Fraport AG

Yes. Another welcome from my side here from Frankfurt.

The last time I presented back in March, the world was still very much in lockdown mode. Fortunately, the vaccine of all times in the meantime, being quite successful in many countries.

So it was just yesterday that the U.S. market reopened for non-essential travel after more than 600 days of being shut.

We also see some progress, some other Intercontinental markets like Singapore or Thailand that have meanwhile opened up for non-essential travel again. So we are quite encouraged about the most recent trends.

However, we also see that the sky is not just blue. We are seeing infection wave going up again, and some countries going into lockdown again.

So the picture remains mixed and the recovery that we are all waiting for and that we want to happen remains quite free. Structural airplanes, we are also seeing from increasing burns of the European aviation sector due to the EU Fit for 55 [ph] Program.

In principle, the program is the right step forward, climate-neutral aviation sector giving an obligation to all market participants to refuel sustainable fuel and to put the burden within the reach of creating a sustainable fuel market by regulation. We just have to make sure that this will be organized competitive neutral.

That means flights via Middle East or Turkish ops have to be treated the same way as flights via European ops. But here I'm quite optimistic that we will be successful finally.

So let's focus now on the nine months figures which brings me to Slide 3 of today's presentation. Total Group revenues excluding IFRIC 12, recovered by roughly €500 million in the period under review.

The figure also includes other income from COVID-19 compensations and settlement in the security business in the total amount of more than €330 million. Adjusted for this special items increase in total revenues was still solid at a level of €160 million.

Key drivers for the revenue increase is our International Holdings. Adjusted for IFRIC 12 and compensations, total revenues outside of Frankfurt grew by about €118 million.

Here in particular, but Greece showed a dynamic recovery and reported revenue growth of €80 million on an adjusted basis. With regard to OpEx, you see the effects of our restructuring program.

Compared to the previous year, we took out an additional €80 million on a, like-for-like basis. As a result of the higher revenue and lower OpEx, our reported EBITDA increased sharply by more than €850 million to €624 million.

The underlying EBITDA without the special effects was up by €240 million to more than €290. Here Frankfurt Airport provided growth of more than €120 million while it was again our International business that provided for the lion’s share to the EBITDA recovery.

Adjusted for special items, International Activities reported an EBITDA of 196, yes, €196 million, and therefore accounted for more than two-thirds of our underlying EBITDA. Remarkable share, which again highlights the strategic value of our investments outside of Frankfurt.

Lower depreciation, amortization and improved financial results, thanks to Antalya, led to profits after tax of almost €100 million. Turning the page to a review on the third quarter standalone, I'm on Slide 4.

The third quarter was marked by an even steeper recovery. Total revenues without IFRIC 12 increased by more than €300 million to €608 million, €650 million on an adjusted basis.

As a reminder, the first nine months were only up for €160 million. Here Q1, 2020 was still wanting more or less at full mode, so before the crisis mode.

So revenue recover in the third quarter was balanced between Frankfurt and our International Activities at about €140 million for each of them. As a result, [indiscernible] EBITDA share was more balanced at 60% of the underlying results coming from our International Activities and 40% from our three Frankfurt segments.

Having said this, our International Activities recovered during the third quarter by more than three quarters to the pre-COVID EBITDA, a remarkable recovery. For Frankfurt, it is still a way to go due to the slower traffic recovery and higher share of fixed costs, the EBITDA recovery in Frankfurt was still below 50%.

Bottom line also profit after taxes were positive in Q3 with a result one off. That's very positive.

Looking back at the traffic performances in the past nine months, I'm on Slide 5. Compared to the previous year, most of our Group airports showed a steep traffic recovery during the first nine months.

The exceptions here were Ljubljana and Frankfurt Airports. Those airports showed more balanced year round operation, therefore the first quarter of 2020, so before COVID crisis was stronger in relative terms and negatively impacted the year-to -date performances.

Both airports, however, recovered sharply when I -- on the third quarter exclusive. For the third quarter in general, we see that the Group airports clearly recovered.

On average, the airports are back at roughly 50% of the pre-COVID level, while certain airports like Luis [ph] and Antalya or St. Petersburg and Brazil recovered even stronger.

Those airports are characterized by lesser traffic or have a higher share of domestic traffic. What are the latest trends?

We are seeing end of this summer or, and of the autumn. On Slide 6, you’ll see a focus on our main airport operations.

While Europe remained in lockdown until something like June, the traffic figures of Fraport Greece and Antalya covered rapidly in just three months from 15% to 20% to a level of roughly 80% in September. Frankfurt Airport, which has a higher share of business passengers and serves as an Intercontinental hub recovered slower.

On the Chart, you also see the preliminary figures for October. Here we are encouraged by the trend at Frankfurt Airport, where we served more than 50% of 2019 level for the third time again.

Also our Latin American airports in Lima and Brazil, which opened up later than the airports in Europe continued their recovery and recorded about 60% and 70% of the pre-crisis levels. Greece and Antalya remained very strong and almost achieved the levels of 2019.

You see here for October 96% and 92% of pre-crisis levels, which is a very, very good recovery. An operational topic that you may have read in the press is shown on Slide 7.

