Ladies and gentlemen, welcome to the Fraport AG interim figures Q2 six month 2024 conference call and live webcast. I am Sandra, the call's operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Nanke, SVP, Head of Finance and IR. Please go ahead.
Thank you, Sandra, and welcome also from my side. Happy that you all called in, despite of probably nice summer weather outside. I have with me at the table Matthias Zieschang, our CFO, and he will start the presentation.
Yeah, thank you very much, and good afternoon, and also a warm welcome from my side, ladies and gentlemen. My first chart of the presentation shows our traffic performance at the Frankfurt site. As you know from our Q1 presentation, we were meaningfully impacted by strikes and weather-related cancellations in the first quarter, and therefore lost about 600,000 passengers. Please note this number is just the direct impact, so without any passengers that we may have lost in addition because they didn't book their flights to or via Frankfurt due to the strike-related uncertainties. As a result, the recovery rate in the first quarter was just 85% of the 2019 level. With the beginning of the summer flight schedule, the recovery rate improved to about 86% in the second quarter. Correspondingly, the first six months showed a reported recovery rate of 85.5%.
On the chart, you also see the preliminary figures for July. In July, we handled about 6 million passengers, which is a recovery rate of roughly 87% compared to July 2019. On a year-to-date basis, we have therefore exceeded the previous year by around 1.9 million passengers. When considering that last year we handled about 59.4 million passengers, this will mean that we already achieved the lower end of our full-year guidance without any further growth from here on, which is not our base assumption. Moving on to my next slide. On slide number 4, you see the development of our international portfolio. Fraport Greece and Fraport Antalya continued their very positive trend in the first 6 months of the year. While the recovery rate in Greece exceeded the first half 2019 by 16%, the second quarter showed an even better momentum at 18%+.
Here, some airports such as Corfu, Rhodes, Santorini, or also Chania on Crete showed a remarkable momentum of more than 20%+ in the second quarter. Antalya Airport also developed strongly, exceeding the 2019 benchmark by 9% in H1 and 6% in Q2. Besides Fraport Greece and Antalya, also the development at Lima Airport is very encouraging. At 101% in Q2 and 103% in H1, Lima Airport is outperforming the 2019 benchmark year, too. Here, the traffic development is catching up on the lost performance due to the political unrest situation in the previous year. Thanks to the strong performance of these three investments, our international portfolio in total reached and exceeded the 2019 benchmark year in the first six months of the year and in Q2.
The latter one is even more remarkable, bearing in mind that Porto Alegre Airport, our biggest Brazilian investment, has been closed since the 3rd of May, so two out of three months in the second quarter. A status update on Porto Alegre is shown on my next slide, number five. As you will know from our Q1 presentation, the airport in Porto Alegre is closed due to the worst flooding which the region of Rio Grande do Sul has ever experienced. Since the beginning of June, intensive cleanup and restoration work, as well as tests, have been carried out at Porto Alegre Airport, particularly on the runway and taxiways. The test results show that parts of the runway and taxiway system need to be renewed. Following an intense analysis, we decided to gradually restore the operations at the airport from October onwards.
By then, we will make about 50% of the total runway length available for flight movements. This will allow up to 50 scheduled movements per day or about 25% of the movements prior to the flood. Simultaneously, we will continue the works on the remaining runway area. In December, we expect to bring back the second half of the runway and restore the capacities entirely. Financially, as you also saw, this is our second quarter results. Today, we have, in the meantime, received the first payment from our insurance coverage to compensate for initial damages. Overall, we expect on a preliminary basis that some EUR 100 million will be needed to restore the operations. We expect the compensation to be a blend of insurance coverage and rebalancing from local authorities.
Moreover, we also expect to be compensated for the lost earnings under the concession agreement, as was the case during the COVID-19 pandemic. For these compensations, we filed a rebalancing request and are in close talks with local authorities about the rebalancing framework. Once we do have clarity on the financial conditions, we will inform you accordingly. Moving now on to our key financial highlights in the first six months, I'm on slide number six. Ladies and gentlemen, the first half of fiscal year 2024 was a very successful one. We exceeded the previous year EBITDA by 18% and also stood well above the level of 2019, which we exceeded by 11%. At more than EUR 2 billion, group revenues showed an increase of some 13% compared to the previous year or 14% when adjusted for IFRIC 12.
Key drivers for the increase in revenues were the traffic recovery in Frankfurt and internationally, as well as higher airport charges. At EUR 566 million, EBITDA was 18% higher compared to the previous year and achieved an all-time high result in H1. Also, EBIT reached an all-time high figure at EUR 309 million. Within our financial result, higher interest income compensated for the year-over-year increase in interest expenses. Simultaneously, our Antalya investment recorded improving results. Our group result, therefore, almost doubled versus the prior year and reached about the same level compared to 2019, a very strong set of results. Taking now a closer look at our Q2 performance on slide number 7. Despite the dropout of the Greek compensation mechanism, which I will talk about later in the presentation, EBITDA in the second quarter recorded a steep increase.
At EUR 355 million, EBITDA was roughly 10% above the previous year and even 14% higher than in 2019. Correspondingly, EBIT recorded a strong year-over-year progress too and reached EUR 226 million. At more than EUR 148 million, group result was well above the previous year too and even exceeded the 2019 comparable basis by some 8%. Again, ladies and gentlemen, a very good financial performance. Turning now the page to our cash flow and indebtedness situation, which you can see on slide number 8. The operating cash flow and capital expenditure developed overall in line with our expectations. Reflecting the positive traffic and financial result performances, the operating cash flow was clearly up compared to the previous year and close to the level of 2019.
