Good day, and welcome to the Fraport Q3 2026 question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would now like to hand over to Florian Fuchs, SVP, Head of Finance and IR.
Yeah, thank you very much, Sharon, and a warm welcome also from my side. I hope you had the chance already to listen to the pre-recorded presentation in the morning, and right now it's time for the question-and-answer session. With me at the table, we got Dr. Stefan Schulte, our CEO, and Dr. Matthias Zieschang, our CFO. As always, we kindly ask you to limit your question to the number of two so that everyone in the line will have the opportunity to raise some questions. With this introductory remarks, I'd like to hand over and hand back to Sharon in order to moderate the Q&A session right now.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to our first question. The first question today comes from the line of Carlos Caburrasi from Kepler Cheuvreux. Please go ahead.
Hi, Stefan, Matthias, and Florian. Thank you for taking my questions. I'll go ahead with the two from my side. First, I wanted to focus on free cash flow. I was just wondering if you could provide some additional visibility on the 2026 guidance. At the beginning of the year, you were aiming for around EUR 200 million, and now with only Q4 left, are you still comfortable with that assumption. Additionally, can you comment on some initial thoughts going into 2027 now that the winter schedule is in place. Second question, I was wondering if you could walk us through the latest developments of the negotiations with Lufthansa. I mean, when should we expect any news, and how comfortable are you with this situation. Thank you.
Can you start with—
Which way do we want to do it? Thanks for those questions. Let me start with Lufthansa. Very clear answer, yes, we are comfortable. Second answer, I would assume another two to four months before we can give you final clearance on that, but it's running the right direction. Regarding 2027, take your answer a little bit broader. Probably was just on free cash flow, I do not know exactly, but if I take the winter schedule, if I take the announcements we have on the intercon traffic and on new destinations from Lufthansa, but we also know from Condor, from other airlines, I am slightly positive on 2027 from today's point of view, but it's too early to give a guidance. But I am slightly positive regarding traffic also in Frankfurt. On free cash flow, Matthias?
Yeah. In addition to this, free cash flow performance in 2026, we see as of today the numbers for the first three quarters, +EUR 93 million. This is absolutely in line with our expectation. We have on slide 43 in our presentation the bridge how to explain what will be the outcome regarding free cash flow for the full-year 2026. When we go through the several items, you see the EBITDA up to EUR 1.5 billion. This is confirmed better than previous year, below EUR 1.5 billion, so we are absolutely in range. Regarding brick and mortar CapEx, I think based on the Q3 numbers, it's absolutely clear that we will fulfill our commitment to deliver EUR 900 million. That's clear. All the other ingredients are stable. Interest expenses are stable. Taxes are stable. The only variable development on one side is working capital changes, which we cannot control.
We have always ±EUR 100 million deviation in both directions, and a little bit dividend proceeds from Antalya. But let me say, the range of uncertainty is very low, so that we will end up as expected or as guided, low three-digit million amount. I would say as of today, around EUR 100 million, perhaps a little bit more. We have to see depending how the outcome of working capital is.
Okay, very clear. Going into 2027, Matthias, do you have any kind of visibility, or still too early to give a word here?
It's too early. Only one thing we can already say is also as promised and guided, EBITDA will be clearly higher than 2026. CapEx will be clearly lower. These are the most relevant drivers for the free cash flow developments. One thing is also clear, free cash flow in 2027 will be clearly above the 2026 level. Coming with our Q4 numbers then for the full-year result, we will give you a detailed guidance for 2027.
That's good. Thank you.
Thank you. Your next question today comes from the line of Cristian Nedelcu from UBS. Please go ahead.
Hi. Thank you very much for taking my questions. The first one is on Terminal 3 retail spend per pax. That was up 30%, 40% in Q3. Could I just confirm, is the target there still 50% higher than what T2 used to generate? To what extent moving the Condor passengers into T3 could be a bit dilutive to what you are seeing today? My second question, if you allow me, you flagged in the past that you may be looking at Greece or Egypt at the potential tenders there, but it was unclear if you will bid or not. I do not know if you could offer us an update and maybe the timeline there if indeed you will participate in those tenders. Thank you.