While Frankfurt Airport just recovered around 50%, we had some challenges with punctuality or they were wrought with delays. On Slide 7, you’ll some further insight.

In this recovery phase airlines focused strongly on peak hour flights. So the result is obvious.

During attractive slots we are back at 80% or even 90% of pre-corona traffic. The flip side, however, is that during off peak hours we are way below those levels.

Moreover, the utilization between the individual days of the week is quite different. While we used to have an imbalance between weekdays and weekends of maximum 20% before COVID, we are discussing these days an imbalance of 30% even more between a regular Tuesday and a Saturday, today.

To make a long story short, with 70% of staff loading and de-loading aircrafts, it is difficult to handle 90% of aircraft movements in peak. This year we hired people again and the good thing is we have some delays, that’s why, but we don't have any cancellations and we're improving from day-to-day with the situation even on the ground and things side, loading, de-loading, baggages.

Looking ahead, you will find the outlook on our Frankfurt winter season on Chart 8. The most important message is that the winter in Frankfurt does not show a negative trend compared to the summer season.

We see that scattered movements are at 70% of peak prices [ph] level, which is slightly better than the past summer season. So recovery in terms of seats is a bit lower when compared to movements at roughly two-third.

The reason is quite simple. We have more frequencies on the continental side with smaller aircraft and on Intercontinental routes four engine aircraft types are virtually being taken out for smaller to the even, A350s or Boeing [indiscernible].

The reason we see the biggest recovery on continental routes. Here the movement capacities are already back at 76% and the seats at 70%.

On Intercontinental routes, the recovery takes longer as expected and is on average at 66%. Within the Intercontinental markets, we see the biggest momentum at 80% to the Middle East and now 76% to North America.

The slowest recovery we're seeing on Far East routes at less than 50%, especially China continues to be weak and remains at only 20% largely closed. An update on the programs to win back to recovery is shown on Chart 9.

The most prominent topic here we placed first, the staff restructuring program in Frankfurt. As you can see on the chart, we have meanwhile reduced the labor force by some 4,300 employees compared to year end 2019.

While the figure is flat against end of June, the figure already contains some rehirings because of the before mention peak hours throughout the day. Looking ahead, we expect the figure to remain around 4000 people despite rehirings.

All-in-all, we are on a good track to deliver on our target set for staff cost savings. On non-staff Matthias will also provide an update later on.

We are also on time and budget to save another minimum €100 million per year. CapEx, we already took out €400 million in the previous year.

In our initial plans we also prepared you for a higher annual CapEx of about €1.3 billion per annum until 2024. Today you will see us more between €1.1 billion to €1.2 billion per year and I will also provide an update on our major CapEx program shortly.

CO2 is another major topic which has made it on our day-to-day agenda. On today's perspective, we are in the final phase to close a power purchase agreement to support a newly planned wind power project.

Moreover, we continue with our three pillar strategy avoid consumption, upgrade technology and produce green energy. With all those measures we are on a good track to provide you a roadmap to net zero soon.

Currently we are still waiting for two mayor puzzle pieces to complete our roadmap, especially the wind craft as I mentioned. We will provide you an expert session in the upcoming year to discuss these topics on detail.

Switching gears and moving onto our CapEx programs. On Chart 10, you'll see the image of the new terminal building in Lima.

The expansion itself we started a year ago with [indiscernible] works for the new runway. The runway itself we will put into operation in a year from now, so end of 2022.

A month ago, we also signed the EPC contract for a new midfield terminal. Construction of the consortium awarded was Inti Punku which is made up by [indiscernible] probably it is the right word, that spelling I don't know, right pronunciation Sekiya [ph] a global infrastructure development company and Khumba [ph] a main Peruvian construction company.

The construction period is set at three years and we expect the terminal to be inaugurated at the start of 2025. For the runway and the terminal the invest volume will be around US$1.2 billion.

One year later then in Peru we expect terminals in Frankfurt 12 months. On Chart 11 you'll find the latest picture of the terminal.

As you can see on the pictures the super structure of the terminal is almost completed. On the right hand side you will also find some further information regarding the awarding progress.

Out of the total budget of around €4 billion we have meanwhile awarded contract in the amount of roughly €2.8 billion or 70% of the order volume. This is in particular important as current shortage and inflation on raw material is not 100% affecting the construction of Frankfurt.

The superstructure works are the most raw material intense works and here large part already behind us and all this still is on the ground. Moreover, when it comes to newly awarded lots, those tenders are also in line with our budget.

So we continue to be on track to be already with terminals we in Frankfurt. The near term future ahead is shown on Chart 12, our updated outlook.

Plus concluding the first nine months we specified our outlook regarding Frankfurt traffic. We now expect to achieve the upper range of our initial guidance, so around 25 million passengers.

As a consequence of the better traffic performance in Frankfurt, but also the year-to-date performance within our International Activities we raised our revenue outlook on a Group-wide level to slightly above €2 billion. Simultaneously we expect that our Group EBITDA will be somewhere in the range of €650 million to slightly above €700 million.