At EUR 359 million, the operating cash flow would have also been sufficient to achieve a positive free cash flow in H1 without considering the expansion CapEx in Frankfurt and at Lima Airport. Our group net debt increased accordingly to EUR 8.2 billion at the end of H1. Despite the higher net debt, our net debt to last 12 months EBITDA leverage ratio improved due to the increase in operational result from 6.8 times to 6.4 times. Moving on to our repayment profile, I'm now on slide number 9. Despite the negative free cash flow, our liquidity position remained at a high level of EUR 3.8 billion or EUR 4.7 billion, including for unused project finance and committed credit lines. Gross debt, on the other side, was slightly down compared to Q1, from more than EUR 12.1 billion to about EUR 12 billion, reflecting minor repayments.
Looking ahead, residual repayments amount to less than EUR 200 million this year, which we expect to refinance in Frankfurt. As a result of the continued refinancing and Lima project finance drawdowns, our average cost of debt increased slightly from 3.1% at the end of Q1 to 3.2% at the end of H1. On the other side, our available funds also reflected an increased profitability. While we started last year with an average yield in Frankfurt of about 0.8%, we are now standing at an average yield of about 3%, which helps us to improve our financial result. Coming now to our segment development, starting as always with aviation on slide 10. While we just handled 86% of our pre-COVID passenger numbers, the second quarter aviation charges exceeded the 2019 level by 11% or EUR 24 million.
Compared to the previous year, the increase amounted to 13% or EUR 28 million respectively. In addition to the traffic recovery, the increase in airport charges was driven by the 9.5% increase in airport fees from the 1st of January onwards. Cost-wise, we recorded higher staff cost, among others, from the second phase of the collective labor agreement at the Frankfurt site. Despite the increase in staff cost, the aviation segment showed very strong incremental revenues to earnings translation. At EUR 109 million, most of the EUR 32 million higher revenues were reflected in the EBITDA growth of EUR 24 million. Correspondingly, the segment showed a clear improvement in the EBITDA margin from just under 30% to 34%. All in all, a very good result of our aviation segment in the first half of the year. Moving on to our retail and real estate segment on slide number 11.
Revenues and EBITDA, also in this segment, exceeded the 2019 benchmark year. At EUR 133 million, revenues were 6% higher compared to 2019, while EBITDA was some 2% above the value of 2019. Compared to the previous year, so 2023, we recorded good progress in the retail and parking divisions, while real estate was slightly below the level of 2023. Regarding the retail activities, the picture remains mixed. While advertising revenues per passenger caught up on the 2019 performance in the second quarter, shopping and service revenues remained flat. At EUR 3.10, total retail revenues per passenger were on the 2019 level and exceeded the previous year's second quarter by some 3%. For the year ahead, we are confident to see the spend per passenger outperforming the previous year and the 2019 benchmark year on a full-year basis.
Regarding the segment EBITDA, we still recorded temporary headwinds from elevated costs for maintenance in the second quarter. At EUR 97 million, EBITDA was slightly down compared to the previous year, while earnings remained higher compared to the 2019 level. Moving on to our ground handling segment on slide number 13. Despite increasing OpEx from a higher staff amount and collective labor agreement effects, ground handling showed an improvement in segment EBITDA. At EUR 194 million, revenues were close to be sufficient to cover the main OpEx drivers from rising staff and temporary staff cost. At EUR -4 million, EBITDA almost reached break-even in the second quarter. Looking ahead, we expect a better cost coverage from higher passenger numbers in the third quarter, as well as from a reduced number of temporary staff from external contractors. Our final segment, international activities and services, is shown on slide number 14.
The international segment continued its outperformance. Revenues and EBITDA remained well above the previous year and pre-crisis level. The increase in EBITDA is even more impressive, bearing in mind that Fraport Greece needed to pay the variable concession charges as a percentage of EBITDA for the first time in Q2. This effect alone led to a higher OpEx of around EUR 27 million in the period under review. On the other side, we recorded a first insurance payment to compensate initial flood damages at Porto Alegre Airport in the amount of about EUR 9 million. Key drivers for the strong underlying earnings development were traffic growth at the Lima site, a positive development at Fraport Greece, earnings growth at Ljubljana, and at Twin Star Airports. The latter one resulted mainly from higher airport charges as of April this year.
All in all, we are very satisfied with the performance of our international segment despite the headwind from the temporary closure of Porto Alegre Airport and higher OpEx from variable concession charges. Coming now to my last slide of today's presentation, our outlook on slide 15. Following the completion of the first six months of fiscal year 2024, we kept the guidance ranges unchanged and stick to our financial outlook and Frankfurt traffic expectations. Reflecting the year-to-date performances and the expectations for the upcoming quarters, we, however, specified the guidance ranges. As a result of the strike impacts, which directly impacted Q1 and indirectly Q2, as well as persisting Lufthansa capacity constraints due to delayed aircraft deliveries, we now expect to be in the lower half of our traffic guidance for Frankfurt Airport passengers.
Thanks to a good traffic momentum outside of Frankfurt, here in particular at Fraport Greece, but also at Lima Airport, we are, however, confident to reach about the midpoint of our full-year financial expectations for group EBITDA and group result. Consistently, we expect the net debt to EBITDA key leverage ratio to stay at about the same level compared to the prior year. Having said this, ladies and gentlemen, I'd like to thank you for your attention, and we can now start the Q&A session.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handset while asking a question.
Anyone with a question may press star and one at this time. The first question comes from Carlos Caburrasi from Kepler Cheuvreux. Please go ahead.
Hi, Matthias. Hi, Christoph. Thank you for the presentation and for taking my questions. I have three. The first one is on the regulated side. Could you give us an update on the consultation process and 2025 tariff increase? And additionally, will there be any incentives programmed? And if so, could you quantify the impact on the tariff growth? The second, I wanted to focus on Porto Alegre's first insurance payment. Could you shed some light on the potential impact that we could see on a full-year basis? And is the full amount expected to be paid in 2024, or we could see some payments in 2025?
