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Frankfurt Airport operator Fraport has today reported a 14% rise in third-quarter core profit, citing a rebound in passenger traffic during the European summer, driving its shares higher in morning trade.
The group said its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose to 4478.1m in the quarter from €420.3m a year earlier, beating analysts’ average forecast of €449.9m, according to LSEG data.
“The beat came from the Aviation and Ground Handling, as well as a lower than expected net interest charge,” Jefferies analysts said in a note to investors.
Chief executive Stefan Schulte said in a statement the group’s Q3 EBITDA, revenue and net profit reached “new all-time highs”, which will “help continue to gradually reduce the debt incurred during the pandemic”.
Quarterly results were boosted by recovering passenger numbers across Fraport’s global network of airports, with traffic at its homebase Frankfurt growing by almost a quarter in the first nine months of the year. Third-quarter traffic at the hub was at 86% of 2019 levels.
“FRA is thus overcoming the crisis faster than other major German airports,” Schulte said in a statement.
In a press call, Schulte added he sees further EBITDA growth in 2024.
The CEO said passenger numbers in Frankfurt are expected to reach around 90% of pre-Covid levels in the fourth quarter, however a return to 2019 levels is not anticipated until 2025 at the earliest.
Demand in the first nine months of 2023 was particularly high for traditional holiday destinations within Europe and long-haul flights, the company said.
The number of passengers from China also increased steadily, reaching 54% of pre-pandemic levels in the third quarter, it added.
Stifel analysts said the return of Chinese passengers should “ultimately support the retail business”.
Despite grappling with soaring inflation and higher operational costs, the group’s quarterly results benefitted from “high cost discipline”, finance chief Matthias Zieschang said.
After free cash flow (FCF) turned positive in Q3 and the company expects FCF to break-even in 2025, Zieschang said, adding he sees cash-flow of around €1 billion at the end of the decade.
Europe’s airlines and airport operators are benefitting from a strong traffic recovery and rising travel demand, despite high inflation and an uncertain economic outlook.
Germany’s flagship airline Lufthansa, which uses Frankfurt Airport as its primary hub, last week beat Q3 estimates and issued a solid Q4 outlook thanks to falling costs and strong bookings.
Fraport reiterated its full-year outlook for an EBITDA in the upper half of its €1.04-1.2 billion range.
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