Let us start with your retail question regarding Terminal 3. First of all, we are relatively satisfied with the performance in our new Terminal 3. In total, we have an upside of 30% compared to the T2 results. This is lower than the before predicted 50%. In September, in this month, we saw 40%. This is good. Now we have to look whether this is a step up in direction of 50%. We see brilliant results in media. We see good sales in fashion as well as F&B. We see a relatively poor performance in the pure retail business, but in total, we are happy with the 30%/40% in September. We are working to improve some things. Regarding your question, what will be the impact of Condor? These are relatively high value passengers on the aircraft.
With other words, we even see an additional chance when they are totally moving from Terminal 1 to Terminal 3.
Let me just add two comments on that. If you go through the numbers on aviation, but if you also go through the numbers on retail, those numbers are not really satisfying. The main reason behind is that we, as a lot of other airports, but Frankfurt and those big hubs with a high number of transfer passengers and a high number of non-Schengen passengers, we had adverse effect on the Entry/Exit System introduced by the European Commission with long queuing times, like Lisbon, I know, like Amsterdam, like Paris.
But the typical German behavior of the federal police, and I am not blaming the federal police, but it is the DNA of Germany, is to set up this regime really one-on-one, really very formal, very official. So we have queuing times because with the Entry/Exit System, you have to check all biometrics of all non-Schengen passengers coming in, going out.
That means, because of the long queuing times, we had much more staff intense on aviation. It's a small double-digit million number, and we had less time for shopping and F&B services in general. I am optimistic for next year because we changed the infrastructure. We brought in much more control units for the federal police. We are on the way to bring in additional areas where we can pass through passengers entering Germany or leaving Germany. So it will be not perfect next year, but much better than this year. All we need in addition is more nations going on the fast lane there, on the EasyPASS, as we call it, states, passengers, or Canada or Singapore, something like this, so that the queuing are less than this year and that we need less people for this to organize all the queuing.
In general, we are really unsatisfied by this European Entry/Exit System because I do not know any system worldwide which is online checking with all the data pools of Interpol and so on. If you take the situation in the States, if you take in U.K. or wherever, you have a pre-registration, and then there is a risk assessment, and then they take one or the other passenger out for a longer check, but not as it is done in Europe with an online check just in time whenever the passenger is arriving before any pre-registration. We are working on this. We are lobbying against this, but to change this in Europe, I am only partially optimistic, to be quite honest. So there will be two positive effects next year on this because it is on a way to be differently infrastructurally organized.
Regarding your second question, Greece and Egypt, to give you an update. Difficult to say. The process started in Greece on the small regional airports, but just to give you the information, we do not expect any upfront payments there or any purchase price for the concession. It is more cost-compensating unit with a more professional management of the airports. On Egypt, we have been qualified in the first round, that is right, but then we have to see the tender specs. We do not have them up to now whether we will participate or not, and if we will participate, it will be minority. So that is much early. I would expect on Egypt over the next 12 months probably an update, not much earlier.
Thank you very much.
Thank you. We will now take the next question, and the question comes from the line of Andrew Lobbenberg from Barclays. Please go ahead.
Oh, hi there. Can I just come back to the retail? Sorry. Thank you for the explanation on the EES. That makes a lot of sense. I was just wondering if you can tell us what happened to the— I mean, you've told us that the spend in T3 was 30% above T2. Just curious to see how T3 compares to the spend in T1, because that's the block of passengers we'll be moving with Condor, yeah? Also, given the challenges of the EES, how is the retail spend in T1 on a year-on-year basis? Then my second question would be just back to how your thinking evolves around Terminal 2 and mothballing it or keeping it mothballed, and whether the decision of Lufthansa to back the T-Pier in Munich, does that delay your need to do any spending on Terminal 2 in Frankfurt?
Thank you.
Thanks. Let me start with the question regarding Terminal 2. I would expect at least another two years on detailed planning, and we go through this planning phase to make all the necessary steps ahead. We will not start with any construction on Terminal 2 before the year 2030, maybe even just 2031. It's targeted at the moment to get back into operation mid of 2030 years. We can then decide in two years whether we start or whether we delay it. But in principle, it's a very good decision to go this way because in the long run, you will need this capacity. If you also look at the recovery rates compared to pre-corona, we are somewhere on 90%, yet now in winter on 86%, something like this.