Additionally, here, could you give us some color on the potential investments needed to put the airport back at full speed? And my last question is on the retail activities, and I was wondering if you could walk us through the main moving parts of the cost base in the quarter, as well as your expectations for the full year and for 2025. Thank you.
Yeah, thank you for your questions. Just a minute, I have to write down your questions. So starting with your first one, consultation process. The consultation itself is over now. We have done all our homework. We have made a lot of presentations to the airlines, and we have answered hundreds of questions, as always. And now we have delivered, after we requested consultation progress, we have forwarded all the material now to the regulator in the federal state of Hesse.
So the material is on the desk of the regulator. Now we are looking forward regarding our proposal. We always said it's below the current increase, so below 9.5%, but above 5%. So this is a range. And we are waiting now for the outcome. We are convinced that everything what we did is properly done. And because it's a formal consultation, you know that before the consultation progress, we also offered a three-year contract to the airlines, which was refused. Nevertheless, we are always, well, we would be flexible if the airlines would come back and say, "Hey, we are going for a three-year contract with FAIR," with FAIR and positive fee increases over the period.
We are always willing also to switch over to a three-year contract, but now the formal proposal is on the desk, and the process is running, and we are convinced that everything is done very in the proper way. And yeah, next year we will start with higher fees. So this is question number one. Question number two, Porto Alegre, as you mentioned or as we have communicated. So first of all, we have damages in the infrastructure. Based on a preliminary analysis, this is—or the outcome of the damages is about EUR 100 million, primarily to repair the runway. And on the other side, of course, we have a loss of revenue due to the temporary closure of the airport. And our working hypothesis is that we will be fully compensated for the infrastructure damages as well as for the revenue losses, which we realized.
We have two sources. On one side, we have an insurance policy, so we will receive about EUR 25 million—as of today, EUR 25 million from the insurance company. And the rest—so if the final damage would be EUR 100 million, then the additional EUR 75 million from the state, based on the economic equilibrium clause, plus the loss of revenues during the year 2024. And so we are in close discussions with the government. Everything is in a good mood.
And that's the reason why our working hypothesis is to get a full compensation. We have to see when the outflow for the CapEx will happen, whether it's most of this in this year or some part in the next year. So this is absolutely open, but let me say in the next—yeah, I would say maximum nine months. So from now till nine months looking forward, everything will be spent.
We have to see how the compensation will take place. So there are several ways to compensate: either direct cash payment or release of concession payments or a combination of both. This is what now is under discussion. But again, at the end of the day, we expect a full compensation of all damages on the CapEx side as well as on the revenue side. Third question, cost base in retail. Here, as I mentioned in my presentation, we, let me say the revenue increase in this segment has been compensated by higher OpEx. This has to do with our project, the reallocation of the Security North project inside Terminal 1, Concourse B. This is a big project. So we are reallocating the security lines to have a better transfer functionality between Concourse B and Concourse A and to gain a huge additional retail space.
And therefore, a part of these maintenance costs are based on the cost allocation key is allocated to the retail segment. And that's the reason why the revenue - this is a temporary phenomenon. And this is responsible that you are not seeing the full revenue increase on the EBITDA level.
Okay, thank you.
You're welcome.
The next question comes from Élodie Rall from J.P. Morgan. Please go ahead.
Hi, thanks for taking my questions. Can I just come back first to the comments you just made on Porto Alegre? Sorry. The total CapEx that you expect is EUR 100 million on top of the loss of EBITDA this year, which is EUR 20 million-EUR 30 million. Is that correct, or is it EUR 100 million in total, including the loss in EBITDA?
No, no. This is correct, what you said.
So the EUR 100 million is a first, let me say, analysis of the infrastructure damages. And on top of this, we have the revenue loss, which is directly impacting the EBITDA loss. And here, as you mentioned, EUR 20 million-EUR 30 million is a good estimation.
Thank you. And therefore, the comment you made on compensation, could it mean that there is a mismatch between the outflow and the inflow for a couple of years, or you would expect to be fully compensated?
Yes, this can be that there's a mismatch. But of course, our ambition is to avoid a mismatch, so to say, or minimize the mismatch. But an economic compensation will be fully given. This is a working hypothesis. But again, it can be that there's not a 100% compensation in this year in which we had and have the damage.
Okay, very clear. Thank you.
My next question is on traffic. I was wondering if you could give us an update on the capacity situation at Lufthansa with regard to the availability of aircraft. I know this is a big reason why you lowered your guidance for this year. I was wondering what your view is on the ability for Lufthansa to deal with that capacity issue into next year, for example.
Yeah, I think this is. It wasn't a big surprise for us because already before the half-year numbers from Lufthansa, we heard from the problems. And it's relatively simple. You have three sources of problems. One is a non-delivery of the Dreamliner. Second, the non-delivery of the 777X. And then as a third topic, you have the engine problems, the A320neo. So all engines have to be refurbished.
And this is creating, on the supply side, a significant reduction of this, what we expected in the beginning of the year and also what was communicated from Lufthansa to us. So of course, our traffic guidance is, of course, independent, but Lufthansa is a big customer. And of course, it's what they are communicating to us. This is also part of our traffic expectation and calculation. And this was, in the beginning of the year, totally different to this, what we are now hearing, so that nothing is coming on the capacity side in this year. And let me say this led to a situation that we have to change our traffic guidance more to the lower end of our range. Next year, we have to see it. So let me say one thing is clear. So the fixing of the A320neo engines, this is temporarily.
