Fraport's profit hit by higher wages, location costs in Frankfurt Airport

By Amir Orusov

(Reuters) -Frankfurt Airport operator Fraport's core earnings fell more than expected in the first quarter, hit by wage increases and high location costs in Germany's busiest airport.

The German aviation industry is facing several challenges from worker protests to high taxes and fees. Those increased costs have prompted airlines - including low-cost carriers Ryanair, EasyJet and Lufthansa's Eurowings - to cut services in the country.

"The Fraport Group has made a cautious start to the 2025 fiscal year," it said in an earnings statement on Tuesday, confirming its outlook for the full year.

Fraport's shares were down 2.6% as of 0753 GMT.

The group, which also operates 30 airports outside of Germany, including seven in the U.S. and 14 in Greece, said its earnings were weighed down by personnel wage hikes in Frankfurt and an increase in German regulatory costs at the start of 2025.

Jens Bischof, the president of the German Aviation Association, in February said that record-high location costs for airlines could threaten Germany's competitiveness in the sector.

"Fraport cost pressures remain a headwind, particularly if passenger outlook weakens on slowing transatlantic and business travel out of Frankfurt," Jefferies analysts said in a research note.

Jefferies had previously raised concerns about deteriorating demand for transatlantic travel, which it said contributes up to around 15% of Frankfurt Airport's total traffic.

Global airlines are highly exposed to risks of slowing economic growth amid increased levels of geopolitical and macro concerns, including those related to U.S. President Donald Trump's trade policies.

Fraport's earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 16.5% to 177.5 million euros ($197.3 million) in the first quarter, missing an LSEG consensus of 186 million euros.

In the same period last year, it had benefited from positive one-off effects such as a COVID-19 compensation payment in Greece and the earlier timing of Easter travel.

($1 = 0.8997 euros)

(Reporting by Amir Orusov in Gdansk, editing by Milla Nissi-Prussak)