Fraport says Germany’s high costs slow travel recovery at Frankfurt airport

(Reuters) -Frankfurt Airport operator Fraport posted on Tuesday a 2% core income miss and a modest increase in its passenger numbers during the third quarter, as high location costs for German carriers hindered a recovery in travel demand.

Shares in Fraport fell as much as 3% in morning trading.

Fraport said its core income (EBITDA) rose slightly to 483.7 million euros ($526.12 million) in the third quarter, which was 2% below a consensus estimate cited by Jefferies.

Passenger numbers in Frankfurt in the quarter rose only by 1.8%, coming in 13% lower than levels seen in 2019 – before the pandemic brought global travel to a standstill.

Despite the company confirming its full-year outlook, a rising cost base and slowing passenger growth at Frankfurt Airport raise concerns about its future growth trajectory, says Oliver Wojahn, an analyst from mwb research AG.

COSTS, DELAYS IN BOEING DELIVERIES

While most other European markets have overcome crises and achieved new records in recent months, high location costs make Germany lag other markets in Europe in terms of passenger numbers, Fraport CEO Stefan Schulte said in a statement.

Last month, Schulte said the airport would reach its pre-COVID passenger traffic levels in 2025 or 2026 as Frankfurt Airport’s recovery largely depends on Boeing deliveries to Lufthansa <LHAG.DE>. The latter accounted for more than 60% of Frankfurt’s passengers in 2022.

It was not clear when Lufthansa’s capacity issues, which forced Fraport to cut passenger outlook in August, would be resolved, J.P.Morgan said.

German labour union Verdi warned last week of job losses, as airlines leave the German market due to location costs.

In October, Aeroports de Paris reported results in line with consensus, while Spanish peer Aena said it saw a record number of passengers across some of its terminals.

($1 = 0.9194 euros)

(Reporting by Amir Orusov; Editing by Sherry Jacob-Phillips and Bernadette Baum)