So it's just a question of time when all the A320s will be back here at the airport. This is clear. This will happen in 2025. And this will increase the supply side. Also, we expect that some of the Dreamliners then have and will come in 2025. So this is also a relaxing element. But the remaining question mark is regarding the delivery of the 777X.
Thank you. And my last question is also a little bit on Lufthansa with the partnership with Alitalia and their strategy to have multi-hubs and the willingness to develop Fiumicino, where we know that fees, I think, are lower, quite materially lower than Frankfurt.
So I was wondering if you think this could have an impact on Lufthansa's strategy and willingness to accept maybe higher tariff increase at Frankfurt in the future, and if this could create some traffic diversion from Frankfurt to Fiumicino.
Clear. And so we do not expect any change of traffic pattern regarding the acquisition of ITA Airways. But this is a strong market, Rome. But it's a market from Rome to, especially, to North America. Let me say, relatively high-income tourists coming from the US market to Italy, to Rome. This is a strong and growing direct market. And so far, Rome is an interesting inbound airport. But we don't see any, let me say, cannibalization by this acquisition for Frankfurt Airport.
Okay, thanks very much.
You're welcome.
The next question comes from Cristian Nedelcu from UBS. Please go ahead.
Hi, thank you very much.
May I ask you three questions? The first one, sorry to come back to Brazil, but just to understand your EBITDA guidance this year, the middle of the range, what does that assume for Brazil EBITDA? So do you take into consideration that EUR 20 million-EUR 25 million of EBITDA lost because the airport is closed, or do you also consider the insurance payments? So just to get a bit of a feel how you're including that in your mid-range of the EBITDA guidance. The second one I appreciate is early, but looking a bit at 2025 EBITDA and at the building blocks there. I mean, I'm doing a back-of-the-envelope calculation with mid-single-digit tariff increase, low-single-digit traffic increase in Frankfurt next year, some OpEx growth. I'm getting an EBITDA of around EUR 1.35 billion.
So could you offer a bit more color on these building blocks and how you see the range of outcomes for next year EBITDA? And the last one, if I may, continuation to my second question, the free cash flow in 2025. And again, looking a bit at what you said in the past around CapEx in 2025 and the other moving parts, doing the back-of-the-envelope, I'm getting to EUR -100 million to EUR -200 million negative free cash flow. So do you think I'm too conservative here? And if you can provide any color on the building blocks, please. Thank you.
Yeah, thank you for your questions. First question regarding Brazil. Yes, first of all, ceteris paribus, the revenue loss will lead to a direct significant reduction of the EBITDA contribution from Brazil.
On the other side, we have thought or we expect that the full insurance coverage, so up to EUR 25 million, will be paid in this year. EUR 9 million we have already received. And this is running against the revenue and EBITDA loss. So with other words, there is also a clear compensation. But as of today, I don't expect a full EBITDA compensation in Brazil. So with other words, it's a little bit, yeah, it's softer than directly. But yes, the numbers in Porto Alegre will be clearly lower than in last year. Just we are talking about 2024. Second question, EBITDA consideration, EBITDA guidance for 2025. So first of all, today, we never gave a clear guidance for 2025 because it's too early. As always, we come to a later timing with the guidance.
But I can give you also some today's indications, what will happen in next year. And also assuming on this, what we know today regarding traffic here at Frankfurt, but also traffic outside Frankfurt. And when we start with our international portfolio, we see when we go through, we have in Greece, of course, this year, a positive one-off. This will not happen again in next year. But therefore, we expect further traffic growth as well as a solid fee increase based on the inflation rate over there. And this is more or less compensating the one-off effect in Greece. So that the final EBITDA as of today will be more or less this, what we will see in 2024. When you look at Lima, Lima, we have a good momentum. The economy is doing very well. These political hiccups are over now.
So that we expect higher passenger numbers as well as solid fee increases in Lima. This will lead also to higher EBITDA numbers. In Bulgaria, we have the special effect in this year that the main carrier in the moment, Wizz Air, with three aircrafts over there, from which two are in the maintenance due to these engine problems of the A320neo. So there's a significant loss on the supply side in the moment. And this will be overcome in next year. So we will see a strong traffic increase in 2025 compared to 2024. And on top of this, also, we are going for another round of higher fees in Bulgaria next year. So there must be a strong uplift on the EBITDA side. U.S. flat or a little bit higher. And I forget something. Yeah, in Brazil, of course, better results. Why?
Because our assumption is that in December this year, all the infrastructure damages are fixed. So that up from January next year, we have again more or less the full traffic at Porto Alegre. Based on this, what I said, that I expect in this year a negative impact on the EBITDA side. So you will see then the clear increase again in next year in Porto Alegre as well as in Fortaleza, where we have normal traffic and fee increase, what we are expecting. Did I forget something outside? Yeah, Slovenia also. Slovenia is doing a good job. In this year, we have, despite passenger level, which is significantly lower than 2019, we see the same EBITDA. This is based on a good cost management as well or in combination with solid fee increases. Here we expect a continuation in next year.
So further traffic increase in combination with higher fees. So that in 2025, the EBITDA will reach an all-time high in Slovenia. So in other words, the international portfolio will also deliver next year. And then we have retail and real estate. And here we expect, let me say, normal growth rates on the parking side, on the real estate side, as well on the retail side. Modest but continuous increase. So an EBITDA improvement. Then, of course, the question is how many additional passengers we will see in 2025. This is a little bit the unknown parameter in the whole calculation. You have ground handling. In ground handling, we will see another significant fee increase for the central infrastructure in 2025. Here we are coming with a fee increase at the end of this year, then, well, up from the 1st of January 2025.