But we are still on the same level or even better than Munich, so there is no shift from Frankfurt to Munich. It is more on the one side, we have this topic with the German aviation tax, which is the highest in Europe, or more or less the highest in continental Europe at least. This disadvantage is the second point, a lack of new intercontinental aircrafts. You got the message from Lufthansa that new intercontinental aircrafts are coming in over the next two years. Yes, they have to replace a lot of old ones, but they can also take out or to reduce at least the buffer they had. There will be some growth, and I am quite optimistic that there will be further growth also for Frankfurt, also for the German market in general in two, three, four years.
It is a recovery if all those reforms in Germany are taking place, and we get a little bit more dynamic coming out of the structural recession we have these days. The structural topics with automotive industry and other industries, and there are additional motivations and additional spending money. Terminal 2, there is enough time to decide. At the moment, we are just in the planning phase, and more we are not focusing on at the moment.
Regarding retail and your questions regarding the numbers. In total, as mentioned, we are flat in 2026 compared to 2025. Again, T3, as mentioned, 30% higher on a like-for-like comparison to T2. In Terminal 1, just carved out from the total numbers, we are about 7% below previous year, so we have a full compensation of the reduction in T1 by T3. The reasons why we do not ended up with +50%, I mentioned also a lack of purchasing power of German passengers. But one thing I forgot to say, when we made our calculation and saying we expect 50% +, we had a sustainable structure of passengers in mind, which we thought for a decade in Terminal 2. Then we had the war in the Iran. Overnight, we lost up to 80% of the Middle East traffic temporarily.
Having in mind that these passengers have deep pockets, they have a strong purchasing power, significantly above average. That is the reason why we suffered so much in Q1, and you could see a stabilization in Q2, and then in Q3, full impact from the new shops and F&B outlets in Terminal 3. But again, with still a significant lower number of Middle East passengers. With other words, looking forward, we think that there will be a full recovery of these passengers with higher purchasing power, which could give us support to achieve this target of 50%, and also from the move from Condor passengers from Terminal 1 in this modern state-of-the-art Terminal T3. This should also give us an uplift for the numbers, so that looking forward, we still believe that the 50% should be achievable.
Thank you.
Thank you. Your next question today comes from the line of Harishankar Ramamoorthy from Deutsche Bank. Please go ahead.
Yeah. Hi. Good afternoon, everyone, and thanks for taking my questions. Just a couple from my side, if that's okay. Could I ask regarding the capacity going forward? You did allude to the weakness in the winter season, but how should we think about how summer 2027 shapes up in Frankfurt, as well as in, say, regional Greece? Are you seeing any weakness in regional Greece as well, and how would you expect that to evolve? Secondly, just maybe going back to the free cash flow position, a pretty strong quarter in Q3. Would I be right in thinking that Q4 should see further benefits from reduced CapEx and perhaps even better working capital? So, you should be on track for, say, EUR 130 million, EUR 140 million? Thank you.
For your first question, a clear no. We don't see any weakness on that. Our business, in principle, is more and more seasonal. The winters are suffering because they are weaker. The summers are getting stronger. In total, for next year, as mentioned from today's point of view, it's not a guidance, it's just the best estimate I have. I would say, yes, there will be a slight increase.
Regarding your question, how free cash flow in Q4 will develop, first of all, when you look on Q3 in total for the first nine months, we have a total brick-and-mortar CapEx of EUR 651 million, EUR 170 million less to previous year. You know our guidance, EUR 900 million. We are convinced to make more or less a point landing regarding the EUR 900 million. So, we have a difference of EUR 250 million in the last quarter, and we think this is absolutely realistic. Whether it is EUR 10 million, EUR 20 million less, we have to see. But again, we are steering on the EUR 900 million, and so we have, compared to previous year, we have to end up with a lower CapEx in Q4 of EUR 50 million, and we think this is absolutely realistic.