Consequently, we also waste [ph] the expectations for our Group EBIT and Group result. So on Group result we expect to be positive.

Our midterm expectations are shown on Chart 13. For Frankfurt, we continue to expect to be traffic wise recovered by around ‘25 or ‘26.

Due to our cost saving measures, we however expect to be financially recovered already by 2023 or 2024. With regard to our International Holdings we expect those to be on average traffic wise recovered by 2023.

This will also mark the year when we expect to be financially recovered in International Activities. Having said this, I would like to thank you and now Matthias with more financials.

Yes, thank you Stefan. Ladies and gentlemen, good afternoon, and also warm welcome from my side.

On my first chart today, Chart number 15, I'd like to focus on our Group cash flow and indebtedness situation. As you can remember from our H1 results presentation, our Group cash flow and indebtedness this year have been adversely impacted by severance payments for Frankfurt's staff.

Here we meanwhile to cashed out just about €220 million for employees to leave the company. This figure negatively impacted our Group operating cash flow in the period under review.

On the other side, we received €160 million as compensation from the German State and the local State of Hesse to compensate for the operational cost inured to maintain Frankfurt Airport open during the first lockdown period in the past year. The cash inflow of €160 million we received during this third quarter this year, as you will also see on my next chart, concluding the first nine months led to a negative free cash of about €630 million.

When compared to the six months free cash flow of minus €755 million, this represented a Q3 improvement of €120 million. The negative nine months three cash flow was more or less exclusively attributable to the expansion programs in Frankfurt, as well as in Lima, but also due to the final CapEx invoices we paid for Fraport Greece and Fraport Brazil in the first half of the year.

As a result of the negative free cash flow, our Group indebtedness stood at €6.2 billion at the end of September. Compared to the figure at the end of June, this was the reduction of €100 million and we recorded therefore an improvement in our gearing ratio by seven percentage points from 173 down to 166.

On the next Chart number 16, we provide you with a closer look at our Group cash flow statement during the third quarter on a standalone basis. Thanks to the 160 million compensation payments, our operating cash flow was positively impacted and reached level of more than €410 million.

When adjusted for the compensation payments, our operating cash flow still reached a solid level of more than €250 million. Here it is important to highlight that we just discuss the third quarter performance and that the passenger numbers at Frankfurt Airport continued to be down by more than 50% compared to our pre-COVID levels.

The underlying operating cash flow of €254 million was more than sufficient to cover all maintenance needs to run the Group. On the right hand side of the chart, you can see the corresponding calculation.

Assuming no expansion programs, we recorded a strongly positive free cash flow of about €175 million, and this expresses the cash power of our company. Even when taking our big CapEx programs into consideration, the underlying Q3 free cash flow was only mildly negative at minus €40 million.

Assuming an equal amount to be invested in the third quarter of the upcoming year, it is possible that we will already achieve a positive free cash flow in the third quarter of the upcoming year, despite the heavy CapEx programs that we are currently running. Due to the compensation payments, which we received this year, our reported free cash flow was positive at €120 million in the third quarter and our Group indebtedness improved correspondingly.

However did the Q3 extra money flow into our Group liquidity situation and the weight of the [ph] cash reserve. On Chart 17, you see our most up-to-date Group cash situation.

Reviewing the chart, you will see that our Group cash reserves remained largely unchanged compared to the figure we provided you at the end of the second quarter. As a result, we used the positive Q3 free cash flow to pay back parts of our financial liabilities.

Here our gross debt declined slightly from €9.8 billion at the end of the second quarter to about €9.7 billion at the end of the third quarter. Moreover in the green box on the chart we highlighted our most recent promissory note loan, which we placed end of October.

The promissory note loan was a big success. When we opened the order books, we just intended to raise some €200 million.

At the end of the order period, the amount of firm orders stood well above €500 million. As a result, we were able to price the loan tightly and raised €500 million.

The proceeds we have meanwhile partly used to pay back a scheduled maturity of €400 million in October, which was priced higher and just under 1.5%. So the promissory note loan placement provides us with some €100 million extra money without paying any higher interest costs than before, a big success of our finance team, I might like to thank here.

Let me now move on to our segment performances starting with Aviation on Chart 18. As with the previous quarters, we provide you for all segments a comparison with 2020, but also with the pre-COVID levels in 2019.

The segment revenues in Aviation continued to be positively impacted by the security settlement in the first quarter, in the amount of some €58 million. Adjusted for this item, revenue stood at €365 million and therefore a notch above the previous year's level despite 2% drop in passenger volumes always compared to the previous year.

The €11 million higher underlying revenue was mainly attributable to a €10 million increase in security services. On the level of the segment EBITDA, we recorded in addition €160 million governmental compensation that we already discussed before.

Adjusted for the security settlement and the governmental compensation, the underlying EBITDA came to minus €45 million. When compared to the adjusted value of previous year, this represented a strong improvement of €74 million at lower absolute number of passengers.

The improvement was mainly attributable to a €63 million reduction in underlying OpEx and the before mentioned increase in underlying revenues. In fact, when paring the low margin of our Security business in mind, the underlying OpEx excluding for Security Services was even reduced by more than €70 million.

