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Press article fom  18.07.2005

Break-even point in sight

Frankfurt-Hahn, 18th July 2005. Things are going "according to plan" for Flughafen Frankfurt-Hahn GmbH with its half-year results - for both the traffic figures and for the economic results. This was announced today at a press conference in the Airport Forum of Frankfurt Rhine-Main Airport by Jörg Schumacher, Management Spokesman, and Stefano Wulf, new Commercial CEO, who has been working at the airport since the middle of April. The main focus was on the subjects of investment and expansion for safeguarding the economic centre and employment generator Frankfurt-Hahn Airport. With more than 1.5 million passengers, Germany's only truly low-cost airport exceeded the result for the same period in the previous year by 13 percent. Freight handling showed an increase of 54 percent for pure airfreight. The number of flight movements rose by twelve percent. Turnover grew by 26 percent to over 17 million euros. The operating loss (EBITDA = Earnings Before Interest, Tax, Depreciation and Amortisation) was reduced by three percent to 2.8 million euros. The break-even point, which is expected in 2006, and profitability, which is planned from 2008, are moving significantly closer with these figures.

Development in passenger and cargo traffic
"We are fully satisfied with our half-year results with regard to the further development of the airport," said Management Spokesman, Jörg Schumacher. The expansion plans of the largest low-cost customer, Ryanair, have played a significant role in this. "The various forecasts for the future low-cost market in the aviation sector show that our customers throughout Europe are the most important", continued Schumacher. Ryanair is the only low-cost airline in Europe that is making profits – currently about 269 million euros net in the year 2004/2005. "This, of course, also means more positive development for Frankfurt-Hahn Airport." In April of this year, Ryanair stationed its sixth aircraft at Hahn, and announced even more routes. Ryanair currently flies to 23 destinations, and, in the winter, the number will increase to 28 destinations in 10 European countries.

But Wizz Air too, which according to the airline, is the largest low-cost airline for Central and Eastern Europe, has looked very impressive with regard to positive development in the Eastern European aviation market. "What Ryanair has done and is doing for our region, Wizz Air is now doing in Eastern Europe. Look, for example, at Katowice Airport in Poland – in 2003, about 258,000 passengers used Katowice Airport (with LOT and Lufthansa); but now, from January to April 2005, more than 261,000 passengers have already been carried, which means a growth of 141 percent compared with 2003. Wizz Air started flight operations from Katowice for the first time on 19th May 2004." Wizz Air began operating from Frankfurt-Hahn on 27th March 2005 with four flights a week to Budapest, Katowice and Warsaw, and recently announced an increase in frequency and the number of routes. As the third low-cost airline, Iceland Express has been occupying an attractive niche since 21st March with three weekly flights to Reykjavik. In the passenger sector, Flughafen Frankfurt-Hahn GmbH expects about 3.5 million passengers for the entire year.

The second means of support - air cargo – is a very important growth generator, especially with regard to the economic development of the airport. With more than 43,405 tonnes, i.e. 54 percent growth in flown cargo, Frankfurt-Hahn Airport continues to position itself firmly as Germany's fourth-largest freight airport (after Frankfurt, Cologne, and Munich). Including road feeder traffic, a total of 104,036 tonnes was handled in the half-year 2005, which means a growth of 15 percent compared with the previous year. Evidence of Frankfurt-Hahn's strong position in the world's cargo market is provided by the new arrival of British Airways World Cargo in the last half-year, Air New Zealand Cargo in April of this year, and the increase in cargo flights by Aeroflot, Russia's largest airline, with a share of about 64 percent of the freight arriving at the airport. The operating company has a total of 9 scheduled cargo airlines, which above all value the 24-hour operation and flexibility, especially in the allocation of slots. For the whole year, the operating company expects about 235,000 tonnes of handled freight, including road feeder service (pure air freight about 95,000 tonnes).

Economic development and forecast
Germany's only truly low-cost airport has created an excellent impression by again achieving positive economic results in this half-year. Turnover grew by 26 percent to 17.4 million euros (half-year 2004: 13.8 million euros). The loss (EBITDA) was reduced by three percent to 2.8 million euros (2004: 2.9 million euros). "The non-aviation sector – income from infrastructure charges, rents and parking – with a turnover of 5.7 million euros and an increase of 35 percent, is one of the largest growth factors of the airport. Business with the airlines accounted for about 22 percent," reported Stefano Wulf, Commercial Director of Flughafen Frankfurt-Hahn GmbH. Income from the non-aviation sector has tripled in only four years from 2001 to 2004 (2001: ca. 3 million euros; 2004: 9.9 million euros). The efficiency of the operating company's low-cost concept is clearly shown by the positive development of the turnover in previous years while, at the same time, reducing the EBITDA margin from 73 percent in 2002 to 16 percent in 2004. With this concept, the airport is continuing on the straight and narrow. Above all, this includes cost controls, increased efficiency, and continuous improvement of services for passengers, visitors, customers and, of course, the 2300 employees.

Investment and expansion
A further factor in this success is the focus on investment, particularly in the expansion of the infrastructure of Frankfurt-Hahn Airport, and at low cost. "We are investing in order to grow further and to safeguard the economic centre and employment generator that is Frankfurt-Hahn Airport," comments Jörg Schumacher. The most important development project for Flughafen Frankfurt-Hahn GmbH at the moment is the extension of the runway from the current 3,045 metres to 3,800 metres, which was approved by the authorities in December 2004. "We need the longer runway in order to offer our existing and future customers the best service so that they can make their cargo flight schedules even more efficient, and we can keep them that way," Schumacher adds. The extended runway will make it possible to use cargo aircraft on longer routes with full fuel tanks and, at the same time, a full cargo. Long haul cargo flights can thus be attracted to Hahn and, as a result, more jobs will be created. Flughafen Frankfurt-Hahn GmbH plans completion of the entire approx. 37.5-million-euro project for about the middle of 2006.

Along with the extension to the runway, the operators are actively involved with the expansion of the terminal – here, the two existing Terminals 1 and 2 will be joined together to form one large terminal with an intermediate area of 3500 square metres for more shops and restaurants at a price of only 3.9 million euros. In addition, there will be a brand new bus station with about 15 partly covered bus stops, including a footpath to the terminal, which is expected to be approved in October 2005 (project costs: 600,000 euros). On behalf of the Hahn Airport Association, a new access to the airport site, part of which is already in operation, will also be built by the end of the year for ten million euros. A new office building, an investment project, near the cargo check-in building, is also under construction with completion planned for autumn 2006.

Since 1998, the airport operating company has invested about 135 million euros in expanding the low-cost airport in the Hunsrück – which, by comparison, is only a fraction of the cost of Terminal 2 at Cologne/Bonn Airport, which was about 325 million euros.

Growth and investment in the coming years have been ensured by the strengthening of the equity capital base with the intervention of the State of Hesse on 1st January 2005. The basic capital has been increased from 30.5 million euros to 50 million euros plus a capital reserve of 22 million euros. This now results in a share ratio of 65 percent for Fraport AG, and 17.5 percent each for Hesse and Rhineland-Palatinate.

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