and nice margin.

Thank you very much.

Welcome.

Yeah. This is Christoph again taking over.

So if there are no further questions, I would like to thank you all for participating. As always you can give us a call later today or in the coming days in the IR for further questions and remarks.

So happy to take your calls and yeah, for the time being all the best. We stay in touch and hopefully start to travel soon.

Thank you.