Understood. Thanks.
Working capital, this is what we cannot control, just to finalize. We had in the first three quarters, we are still negative. So with other words, there is some probability that this, because this is an up and down, this is like white noise, to say, over time, and it can be that we will end up with a better tailwind from working capital. But again, this is up and down.
Be a little bit more optimistic. I know Matthias already for years. He will work in the fourth quarter on working capital.
We will do it.
Next question. Thanks very much.
Thank you. Your next question comes from the line of Marcin Wojtal from Bank of America. Please go ahead.
Yes. Thank you, and good afternoon. I've got two questions. The first one is a bit more high level. I believe the German Chancellor, Friedrich Merz, stated in a recent interview that perhaps the government could look into reducing aviation taxes in Germany further, but there wasn't really that much detail. Could you share your view? Is there something happening behind the scenes? Is there something to look forward to with regards to these aviation taxes? My second question, apologies, this is just a follow-up on this cash flow discussion. I mean, you seem to have said that cash flow will be in the full-year around EUR 100 million, but then you already generated EUR 93 million in the first nine months, and you are now saying that there should be some cash flow from the working capital as well in Q4.
Isn't the guidance of EUR 100 million only, is it just a floor, or is it very conservative? Could you explain that a little bit?
On the first question, yes. I was really glad that the Chancellor mentioned this yesterday. All the discussions we have on different levels, a lot of different parties, not just aviation, but also broader aviation industry going beyond, I hope this will help. But I can't promise you anything at the moment. It could also take another 12 months or even more than that. That's very difficult, but it's absolutely clear. If you look at the aviation industry, if you see the burden for the airlines, if you see the development and the reduced connectivity on a lot of airports, the government has to do something, and he is at least is willing to do something. That was in the comment yesterday, but you need a coalition.
We are really putting some pressure on this, trying to convince them that this would be even good for the German economy. Let's stay optimistic on that, but it will not be something for the next 6-12 months. It will be over the next one to two years, if I stay optimistic.
Regarding your free cash flow question, when we gave the first indication or guidance the beginning of the year, everybody expects, and we internally, based on the information which we gathered from the airlines, we saw a traffic increase here in Frankfurt up to 3 million passengers, and now we are flat. With other words, we lost a significant amount of money on the revenue side. Nevertheless, our guidance was based on traffic 2 million-3 million higher than this what we have now. Nevertheless, we will show you an EBITDA above previous year, that's for sure. But you can see that in the beginning of the year, our internal expectation about the final EBITDA outcome for the full-year was higher than this, what we are now delivering, because we have a lack of 2 million-3 million passengers.
That is the reason why perhaps internally the free cash flow consideration for the full-year was higher, because we had this calculation 2 million- 3 million more passengers. Focusing now on a EUR 100 million amount, I think this is not conservative. This is what we see as a realistic point, plus-minus, of course, depending from working capital. But I think this is a range where we will end up.
Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone and wait for your name to be announced. We will now go to the next question. Your next question today comes from the line of Dario Maglione from BNP Paribas. Please go ahead.
Hi, good afternoon. Thanks for taking my question. I have four. The first one, on the ground handling contract with Lufthansa mainline, can you maybe repeat what you mentioned about how the negotiations are going and when do you expect to provide the market with an update? Question number two, are there maybe some cost savings that you are looking at if traffic continues to be a bit weak in Frankfurt? Question number three, can you give us maybe an update of the traffic outlook in Brazil and Lima, given the change in the political situation and as well as the high jet fuel price? The final question is on the management succession plan. Can you give us an update on, I think there was a search for a CEO, maybe by the end of the year? Thanks.
Thanks very much. On ground handling, I gave the update that we expect news over the next two to four months, because the contract is running up to March next year, and up to that point, we should be through with the negotiations, but the negotiations are running quite fine. We are, I would say, on the right track. As we always promised. On cost savings, let me put it this way. The less you have or the more you are influenced by the general German situation on a lot of uncertainty, on conjunctural and structural restructurings in Germany, the less you have, with German aviation tax and all those topics, the less you have growth potential. There will be some growth, but it will not be the big booster. The more you have to work on the cost side, and that is what we do.