Relatively high single-digit increase, which we are going to bring into the market. On the other side, we are now having a stronger focus on the productivity side. We are bringing down the number of external workers, which are very cost-intensive. On the other side, the additional traffic in 2025, which we are going to expect, will be realized with the constant numbers of internal workers. In other words, the productivity increase will be significant in 2025 plus fee increases. This gives confidence that we see a good EBITDA improvement in 2025 versus 2024. Then we have, as a last segment, aviation, where we have the addressed fee increase, whatever it will be, but it will be a solid increase plus traffic. The traffic will be positive. But don't ask me how many percent.
This is primarily driven now from the seat capacity side of Lufthansa. This is the unknown variable in the final calculation. These are the elements. You see each and everything is relatively positive. Again, it makes a huge difference whether we have 1%, 3%, or 5%, or I don't know what passenger growth in 2025. Therefore, you have to ask Lufthansa what they think that they can deliver next year.
Yeah. Thank you. That's very helpful. Apologies to come in. Just maybe on the this is very helpful colors, so I'd really appreciate it. Just on the OpEx side in Frankfurt, I guess this year you're talking about a EUR 100 million increase year-over-year. What should be the range next year? Are you talking about EUR 50 million higher OpEx year-over-year, ballpark, or more or less?
At the end of the day, you have two things which are key for us. This is the inflation rate generally for the material expenses. Here we see that you know it from the Eurozone. So all the prices for materials are more flattish. So we do not expect further significant price increases. So this is dampening significantly the increase on the material expense side. And energy prices are relatively constant now or even going a little bit down. So then we are finally talking about personnel costs. And here the key is not the number of personnel. The key is the wage increase. And the wage increase is determined by the new agreement in the TVöD. This is the agreement with the union ver.di. And here the negotiations will start in the next couple of months.
Not done from us because this is a contract covering all the civil servants in Germany. So we are talking about three million workers or people. It's negotiated between the Minister of Inner Affairs in Germany on one side and ver.di on the other side. We are part of this whole game, but we have no influence. We have to see what is the outcome. You know the budget problems of the German finance minister on one side and trend to socialism on the other side. We have to see what is the compromise between all these elements. But I think that for today, I believe that the increase based on the new agreement will be clearly lower than just what we saw in the past based on the old agreements. Your third question, free cash flow in 2025.
Here our clear target is to realize free cash flow break-even. You have two elements which are variable. What is not variable is the cash out for interest expenses on one side and interest income on the other side. This is a given. We have also, let me say, fixed concession payments on one side. We have relatively high dividends, which we are going to receive from Antalya. This is more or less everything given. We have the two variables. You have the EBITDA on one side. Here you gave a number based on your calculation. On the other side, you have the CapEx. Here our target is not to exceed EUR 1.1 billion. Even to be below EUR 1.1 billion. If you have a normal EBITDA expectation for 2025 minus interest expenses plus dividends from Antalya minus CapEx, then it's around zero.
So this is today's perspective on this topic.
Understood. Thank you very much.
You're welcome.
The next question comes from Sathish Sivakumar from Citi. Please go ahead.
Yeah. Thanks, team. I got two questions here. So firstly, on the CapEx-wise, so you split the Frankfurt into maintenance of EUR 350 million plus T3 at EUR 600 million. And into next year, the step down, is it going to come from maintenance or the T3 itself? So how should we think about maintenance CapEx for Frankfurt into next year, given that you are planning to shut down T2? So majority of that would be related to T1, and what is it related to? And the second one is about the Munich. Obviously, Lufthansa has flagged that they have actually bigger issue at Munich Airport.
And they've said, "Yeah, Frankfurt is streamlined, works seamless right now." And they have taken capacity out of Munich, and we are located that in Frankfurt this year. And despite that, you have seen capacity or traffic guidance has come in at the lower end. What does it mean into next year if Munich is able to ramp up its operations? Do you see potential impact on next year's traffic expectation? Thank you.
Yeah. Thank you for your questions. First, CapEx allocation, I make reference to our slide number 8 in the presentation where you see the cash flow bridge. So you see what we have spent in this year, in the first half year, as CapEx. And you can see there's a clear focus on Terminal 3 with EUR 326 million. And for, let me say, CapEx in Frankfurt plus some other assets with EUR 189 million.
So looking forward in 2024, you can more or less double these numbers a little bit more because always in December, the bills are higher. This is what you can expect for 2024. And you can see that the whole CapEx program is driven by the two big expansion projects in Frankfurt regarding Terminal 3 and in Lima for the new midfield terminal. And here we have the situation that we expect or scheduled is the opening of the new midfield terminal in December on the 18th in this year. This means that the CapEx number for Lima will go down significantly in 2025 compared to 2024. So this is the main driver is Lima. But also regarding Terminal 3, so the CapEx in 2025 will also be clearly lower than in 2024.
So these two elements, these are the drivers responsible for the significant reduction in 2025 expected compared to this, what we have guided for 2024. Traffic regarding Munich. So we have no additional information or no secret information. We also could read the newspapers and the press releases of Lufthansa where they told everybody that they are going to reduce the seat capacity in Munich end of the year. So what we read is that they are going to reduce the A380 supply as well as some A350s. What are they doing with the aircraft? We don't know. Perhaps they will pop up in Frankfurt. I don't know. You have to ask. You have to address this to Lufthansa. The only thing which we read is that they are going to reduce in Munich, but not in Frankfurt. But this gives room for thoughts.