Looking ahead, we also expect the regulator to approve our fee application for the aviation charges in the upcoming year. We currently expect to hear back from the regulator by end of this month.

Moving on to our Retail and Real Estate segment on Chart 19, looking at the individual revenue streams of the segment, we are pleased to see that our Real Estate subdivision is back on the pre-crisis level. The result is even stronger bearing in mind that terminal 2 was closed for five out of nine months this year.

In contrast, Retail revenues were still clearly impacted by the lower number of passengers. At €52 million Retail revenues were even down compared to the first nine months of the previous year.

The explanation here can be found in the shortfall of advertising revenues. Here the first quarter of the past year was more or less unimpacted by COVID-19, which led to clearly higher advertising revenues in the nine months period of 2020.

Parking revenues on the other side were mildly up compared to the previous year, despite the 2% lower passenger volume. At €191 million segment EBITDA reach more than 60% of the 2019 volume, mainly thanks to the strong real estate performance.

The continued OpEx savings also put us into the situation to record an all-time high, EBITDA margin of more than 82% in the period under review. The financial performance of our Ground Handling segment is shown on Chart number 20.

As with the other two segments revenues and the Ground Handling segment continued to be more resilient than the pure passenger performance in Frankfurt. At €270 million segments revenues were up by 8% against the first nine months of the previous year and down by 50% compared to the same period of 2019.

Key drivers for the better revenue performance again, were charges that are not directly linked to passenger numbers, so maximum takeoff weight and movement related charges. The cost side of the segment also continued to improve at €330 million.

Total OpEx was down by €18 million when compared to nine months, 2020 despite the fact that we recorded higher revenues. Still in absolute numbers, we lost about €50 million with regard to the segment’s EBITDA in the first nine months, a situation which is clearly not satisfying.

The bright spot, however, remains the focus on the third quarter. Here, we clearly see that our efforts to restructure Ground Handling are bearing fruits.

At minus 55% passengers compared to 2019, the segment almost achieved an EBITDA breakeven at minus €2 million EBITDA. On Chart 21, you see the summary of our Frankfurt results during the past period.

When compared to our operational expenses in the past years, we clearly see the restructuring gains. In total, we achieved cost savings of more than €340 million or about 30% when compared to our pre-COVID cost level.

So we continue to be well on track to deliver on our cost savings target of €450 million to €500 million this year. Also when compared to the first nine months of the past year, the cost savings are remarkable at €80 million.

The savings are remarkable because we handled almost the same number of passengers, which we reopened Terminal 2 and we reduced the application of short time work. The latter two effects.

So the reopening of Terminal 2 and the reduced application of short time work led to a higher sequential cost in the third quarter. As those two effects account for some €30 million higher cost, our underlying cost performance continues to be strong as we offset about €10 million here.

Regarding the EBITDA, we managed to achieve a positive EBITDA of more than €100 million across our three Frankfurt segments in the third quarter. This also means that on an annual basis, we can cover all Frankfurt interest and maintenance costs in running the airport only at about 50% of the pre-COVID levels, a very good result, which again shows the strong free cash potential Frankfurt Airport has.

On the next Chart 22, you will find the financial performances of our International Activities and Services. The very positive message here is that despite the continued strong impact of the pandemic, all investments were EBITDA positive.

Jointly the majority owned International Activities and Frankfurt services contributed some €312 million to our Group EBITDA. As Stefan already mentioned, the segment therefore accounted for the highest share in Group EBITDA and stood on a reported basis at exactly 50%.

The performance of the International Activities is even more impressive on a quarterly basis. During the third quarter, the majority owned investments and Frankfurt services contributed an EBITDA of €184 million.

The segment was therefore accountable for the absolute highest share of the Group EBITDA. During the third quarter of 2021, the International segment contributed about two-third to the Group EBITDA also an all-time high value.

Moving now to my last chart, our International Activities segment on Page number 23. For the segment we continue to see that revenues excluding for IFRIC 12 are clearly impacted by COVID-19.

Compared to 2019 segment’s revenues dropped by roughly 46 or more than €360 million. On the other side, we significantly took out underlying OpEx.

Compared to 2019, we saved around €183 million. Having said this, the underlying EBITDA was only down by €174 million, despite the steep drop in revenues of €360 million.

Compared to the previous year’s adjusted EBITDA of €82 million, we recorded a steep increase in EBITDA to 196 on an underlying basis. Here, ladies and gentlemen, we are very pleased to see the results of our cost savings measures and the higher charges in Greece.

While the adjusted EBITDA margin stood at 26% of the previous year, the cost savings and higher charges brought back the EBITDA margin to the 2019 level of 45%. During the third quarter, the margin was even higher than in 2019 at 61% without considering any one-offs.

Having said this ladies and gentlemen, I'd like to conclude my presentation with this positive message and we are looking forward to your questions,

Hi, good afternoon everyone. Thanks for taking my questions.