Where we have a clear focus for the next years to have a higher performance, to be more efficient on that side, using AI on the one side, running tests already on autonomous vehicles, but also to be very clear on managing costs very, very intense, and to have a very high cost control. That's the thing, what we mentioned with this, I think we can give you more updates there in March, what we are expecting there, but it will be an absolute focus for the next year or the next years. On Brazil and Lima, if you take the elections, they just started, so the traffic growth has been quite fine. In the third quarter, we expect to go ahead this way also for the near future. On my succession, the CEO search is running.
I would expect that somewhere over the next two or three months, we can give you also an update on that one. You know that I'm leaving end of August next year, and I hope in the next two or three months, we can announce who will take over the responsibility as CEO. So it's running quite well. Everything is fine.
Yeah. Thank you.
Thank you. Your next question today comes from the line of Elodie Rall from JP Morgan. Please go ahead.
Hi. Yes. Thanks for taking my questions. On interest expenses, I was wondering if you could give us some color on your expectations into Q4 and next year, if you exclude capitalized interest, obviously, and how this will weigh on net income. The guidance that you gave on net income today that you confirm, can you just precise if it's including or excluding the gain from MAS? That's one question. Maybe I can just follow up on the previous question on your upcoming departure, obviously, in July. What about our dear CFO? How much longer can we expect to have him stay with us? Thank you.
Starting with interest. You can see in our slides that as of today, we have a total cost of debt of 3.5%. We have a rollover of less than 10% of our indebtedness year by year, so our interest exposure is limited, which is good because whenever we go for new long-term financing, of course, we have to pay all in more than 4%. There is some upside, which we will see in the next up to 18, 24 months. We have a very detailed scenario calculator in our house where we can play with interest curves in each month looking forward. We cannot tell you what is the interest curve, but we can tell you, given a special interest curve, what will be the outcome for our interest expenses.
Based on the simulation, assuming that the interest rate curve is more or less flat or a little bit higher than as of today, you will see in the next 18 up to 24 months, a slight increase up to 4.0 or 4.1. This is a maximum, and then we are running flat on this level cost of indebtedness regarding the gross debt which we have in our balance sheet. In absolute numbers, I think if you look now on the Q3 numbers, just interest expenses on— Where is it? On slide number— Just a minute—
—32, you have to think.
—30. What is this? 32. Thank you. You see that we had EUR 122 million. This is insofar remarkable because this is without IAS 23. So the capitalized interest for our expansion program is gone. The last bookings we made in Q2. If you take the EUR 122 million, which includes also roughly between EUR 15 million and EUR 20 million for this IFRIC 12 effect, so these are interest expenses not combined with cash out, you can take the EUR 120 million times four, and then you have looking forward a stable interest expense for the full-year. If you want to know what is the cash out, it is very simple. Take the EUR 12 billion times 3.5%, 3.6%, then you have cash out interest. Regarding the proceeds, you can take our liquidity of EUR 3.8 billion times 3%.
To take your other two questions, I am quite optimistic that we will make the guidance excluding MAS. We will get it done at the end. I think that is the clear message. Second, if I look at our CFO, my feeling is, I do not know exactly, but he is looking like 55 or something like this.
82.
Come on. His actual contract, his contract is running up to August 2028, if this was your question. Everything else—
Okay
—the Supervisory Board will decide in due time.
Glad to hear. Thank you.
Thank you. Your next question today comes from the line of Max Dolbey from Green Street. Please go ahead.
Yeah, thanks, and good afternoon, everyone. Just a follow-up from me on the international portfolio, please. So you added two regional airports in Brazil and Greece, which only handle a few hundred thousand passengers compared to the portfolio of nearly 70 million. I was just wondering generally, how attractive are these small regional airports in terms of returns and risk compared to the existing portfolio? Is it just about leveraging the existing network, or are they attractive investments on their own? How are they worth the management time? Thanks.