And looking forward in 2025, we are so far optimistic, not optimistic that overnight now all the not delivered aircraft will come now. But we know how valuable Frankfurt is compared to Munich. And I often raise this topic that if you compare the cost side, Munich versus Frankfurt as well on the revenue side, there's one big difference. These are the proceeds from the belly freight where there's a fact that all the bellies in Frankfurt are fully packed with cargo. And each and every international aircraft has a significant financial contribution by the belly freight. While in Munich, you are selling tickets but no freight inside the belly. And this makes a difference. And if you have to make a decision how and where to allocate your aircraft, of course, you're going to choose this airport where your proceeds are higher or the highest ones.
That's the reason why we are confident in this competition to Munich.
Thank you.
You're welcome.
The next question comes from Harishankar Ramamurthy from Deutsche Bank. Please go ahead.
Hey, hi everyone. Hari from Deutsche Bank here. Most of my questions have been asked, but just a couple of follow-ups. When we talk about Lufthansa trimming capacity for the winter and also having probably an effect into 2025, it seems that they were a bit critical of both German hubs. So my first question would be, do you see any risk to traffic from any potential reductions? And as a follow-on from there, how willing would you be to consider reducing the tariff increase, which I believe is high single digits into 2025, to drive any capacity buildup from Lufthansa? So more broadly, is your priority traffic or tariff?
Maybe on a more longer-term basis, could we get a sense for the Frankfurt traffic CAGR that you bake into your assumptions for the plan to get to a EUR 2 billion EBITDA by 2030? Thanks.
First question, let me say, at the end of the day, we are a company with a clear target to make money and to realize or to cover the cost of capital. This comes from the revenue side on one side and the cost block on the other side. On the revenue side, we are talking about prices and volumes. At the end of the day, I think the revenue side must go up.
You can go up by having higher volumes and/or higher fees, especially in a situation where the traffic, let me say, dampened by a shortage of seat capacity to answer with low fees or lower fees or, let me say, reduced increases makes no sense. Because even if you would lower the fees, the volumes cannot go up because there is no capacity in the market. Capacity comes from the aircraft. So this would be ridiculous. And so the main driver for the revenue increase will be and must be fee increases. Then we have to see what will come on top from the volume side. And we are talking, we are a transfer hub. We are talking about international traffic.
When you look on the ticket prices, whether you fly with an economy ticket for EUR 500-EUR 800 or business class ticket with EUR 3,000-EUR 4,000, our share on the production cost side is, in average, it's EUR 15. So if you are looking on a departing aircraft times two, we are talking about a cost element of, in average, EUR 30.
If you have a production side where you have 30% of your production costs covered by personnel expenses, another 30% coming from fuel, and then you have 25% cost of capital, and then you have fees for air traffic control for I don't know what ground handling, etc., and then there's a Mickey Mouse share for the airport fees, you have no impact on the flying behavior of passenger, whether your fees of departing aircraft are EUR 30 or EUR 31 or EUR 32 when you are charging for a ticket EUR 500, EUR 800 , or in the case of business class ticket, EUR 3 or EUR 3,500 . So the price elasticity is not working by cost increase or decrease of EUR 1 or EUR 2 . To believe that this would have an impact is ridiculous.
That makes sense.
You said critical of both German hubs.
Yes, you can say you can really complain about the general cost escalation in Germany. And I fully agree that all the production costs in Germany are, in the meantime, much too high. We have taxes. We have each and everything. And let me say, Germany is producing with a cost base which is not very competitive. But when you are living in if you are here and you have to fly, you have no alternative. And to go to abroad and to save some money, this is not a real alternative. And what was your last question?
Sorry. The second one was maybe partly already answered because I was questioning whether you'd be willing to reduce the tariff increase. But I think we get the answer to that. And the next one was on the traffic CAGR to 2030. Would you have any color on that out to 2030?
Especially in the context of what you've said, right, that in an environment where airlines are finding capacity harder to come by, so should we take that to mean that your capacity increase into 2025 and maybe even beyond comes under risk, right? The growth then becomes one of tariff and not traffic necessarily. Would that be a right interpretation?
Let me say, when we are looking forward to the year 2030 and you know our strategic targets with this EUR 2 billion EBITDA and EUR 1 billion free cash flow, I can tell you exactly what we expect as a traffic target in five, six years. But it's in so far a moving target. So we always said when, of course, when the volumes are higher, would be higher, which is very nice to have, then we can be more modest on the fee side, but also vice versa.
So if, for example, the CAGR would be just 2% per annum, then we have to be a little bit more ambitious on the fee increase side. So this is a little bit, let me say, two elements which both of them will lead to the same outcome. And we are playing with these not we are playing with the two variables because one variable is given. The growth is always given. We have no impact and no lever on these growth numbers, but we are reacting with the fee level. And again, whether we are increasing 1% or 2% more or less, this has no impact on the price elasticity for intercon traffic. And we are not talking about low-cost traffic.
Here, when we are talking about pure low-cost traffic, then of course, we are talking about EUR 5 difference, which can be decisive to fly or not to fly. But in so far, what some people say would be a disadvantage is that we do not have low cost. We think it's in the moment an advantage because we don't have these price elasticity which other airports have, which have a low-cost market share of 20%, 30%, or even 40%. So our customer base has a very low price elasticity.
Understood. And maybe just one last question I can trouble you with. With respect to Porto Alegre, I just wanted to make sure that I got this right. For the full year EBITDA, you would see the loss of revenues. I get that. But you would also be getting the insurance receivables.
So the insurance receivables do form part of the full year EBITDA, right?
Yes. So what we are receiving, so each and every euro from the insurance is going into the ceteris paribus in the EBITDA.
Got it. Got it. Thank you.
So let me say, in a positive scenario, we have a full. It can be that at the end of the day, the EBITDA in Porto Alegre is the same that we had in 2023. Can happen, yes. But it can also be that we are some million euro . There's some uncertainty. All along, full compensation. In the relevant year, it can be a full compensation, but it can also be lower.
