MIAMI – FRAPORT, the company that operates Frankfurt Airport (FRA), has published its annual report for the fiscal year 2020 ending on December 31.
For the first time since the year 2000, German transport company Fraport AG Frankfurt Airport Services Worldwide, commonly known as FRAPORT, has reported negatives numbers, resulting in US$300.7m (€250.6m) for 2020 against a positive US$1.41bn (€1.18bn) for 2019.
EBIT (Earnings Before Interests and Taxes) also fell to a negative US$850m (€708m), plus US$846 (€705m) the preceding year. in addition, the Group’s net profit fell to negative US$828m (€690m), a loss when compared to the 2019 positive result of US$545m (EU€454m).
FRAPORT also manages China’s Xi’an (XIY) and Ljubljana (LJU), Slovenia, airports that have also posted disappointing EBITDAs (Earnings Before Interests Taxes Depreciation and Amortization).
Heavy Impact from the Pandemic
The cause of these exceptionally negative results is part of the fallout of the pandemic, which severely impacted airlines and, consequently, airports.
In the case of FRAPORT, countermeasures are being implemented by the elimination of its operation’s nonessential expenses, savings on non-staff costs such as materials and services, downsize or cancellation of investments in particular at the home base off FRA airport.
FRAPORT is, however, continuing with the construction of a new terminal three to meet the anticipated travel demand, which, for FRAPORT CEO, Stefan Schulte, means that the Group is “seeing the light at the end of the tunnel. Long-term growth remains intact.”
Behind these results lies a massive traffic reduction that dropped 73.4% at FRA with a staggering figure at only 18.8m passengers coming through the hub. Numbers also fell in other Group’s airports, with China’s XIY showing a negative 34% and, more severely impacted, a negative 83% at LJU airport.
Finally, overall revenue decreased 54.7% year-on-year for the Group, and losses had to be contained by reducing costs from materials, personnel expenses as well as general operations costs.
FRAPORT Prepares for the Future
FRAPORT says it is taking actions to adjust its overall business organization to achieve a leaner and more agile company. Some 300 measures being implemented include the streamlining of processes, a more flexible corporate structure and the cutting of about 4,000 jobs, which are reductions being planned by the end on 2021.
Furthermore, new financing was obtained by FRAPORT during 2020 by raising approximately US$3.5bn (€ 2.9bn), which added to the current cash availability of US$3.6bn (€ 3bn), allowing the Group to face off the crisis and achieve future investments.
On the forecasts side, FRAPORT expects for 2021 between 20 and 25 million passengers and a total EBITDA revenue of US$360/540m (€300/450m) with an EBIT and net result remaining both negative. In view of the above results and the continuing massive negative impact of COVID-19, the FRAPORT Board has decided not to distribute dividends from the fiscal year 2020.
Featured image: Frankfurt Airport. Photo: Fraport Group