Good question. Thanks very much. You are absolutely right. These are two small airports that can be handled just by the existing people in Greece on the one side and in Brazil on the other side. We have our management team, we have our operational team over there, so there are no additional people, no additional staff, no additional complexity. in the longer run, these two airports can be very attractive. We would expect over-proportional growth potential over there, but of course, it is not changing the complete picture. That is absolutely right. These are two smaller additions in an attractive region, and that is it. Risk potential is very limited.
Perhaps in addition to this, what Stefan said, we have, looking forward, we have a lot of chances. We do not see any risk, also due to the fact that the additional airport in Brazil is fully consolidated. No risk. In Greece, also no risk, but here we have 50%, but no formal control. So it is at equity treated. You do not see it in our numbers. And we expect and see a huge potential on the Peloponnese regarding tourism. So this bringing a huge uplift in the next couple of years. And whenever we feel fine with this, we have an option to get full control, and then we have the full consolidation. So when the numbers are so brilliant, or that we think they are so brilliant, then we are going to use the option, then we have an EBITDA kick-in of this element.
With other words, there is absolutely no downside, but a lot of upside potential looking forward.
Okay. We know you are bidding on Greece, but we should potentially expect more of these smaller regional airports in Brazil added to the portfolio in future?
No. In principle, no. The small airports, regional airports in Greece, you are right, but this is a very special case because we have such an exposure in Greece already that we cannot stay out of that auction, also due to relations with the government and so on. But these are not airports which will really change the picture. These are so small regional airports, where I could even say it is more to develop those airports in the favor of Greece, but we will only do it if it is profitable for us.
Got it. Thanks very much.
It's not a new business strategy. Please don't understand it in a wrong way.
Absolutely not. Understood.
Thank you. As a reminder, if you wish to ask a question, please press star, one, and one on your telephone. That is star, one, and one to ask a question. We will now go to the next question. Your next question is a follow-up from Cristian Nedelcu from UBS. Please go ahead.
Hi. Thank you very much. I have a few, if you allow me, a few small ones. Could you please tell us on the Lima regulation, the timeline, and your latest expectations there? Secondly, I think that the T3 OpEx seems to me much better than you were expecting. So maybe an update on the incremental T3 OpEx versus T2, what is the run rate or the annual run rate? Also a brief on wage inflation in Frankfurt and overall inflation in Frankfurt next year. What is a good number to have in mind? The last one, the Antalya dividend. What is roughly the Antalya dividend received this year, and what about next year? Thank you.
Take the first question, Matthias, then the other questions. On Lima regulation, I hope over the next three months we can give you an update, and hopefully it is settled then, regulated on the X factor. That is the most important thing there. Up to now, it is too early. Even the government has not put their position on the table, so it could take another three months to receive, but I hope for the full-year figures in March, we can give you an update on that one.
Yeah, your other questions. First of all, Antalya dividend, difficult word. So in this year, we expect in total EUR 60 million-EUR 70 million. Next year, we have to see whether it is EUR 20 million. So this is today's expectation regarding dividend proceeds from Antalya. T3 OpEx, I think you are right, or your impression is right. So we are with the OpEx lower than expected. Now we have to see, because if you take over new infrastructure, you are well prepared, perhaps even you are going with a little bit too many resources in such an operation. Now we are going to optimize. On a today's perspective, we think that it is equal and perhaps even could be a little bit better in the future compared to Terminal 2.
We are working on this topic, and I think next year, we have already a track record of one year, and then we know what is the exact level, whether we are lower than T2, and there is some probability that this could be the case. Wage inflation, very difficult because we are waiting for the new negotiations regarding the contract for the civil servants called TVöD, Tariff Agreement for Civil Servants. Let me say, people say it will be a two-year agreement or the result, just subject to negotiations. What we hear is that could be on an annual basis an increase between 3% and 4%, but at the end of the day, nobody knows. But this is what we think could be a range, 3%-4% per annum.
Thank you very much.
Thank you. There are currently no further questions at this time. I would now like to turn the call back to Florian Fuchs.
Yeah. Thank you everybody on the line. Thanks for the question and the lively discussion. We remain at your disposal in the IR office and look forward being in touch with you either on the phone, video calls, or on the road. Speak soon, and bye-bye.
Bye.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.