Understood. Thank you.
This is part of our guidance.
So don't expect that we are saying, "Oh, now it's lower in Porto Alegre." So when we gave the, let me say, the new guidance in the middle of our range, everything of these elements is included.
Makes sense. Makes sense. Thank you.
You're welcome.
As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Andrew Lobbenberg from Barclays. Please go ahead.
Oh, hi there. Could you talk to us a little bit about the retail trends? Because you're sounding somewhat optimistic that things will brighten in the second half. But at least in Q2, the retail trends per passenger did not look good, though they were flattered by decent advertising thanks to the football. So when are people going to start spending real money in your stores? Second question on ground handling.
Have you been successful in you've told us you've put up the central infrastructure, but on the contracts that come up, are you getting the rates up for airlines, or are any airlines leaving you to go to the competitor? And what's the story with the renegotiation for the Lufthansa contract for 2026? And just the final question. We haven't spoken about the environmental protests that seem to be building some strength across Europe, but particularly in Germany. And I think you lost a day or half a day of operations earlier last month. How do you see the challenges with building environmental protests against aviation? Thank you.
Yeah. Starting with the last topic, these protests. So we made an analysis of the losses. So we said, based on the first calculation, we lost about EUR 1 million EBITDA, roughly.
Of course, we are going to file a claim against these guys for the losses. We have to see what will be the outcome. You see this general trend everywhere. We are not the first and only airport. You have to see that it is absolutely impossible to protect an airport because you have kilometers of fences, and you cannot build up a new German wall, so to say. With other words, this can happen again. There are no mechanisms to avoid this, even if you would spend a lot of money. This can happen again. This is a given. Second question, ground handling. First of all, focusing on the revenue side, we have the volume effects and volume drivers, which are reduced by the weak traffic outlook of Lufthansa. Nevertheless, we expect positive numbers. This helps to improve the results.
Second, we have, in this year, increased the fees for the central infrastructure and ground handling, 9.5%. As I already mentioned, in 2025, we are also going for a solid increase price-wise in the central infrastructure. Regarding the ground handling activities, so ramp and passenger services, we have a permanent change of contracts or renewal of contracts with the other airlines. Whenever a contract is expiring, we are renewing the contract with significantly higher fees. This works and helps us to improve the EBITDA numbers. We have still a problem with our biggest customer because here we have a long-term contract till 2026 with just 2.2% increase per annum, which is not covering the wage increases. This is a contract combined with deficits.
We try to find a solution with our customer, but we have to see the probability is very, very low because pacta sunt servanda, and so it's difficult to reopen the contract. We have the cost side. Here I mentioned we are making progress. We now have focus on productivity elements. Already in the third quarter, when you look now on the second quarter, you see on slide number 13, we had still negative EBITDA with EUR -4 million. When you now look forward in the third quarter, we expect in total or we had 16.2 million passengers in the second quarter. Now, I would say that minimum we will see 18 million in the third quarter of this year, so nearly 2 million passengers more.
Given a stable workforce or even a reduced workforce because we are now going to reduce the number of external workers, we have a significant higher revenue in Q3, while the personnel cost level is relatively flat. So in other words, we are going to expect now a clear positive EBITDA contribution in the third quarter as an expression also of higher productivity. And this is, let me say, the base for further improvements. And we have to see our target is to achieve break-even for the full year or coming close to this. And then we have to see what will be the progress in Q4. But then looking forward into 2025, we have again higher fees. We have modest volume increase. And then we have to do our homework on the productivity side, which is not based on hopes. It's based on real measures.
Again, as mentioned, the reduction of external workers. Yeah. So far, my comments to ground handling. Did I? Yeah. Everything covered or?
I just asked on retail and how you expect the retail spend to go up.
Yeah. Let me say there was a modest improvement in Q2. So you know the numbers, you can see it. And looking forward, you could also see that especially in the fourth quarter and last year, there was a good year-end rally, and we expect the same in this year. So a continuation, the numbers from Q4 last year. And having said this, this combines with our outlook saying that for the full year, the spend per pax will be higher than last year as well as in 2019. So not a big jump, but small, but given positive improvement.
Do you expect the spend per pax in the stores themselves to go up? Because, I mean, so far in Q2, the increase in retail spend, in retail rev per passenger was all driven by advertising, wasn't it? And the spending in the stores was down.
That's fair to say. It's difficult to give you a precise answer. So what we see, again, positive trends in F&B, the positive trend in advertisement media, but this comes also from football. But we see also good momentum besides football. And let me say a relatively stable performance in retail. We see the coming back of the Chinese, not the big improvement, but there's an improvement. So I would say for the rest of the year, a modest increase.
Okay. Thank you.
Welcome.
The next question comes from José Manuel Arroyas from Santander. Please go ahead.
Yes. Thank you, José Manuel Arroyas from Santander.
I have two, please. First is on Fraport Greece. I must admit, last few days of July, Ryanair put out a confusing statement saying that they were very angry at Athens Airport and at Fraport Greece that were not willing to honor an agreement by the Greek state, saying that the Greek state had approved a 75% reduction in the aviation tariffs. I honestly don't understand a word, but is this really going to happen? Are you going to see a 75% reduction in revenues in Fraport Greece? That's question number one. Question number two, it's about the consultation process. I want some more qualitative comments. Exactly a year ago, you showed us a slide in the presentation pack displaying all the building blocks and sanctions that led to the 9.5% increase.
I think at the time you even described the relationship with Lufthansa as good as it had ever been. Today, we didn't get this slide, and we didn't get the comment about the relationship with Lufthansa. Does that mean the relationship is not as good as it was last year? And is it all down to the regulator to decide on the tariff? Thank you.