So I'll have three, first of all, on the revised guidance, so you have increased it obviously given the good results, but I'm just wondering, why is your revised guidance still very conservative as it looks like because even the top end of your guidance implies Q4 EBITDA of €80 million to €90 million on your bottom line, your bottom end basically applies mainly to that at all almost in Q4. So, why you are being so conservative when you only have one quarter to go?

Are you expecting something bad in Q4? And maybe some costs going back up with traffic, if you could give us a bit of details on why being so conservative?

That's my first question. Second question would be on tariff update please for next year and what you're thinking for the years after next year?

And my third question is on CapEx. I'd like to understand what will be the normalized amount of maintenance CapEx post reopening of Terminal 3 and the completion of Lima as well?

And if you could have a little bit of phasing in terms of CapEx and update on phasing for CapEx over the next four or five years, that would be helpful? Thank you.

Let me start a little bit general on the revised guidance. From this point of view, we are quite positive regarding the fourth quarter traffic wise, but that's more Frankfurt because the international participations will not contribute the same amount on the fourth quarter because, wherever it's leisure, wherever it's tourists the season is more or less done, but your point is correct.

It depends a little bit, and that's a reason for the wide range. We are still working on some projects and it depends a little bit whether we have to book or some provisions yes or no, that’s a topic on Fraport USA, where we are and some flights regarding progress it depends regarding one concession, whether we will comply with our deadline, say yes or no, or whether we have to book some provision.

And second, here on Frankfurt business was the restructuring on the Security business that we are still in discussions also with the Workers' Council and just with the Workers Council and let's see how this work. That's the reason for the border range, on this guidance and we hope to be more on the upper end, but it depends on those topics as mentioned.

I'm not discussing another time of lockdown. I don't see any lockdown, but what could have more of course is it’s known and we are quite optimistic regarding the traffic.

We see that the business strike is coming again back to growth, and business passengers are flying again, that's positive. Intercontinental is reopening, but we see also on a daily basis, more intense discussion under on compliance, not on compliance, sorry on COVID and so on and so on.

So at what time this could change the mental situation of passengers continuing to fly or to be more prudent on that side, I don't know it's not known [ph]. But the main issue is, are there at the end special topics, yes or no?

Regarding traffic update for next year, it’s difficult at the moment. So I will give a best guess at the moment, somewhere in the range of 60% to 70%, but it's too early to be quite honest.

It's just a momentum from today's point of view and we will give you a more clear insight at our full year’s presentations in March or even earlier January, February, let's see. But it depends very much on the COVID development and not whether we expect another time of lockdown, I wouldn't expect a lockdown in Germany, as long as you are 2G on 2G base or if you are vaccinated, then I would expect there will be no further restrictions for those who will be well fully vaccinated, but nobody knows what's going on internationally whether other countries are restricting traffic another time, yes or no.

And what nobody knows is how people will react at the end. It is see on a daily basis and use opening up in the morning at 7 o'clock with the new COVID numbers and so on and so on.

That's a little bit the topic behind, but we are quite optimistic for next year, probably starting with the eastern and then another time with a clear summer peak and it feels like almost in an autumn. CapEx saving to you Matthias.

Yes CapEx, after finalizing the expansion programs, we see and expect sustainable maintenance CapEx level in Frankfurt of little bit more than €200 million, outside Frankfurt and our International portfolio less than €100 million for all airports. So if you put this together, the long-term sustainable CapEx level is up to €300 million per annum all included.

Hi, thank you very much for taking my questions, also three if I may. Firstly on Transatlantic capacity, I think overall at a market level, December is somewhere around 70% of the 2019 capacity.

Could you tell us your expectations as we move into 2022 on Transatlantic? How do you see the passenger traffic evolving as the percentage of 2019 and color that would help?

Secondly, could you give at least an update regarding the tender in Antalya for the extension of the concession there? And any more details you can offer us in terms of the range for the upfront payment or any CapEx involved there?

And then I guess your strategy, if your intention to participate there, that would also help? And the last one, just on thinking at your OpEx in 2022, what do you budget internally in terms of cost inflation next year?

So either it's wage inflation or one of your peers is talking about electricity costs going up quite a bit. So any more inputs you could offer us into 2020 to OpEx wage inflation and cost inflation?

Thank you.

Yes, thanks very much. I can start with your first questions on Transatlantic traffic.

As mentioned with you on the Intercontinental market the biggest momentum at 80% for the winter season on the Middle East and 76% on North America. And of course we don't have a crystal ball, but we would hope that we see even higher gross rates and over the year next year, it there is no COVID impact or something like this.

So that U.S. traffic, which is really important for us is for the further goals and over the year.

So in principle, from today's point of view, but that's not a guidance, from today's point of view we hope to start next year and the first month on a level of 55%, 60% of traffic, especially on continental traffic, but also some Intercontinental traffic. And then we of course, hope to see a first peak, during Eastern and then May holidays and so on.

The longer weekends to hope to peak off more than 70%, 80%, whatever, and somehow but we have to see, it’s a little bit too early at the moment. So if I gave you a range of 60% to 70%, it could even be depending on summer, depending on COVID a little bit better, but it's not a crystal ball it's too early.

