March 20, 2015
Economic downturn in Russia and the Ukraine hits Fraport hard
The massive devaluation of the rouble has seen Fraport AG affected quite heavily by the change in travelling and spending habits of Russians and Ukrainians. Fraport runs the world’s third largest airport at Frankfurt, as well as having other relevant financial investment with a 50% stake in Turkey’s Antalya airport, and a 35.5% stake in the operators of St Petersburg airport. Where passenger spend per head is concerned, Russians are some of the biggest spenders who pass through Frankfurt airport. Although they may only account for 2 percent of all passengers, their average spend is four times greater than the overall average. However the cost of travel has virtually doubled for Russian passengers said Fraport’s Chief Executive, Stefan Schulte, after discussing the group’s full annual results. Fraport confirmed on Thursday that net retail spending per passenger fell 4.7% to EUR€3.43 (US$4) for 2014. However Fraport still managed to meet targeted financial figures for 2014 with the group declaring revenue of €2.4bn (US$2.8bn), which is up 3.2% compared to 2013 on an adjusted basis, while profit reached €790m (US$921m), up 7.8% year on year compared to 2013. In addition, at Turkey’s Antalya airport over 30% of the 28 million passengers in 2014 were Russians, while Germans, accounted for 25%. This has helped to compensate for the fall in Russian tourists numbers, with total passenger numbers up 4.7% for 2014. However Schulte conceded that this coming summer would be a difficult time for the airport arm of the group as tourist arrivals to Turkey from Russia fell 21% though to compensate, hotels and tour operators are now reducing prices to provide a still attractive option according to the Turkish Government. Fraport owns a 35.5% stake in the operators of the airport in St Petersburg, Russia. They are involved in financing a new terminal in Euros and US dollars, but the project has now found itself in a negative equity situation. To compensate for this, Fraport now intends to convert a loan it has provided the operator, Northern Capital Gateway, into equity to reinstate the situation to positive equity. St Petersburg’s share of international passengers continues to decline as the financial crisis is putting people off traveling to St Petersburg, meaning 2015 will also be a challenge, Fraport confirmed.