Yeah. Thank you for the questions. First of all, moving over to Greece, I don't know what Ryanair is saying. So we consulted each and everything with the airline, so everything is approved. So I don't know what they have said, but what you said, the content is nonsense. Full stop. So there's no impact on us.
Regarding the fees here at Frankfurt, yeah, and so far you have to see last year, it was very easy for the airlines to take the higher fees and to push this through on their revenue side. And you see now that there's in the last couple of months, there's the possibility to pass it through is in the moment, or in the moment, it seems to be it's exhausted. So you cannot any longer just take it, and each and everybody is accepting higher ticket prices. And this creates problems for the airlines, and you can hear it, you can read it, and you know it from the numbers. And so the willingness just to sign what we wanted to see is lower than last year.
I think everybody can understand this, but this has nothing to do with the relationship is not on the same level like last year. So this is a natural behavior. If I would be a board member of Lufthansa, I also would complain about higher fees. Whenever your cost items are going up price-wise, you have to complain. So this is the name of the game. Hello?
The next question comes from Graham Hunt from Jefferies, please. Go ahead.
Thank you very much for the question. Just two from me. First of all, could you remind us of your thinking around dividend payments from Fraport up to shareholders? Are you still aiming for I think there was a soft target in next year if you turned net debt multiple. And then second question on CapEx guidance. Just to clarify, that doesn't include the EUR 100 million in additional in Brazil, right?
Is that because you just assume mutual impact on the economic rebalance? But would that create some kind of mismatch effect if the rebalance isn't all cash-based in 2024 or 2025 on your existing guidance? Thank you.
So first of all, I have to say it's very difficult to understand you. So I tried to interpret what it could mean. So I heard something about dividend and dividend policy, and perhaps I give you an answer not knowing what was your concrete question. So dividend, so we always said that we are starting to pay dividends out of a positive free cash flow. So normally, we have our ratio saying that 40%-60% out of the net income will be paid as dividends. This is still our policy, but we are not creating shareholder value when we are increasing the indebtedness to pay dividends to the shareholders.
So, clear message, but this is not new to the market that at that point of time when the free cash flow is clearly positive, then we are starting to pay dividends to the shareholders. And I hope that I have covered your question by this statement. So then it was CapEx, it was very difficult. I'm looking to the colleagues who—I can—that's the one.
Is the line any better? I can try again if the line is better now.
Does it include? No. No. Let me say all the numbers regarding CapEx, it's without Porto Alegre because, again, the EUR 100 million is a rough guess. I hope that at the end of the day, perhaps it's lower, but this is today's assessment and analysis.
And we have to see, again, when we are going to have the cash-out effect, is it more in this year or something in the next year or combination? Nobody knows. And then we also have to see is it a direct cash compensation. So we have so many unclear and open topics. So all what I—again, at the end of the day, there will be a full compensation, but in all guidances, we have not included CapEx outflow for Porto Alegre, as well as we do not have included any compensatory effects. And at the point of time when we have a clear and transparent view, of course, we immediately are going to inform you how the compensation—what is the outflow, when does it take place, and how the compensation will be realized.
Thank you.
Further questions?
We have a follow-up question from Cristian Nedelcu from UBS.
Please go ahead.
Thank you very much for allowing me to add something. The first one on retail and real estate on the second half EBITDA. So your guidance of more than EUR 400 million EBITDA seems to imply more than EUR 220 million of EBITDA in the second half. If I look last year, I think you've done around EUR 190 million of EBITDA in the second half of 2023. So I'm just trying to understand this increase of EUR 30 million a year. We have low single-digit traffic increase, low single-digit increase in spend per pax. OpEx is increasing. So what is causing this meaningful EBITDA increase in the second half of this year, the EUR 30 million more or less? And the second one, you mentioned at the beginning that part of the rebalancing in Brazil could be under the form of not paying the concession payments.
Could you remind us ballpark, what is the annual concession payment in Porto Alegre? Is it EUR 5 million, EUR 10 million per year? I'm trying to understand if at the end of the day, this EUR 100 million potential CapEx cost will be recovered over five, six, seven years by not paying the annual concession fees if that's a potential scenario. Thank you.
First question, retail. So first of all, when you look on the EBITDA contribution, first half year versus second half year, there's always in the second half year, the EBITDA contribution from this segment is always higher. This was always in the past. And this will happen again in this year. We have a very strong third quarter traffic-wise with about 18 million passengers. You will see a strong impact from parking revenues. Also, we are going to increase the parking fees in the third quarter.
So we have a volume effect in parking. We have a price effect in parking. We have some increases on the real estate side based on contractual increases, plus a further improvement on the retail side. And this combination of these three elements will lead to this, what we gave as a guidance for the full year. And regarding the concession payments, we have for both airports, we have a variable concession payment of 5% of the revenues, so a revenue-related fee. And what you said is fully clear. So with this, just with the release of the fees, it would take a long time to have a compensation. This is only just one element.
Again, our focus is on a full cash compensation immediately, but it can be that it is a set of elements, for example, a cash compensation plus a release of fees plus higher fees in 2025. So let me say there's a lot of variables with which you can play. And at the end of the day, all the elements together must lead to a full compensation. And now we are in the negotiations with the government. And again, if life would be, yeah, if you could choose, of course, we would say 100% cash compensation. But I cannot say, "Yes, we are going in this direction. It takes two to tango." And so it can be a combination, but it will be a full compensation.
Yeah. That's very clear. Thank you very much.
Welcome. Ladies and gentlemen, that was the last question.
I would now like to turn the conference back over to Christoph Nanke for any closing remarks.
So thank you for your good questions. So if you have later any further ones, please contact us in IR, and I wish you a good rest of the day. Thank you so much.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.