It's a normal to see how everything is developing on that side. But we are quite optimistic on 2G basis that most of all passengers are at the end fully vaccinated, and they will continue to fly.

If the situation keeps under control, that's an important thing around the world. So nobody knows at what time China would open up.

We are almost in the market that Far East, especially China could be -- could continue to be closed up to end of next year. I can't comment on that.

I have not and we don't have the crystal ball. Regarding Antalya, I can just tell you, that we have a close look at that one, that's clear because we are in there already for 20 years.

It's selective market, no question, but there's also, there are some limits and we were to close look to this one. So how could we continue or how could we bid for Antalya with limited resources on that?

How do we structure that one? Maybe taking a partner and whatever, it's too early at the moment.

And we'll also have first to check all the documents and the chance and the risk profile, whether it's expected for us, yes or no. But we will let you know.

At the moment due date is beginning of December and still two or three weeks to go on that site. I forgot to answer the first question or the second question on your predecessor.

So the margin aviation charges, if I've got your question correct, it was the question what's going on for next year. So we consulted and it's done already.

It was, this was a plus 4.3%, which already – yes correct, which has [indiscernible], so we can increase that number, but there is no further decision for the year 2020 suite. That's too early we will development our mind, so in the first quarter of 2022.

Matthias, OpEx?

Yes, regarding inflation impact on our cost side, so normally when we are looking forward and our long-term plan, we have, you can say an average an inflation increase of 2% to 3% on the wage side, as well as on the price side for our products. Now, everybody has noticed this that the prices are going up, but we do not expect the wage price spiral in the future, so of course, just a temporary increase of prices.

And, but this will not create a huge negative impact for our business because we have a lot of long-term contracts. And so we have a, you can see a contractual protection against inflation for the next couple of years.

So perhaps in average, there could be a higher price level of about 1% compared to this, what we haven't had in our long-term planning, but we do not expect that prices on the construction site on resources side, due to these long-term lasting contracts, which we have yet for the company.

Thank you very much.

Welcome

Good afternoon. Three questions please.

First, a clarification question on next year. Lufthansa indicates 80% of pre-crisis capacities next summer.

Given your plans for next year, could such a recovery imply challenges for your Ground Handling division next summer? Second, could you please give us a breakdown how the cost savings that you are currently implementing will be distributed to the different divisions of the Group?

And third, do you see any potential to restructure the financing of the Brazilian airports? You have very good financial conditions in Germany, but the interest payments for the small step position in Brazil looks very high.

Thank you very much.

Yes, thanks a lot. It's an in a phase two, it's very difficult to predict exactly the traffic development and for the next 12 or next 24 months, and what we have seen over this year, if you'll remember, we have seen in Germany and a lockdown up to June or more or less seen as a lockdown up to June.

And then suddenly June, but especially July, August, we saw the increased number from warm water destinations as we called them. And at that time, beginning of the summer, where more whoever believes that in still the autumn vacations would be so strong, I said, no, came through and nobody knew at what time the states are opening up.

So we have to plan a little bit on scenarios and once in hours really that we would be able to handle 80% of the traffic in summer, that’s one of the scenarios. I'm not saying we are planning for this, but something like this could occur that's absolutely right.

And that's the reason we want to set up the business on the Ground Handling sides, loading de-loading and so on, more flexible than we do it nowadays, so to be more flexible on the shift basis, to have further incentives out to hire people. And they could be that, at the end we will have a little bit too much people on or a little bit too less, but we have to have enough flexible instruments that we can handle even 80% next summer, absolutely right and we have to be prepared for that.

On cost savings, Matthias?

Yes, cost savings or the drill down of the allocation of percentages, if you assume a 100% of our cost targets for next year, which we already defined, so about €250 million on the personnel cost side, and €100 million to €150 million on the material expense side, you can allocate this in 40% to Aviation, 40% to Ground Handling, and 20% for Retail, as well as Internal Services.

We had a question on the Brazilian smaller financing, the existing, smaller financing. I don't have [indiscernible] on that one.

The interest cost or what -- let me say the financing in Brazil is done on Brazilian real. So the Brazilian currency project financing non-recourse, and I think we pay weighted average about 8% to 9% in Brazilian real denomination.

Thank you. And you don't see any potential to restructure the financing in Brazil at this stage?

No, no, no, we are fine with this refinance.

Thank you. Thank you.

Because it's in real, that's important thing.

And we have on the revenue side, you know, let me say our -- the charges in Brazil, so to say inflation protected because when the year is over, we are looking on the inflation rate and you can say that more or less the fee increase is related to the inflation rate. And let me say also in the interest side, so we have a natural hedge.

Revenue in real protected by this price escalator and the refinancing for the CapEx is also in the real so we don't have any currency risk in Brazil. So the remaining risk is just the translation of the profit from Brazilian real into euro.

Thank you.

Welcome.

Hi there. Can I ask a little bit about the latest view on your competition with your rival in Bavaria?

I think Ruxandra was trying to get us to look at Lufthansa's guidance of 80% capacity for the summer and see what it means for you, but through the pandemic, certainly there was a concentration of that capacity with you, because of your great cargo attractiveness. Is there a risk that as they bring capacity back, that your share actually dilutes and we get disproportionate growth in Munich or do you think you can keep your current share of Lufthansa?

And then, can I ask you a little bit more about the delays that you referenced? Are they all on the Ground Handling side or are there any problems in the terminal?

Obviously I'm always interested in the security and hoping that we can get a clear path for it to improve, but I mean as security processes in a state to improve yet, or you haven't got your arms around it yet? Yes, that will do.

Thanks.

Thank you very much Andrew. We are seeing over the pandemic is that airlines Lufthansa, but in general all the airlines, especially on the Intercontinental side, concentrated their traffic very much on the main hub site Frankfurt.

We see recover as now, this will of course not stay on that absolute level on this relative level. That's clear, because there's also other catchments and while we would expect that over the times of more recovery which is going ahead, we will come somewhere back to the old relations if you want market shares, and so on.

Whether we can keep at 300% [ph] on more market share could be that’s too early, but on the other side, we also don't see any shift from Frankfurt to Munich. But if you are seen, for example, this year or last year, Munich suffered very much.

They have been on a very, very low level of traffic, especially on the Intercontinental side. And what we know is that we still recover we past known one or the other route, we will reopen also from Munich and that makes sense from Chile, even if I would like to have all the traffic's that's not realistic.

So it's not a shift in a way that’s putting out from Frankfurt to Munich, but it's with all the reactivating on aircrafts that in the second phase, third phase of the pandemic, more now aircrafts will also be activated on the Munich side. On the delays, now that's not just going to endings, that's a lot of reason.

But if I go through the processes in general, Security was quite good this year. There are small waiting times, so the Federal Ministry also a lot of people and that worked quite well.

It's more that was all the documentation checks, more transfer passengers, but also on originated passengers. It takes more time.

The simple people, passengers are not any longer so much used to fly, so takes out some more time on the security side, even if it worked without long waiting times, but it takes more time and the same on the border. So that's the [indiscernible].

Immigration issue and so on. It takes a lot more time with all the document checks on that side, so especially on non EU traffic.

Then at the end, we have to -- we have some passengers who are not making it up to the aircraft, so yes so right baggage, so the baggages has to be de-loaded and so on. So, loading teams have to be long and [indiscernible] going along on an aircraft and also with the boarding and de-boarding processes, which are even not so smooth as before quite so.

It's not the one point. We have several points in the process where everything has to come together and then we're still in a recovery phase, so it would take some further months on that side.

But the Security process is at the moment not to pinpoint not at all. I think that was the second question and your final question.

Yes. No, that's perfect.

Thank you.

Yes. Good afternoon, gentlemen.

Just a couple of questions on the guidance. First one, looking at the net debts into yearend 21 is, should we expect anything odd or actually unexpected in Q4?

I mean, you've raised the guidance on EBITDA, when it seems there's a bit of a loss contribution flowing down to net debts. So just trying to understand a little bit the bridge into the full year 2021 net debt?

Second, picking on Antalya, do you guys actually expect to get paid a dividend in 2021, considering that there's strong performance of the assets or should we wait for next year or do you have any idea of the scope of how much you could get out of the asset considering it's cash positive? And last one on Greece, I mean the performance of the asset has been, it's been quite amazing.

They traffic is recovering fast. All airlines are putting a lot of capacity into 2022.

Beyond that what's going to really drive the results in the asset value? I mean, what you need to make this a genuine key contributor and continue to push up the value of the assets?

Is it just developing shorter season traffic, duty-free I mean, how can we drive basically more of this growth just beyond a catch-up on traffic? Thank you.

Matthias, do you want to talk on the guidance, net debt, EBITDA and so on?

Yes, before, like we said before we changed or improved our guidance. We said that we expect an indebtedness end of the year of about €6.5 billion.

Now we improved our guidance and this is directly translating also into an improved guidance for the indebtedness. So as of today, starting from €6.2 billion net debt in September 30, I expect for the year end €6.4 million.

So a clear improvement of about €100 million on the debt side.

Included in those numbers is already an expectation where we are working on to get it done on dividend on Antalya this year still was €20 million, €25 million on our share was to get through this year. And your third question Greece, on the midterm outlook, first Greece is very attractive as a destination and metros [ph] issues.

So it will continue to be traffic that's clear. As on all airports it’s traffic, its tariff increase and it's, of course, also duty-free and retail and all those things.

And others in addition, positive things that we have to pay for some years less concession fees, so this is also positive, reduces of compensation we now brought. And we have to keep costs under control as we did up to now and we are quite successful on that side.

And we have to, what do you say, to get out to the terminals as much as possible, so lay CapEx [indiscernible] and so it was a general lecture on making a concession successful and so we'll try to do this.

And in addition to this what Stefan said, we have a very comfortable concession agreement in a way that there is an automatic escalation of the charges of 0.9% of the Greece inflation rate. So we have positive price numbers, and even if they would go up in the future, what we do not hope in principle, but this on the other side, we have a perfect inflation natural hedge by this concession agreement.

Okay. And last one, if I may, I'll give you a try on, you’ve talked a little about the actual contracting on 2022 remaining quite vague.

I mean, on -- yes we switched to EBITDA and I'm not going to get a number from you, but we've seen consensus numbers, some numbers in consensus heating up to €1.2 billion for next year. Where are you comfortable as of today, considering what you know on a winter schedule and quite a, let's say a fair amount of tailwinds on traffic into summer?

No, I think at the insight to be quite open and do you notice or what it has to be still supplies for the next call and it’s little bit too early to give you all the guidance on that side. So yes, we have some expectations and we will try to get it done as best as possible.

But first, we have to get a better look on the traffic side, whether we can be so optimistic as mentioned, even up to 80% in summer, because that's the most important driver on that side. And I'm quite optimistic on the EBITDA side.

So I know that I have a really good CFO on my side. So it will work even if we have to be a little bit more conservative, what I mentioned on the scenarios regarding hiring of people, but just counting, it’s not in general and the current companies just aren't ending.

Because at the end, you have to be able to match even a sample recovery also traffic to keep market share and so on and so on. Next call on that one.

Okay, all right, thank you.

Hi, good afternoon. Just one question from me, regarding the Fit for 55 proposals that you mentioned, how much traffic do you think is a risk to be captured by the Middle East hub if all the proposals are approved?

Thanks.

I'm more positive thinking to be quite honest, I'm absolutely sure all those discussions we had already with the European Commission that fully understand our argument. And that we will find at the end a way which gives us a clear path forward to my neutrality, you will see sustainable fuel obligations, that's absolutely right.

But there will be competitive neutral, because they see this point and they don't want to harm the big airlines in Europe, the big hubs in Europe. They know how important they are for the connectivity of Europe with your work and I'm sure we'll find a way and if we have it and if we can discuss this and if we know the details, then we can discuss what is the remaining spots from today's point of view and to positive.

Yes. Thank you.

Hello, Elodie?

Can't hear you always, the question is not?

You can hear me?

Now we get you.

Okay, sorry. I just wanted to come back, yes on the cost saving section, question.

Now I get you. Thanks.

Can you hear me?

Yes. Thanks.

Okay.

Perfect.

So 500 million savings this year. How much is really sustainable if you mean traffic at Frankfurt comes back to 100%, say traffic at Frankfurt comes back 200% next year, should we assume that basically EBITDA at Frankfurt will just be €400 million higher than it was in 2019?

Good question. Our targets what we give you as the guidance for next year the €250 million personnel expenses plus €100 million, €150 million, so on the personnel expense side you have to see that when you look on the allocation of more than 4000 FTEs, which we reduce so 50% is at the level of the Ag so the high paid admin and semi-admin guys, and we are going to continue with this lower number than before.

On the other side, we have another 2000 FTE reduction in services and subsidiaries here at the Frankfurt side. There will be some compensating effect when we rehire some guys in the Ground Handling, but you have to see that the average payment, for example, in the flat [ph] round and our subsidiary, we pay an average 40,000 per employee per annum, while on the admin side we have a lot of guys which had 100,000 per year.

So just looking on the FTE numbers is not, let me say the key indicator. You have to look on the real expenses which we brought down.

That's the reason why also looking for the next couple of years we expect this €250 million lower personnel expense level here for the Frankfurt side and on the material expense side, there will be some ramp up. Perhaps at the end of the day, it's not €150, it's about €100 million, but this is indicated the range of sustainable lower cost basis in the future for the Frankfurt side.

If you then add better performing International business, but some inefficiencies on the recovering side, because we are not on a, but we still will have some peaks factors next year, we are not on a full utilization, then probably your height was something like on €250 or whatever, because they are plus and minus and so on, on that level that probably is a wide number, but it's too early today to be quite honest, we will go through this process the next weeks, and then we will pick the targets with our different units. And as you get some first ideas in which rough numbers it would be.

Okay, thank you.

Yes. Hi thanks for taking my question.

I actually just have two left, which yes, both touch on the topic of the increase and also regulation. So firstly, do you maintain the ambition to increase fees by 4% to 6% a year over and beyond the 4.3 for next year?

That's the first question. And then within the regulation, be it’s the vax [ph] formula or be it’s the definition of the regulated, regulated asset base, is any aspect or any angle that you can think of the Lufthansa could potentially attack in order to prevent those fee increases to happen or is it all 100% waterproof in your eyes?

First, I would say from our point of view, it's 100% waterproof, but you never know, if you're going in front of God or whatever. It means God will check it, but from our side it is 100% waterproof.

Second point, I think we haven't given any indication that we will be in the range of 4% to 6% per year over several years. But what we can give you as an intention, yes there will be fee increases over further years that's absolutely clear.

But we haven't decided defined up to nine which sites size we will do it, what's necessary and what's market compatible, those ways. So as an indication, yes there will be further fee increases, but we haven't decided on the level.

Okay, thank you.

So, I'm taking over, Christoph Nanke. So thank you everybody for participating.

If you have any further questions give us a call in IR. Yes and happy to look forward for the end of the year and hoping for good traffic and good time anyway.

So thanks again.