Fraport AG (FRA.DE) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the conference call of Fraport AG. [Operator Instructions] May I now hand over to your host today, Christoph Nanke, SVP, Head of Finance and IR.

Thank you, Moritz. And also a warm welcome from my side. Welcome from Frankfurt Airport from Fraport Group's headquarter. I have with me at the table our CEO, Stefan Schulte; and our CFO, Matthias Zieschang. I think we can present a very confident story today. And therefore, we should jump directly into the presentation. Thank you.

Yes, let's make it. Good afternoon, ladies and gentlemen, also from my side, Stefan Schulte. Let me start my presentation today with a review of the past year's performance. As you are aware, we recorded a strong traffic recovery here in Frankfurt and even more dynamic recovery with our international airports. Yet, Fraport Greece, in particular, showed a very good traffic development exceeding already the 2019 benchmark year, which was remarkable. For Frankfurt, we achieved a recovery rate of around or about 70% level compared to 2019. Compared to other hubs in Europe, Germany was very much impacted by the Omicron variant at the start of the year. So travel restrictions were longer valid. Having said this, we recorded a steady increase in traffic momentum over the course of fiscal year 2022 and ended the year with an average growth rate of roughly 100%. Also for the current year, we are confident to see a continued traffic recovery in Frankfurt and in our international activities. And more on that, I'll present later. Financially, we also see it on the chart, we recorded a quick financial recovery in line with the traffic development as well. Key driver were our international activities, which contributed more than 55% to group EBITDA. The high share gain highlights the importance of our international business as a value driver in the group. Correspondingly, our group EBITDA exceeded EUR 1 billion and stood at 87% of 2019. We also recorded multiple one-off items in our international activities like the divestment of Xi'an with EUR 54 million, the second state settlement in Fraport Greece accounted to EUR 24 million, hence the economic rebalance in Brazil was EUR 18 million. On an adjusted base, EBITDA, therefore, would have achieved an EBITDA of about EUR 940 million. Accordingly, the return on our invested capital, which we call ROFRA, for return on Fraport assets, improved significantly from 3.4% in the previous year to about 6% this year. The operating cash flow also increased strongly by around EUR 400 million and achieved just under EUR 790 million. As good as these figures are, we are still confronted with the high indebtedness mainly due to the COVID. Our net indebt -- net financial indebtedness was up from about EUR 4.1 billion in 2019 to roughly EUR 7.1 billion end of 2022. As a result, we again have not proposed a dividend payout for the past year and also not forecasting this to propose for the current year, for the year ahead. Moving on to our business update and starting with our summer flight schedule, I'm on Slide #4. As you see on the chart, our continental and intercontinental seat capacities continue to grow back towards the 2019 levels. Most dynamic here we are seeing on intercontinental routes, which are scheduled to back at about 90% of 2019. The traffic recovery here, in particular, is and will be strong on U.S. or North America routes in general, which are more or less already on the 2019 level. The lowest ramp-up, we continue to see on our routes to fly East, especially to China. Adjusted for China, which is just about a level of 44% -- 45% recoverable rate on intercontinental routes, would have been pretty close to 2019. Our continental routes, the scheduled capacities are back to roughly 80%. And here, domestic will continue to underperform the broader market at a level of about 70% to 75%. While Western European flight capacities are already back to roughly 90%. So Eastern Europe continues to be impacted by the closure of Russia and the war in the Ukraine by Russia. That's the reason that at the moment on a level of 65% expected. From a timing perspective, we already expect the first traffic peak coming during the Easter holidays in a few weeks from now. Here passenger numbers should come back to around 85% of the 2019 levels. This will mean around 108,000 passengers on peak days. To handle the foreseeable traffic increase, we have prepared ourselves markedly, which we will show you on the next slide. On Slide 5, I would like to focus on the security transitioning at Frankfurt Airport. As you know, that was one of the major pain points in the past. Correspondingly requested to take over security responsibilities for a long time and jointly with the Federal Ministry and the Federal Police, we have decided to transition the responsibility on the first of January this year. The transitioning comes along with the responsibility to procure and maintain the security equipment at Frankfurt Airport as well as the rewarding of security contracts to security operators managing the full process. Regarding the procurement, we have already started to equip the security checks with 7 modern CT scanners. I will continue to roll out our equipment over the next few years. So another 24 CT scanner ordered. And some of them will be in place and in operation already before summer. From a process point of view, we have now also become more flexible in the deployment of staff. And we have much better information. It's much more transparency on, which will also be -- also benefit our passengers and airline customs. Additionally, we have started to test one of Frankfurt smart -- Fraport Airport SmartWay, as we call it, a service which allows passengers to book a time slot for security checkpoint at home or when they are on the way to the airport. So slot will entitle passengers and exclusive access to the security checkpoints, helping toward waiting times and to create an improved airport experience. Simultaneously, we have reduced our shareholder -- shareholding in our wholly-owned security subsidiary, FraSec as a security to 49%. So the corresponding P&L effects are shown on the chart. While the security business remains broadly EBITDA neutral for us, the tendering of security services for all terminal parts at Frankfurt Airport will mean some EUR 100 million higher revenues and OpEx at the same time. For the procurement of the equipment, we expect cash outs of roughly low double-digit million amount per annum over the next few years. If we draw our first conclusion, it's very positive. The throughput figures are significantly above the previous year. The waiting times are correspondingly very short, and customer satisfaction has increased significantly, and so did our employee satisfaction and friendliness. So all in all, a very positive development. Moving on to our ground operations on Slide #6. The first message here is that 2022 was not a good year from a quality perspective and from a financial perspective. Our task now has to be to make 2023 better year, financially and quality-wise. And yes, we are confident that we are on the right way to achieve this. To explain you what, we have done in the meantime, it's needed to take a short look back at the last year's performance and the main reasons for the quality bottlenecks in 2022. Firstly, our capacity this year in Frankfurt were quickly taken up by the market, especially during peak hours. We came back to 100% or even more than 100% of 2019 individual hours. This surge in demand was simply too quick for the interfaces here in Frankfurt, regardless whether we discuss check-in security, boarding, but also loading and air traffic control. In addition to the increase in demand, the airspace above Frankfurt was negatively impacted by the war of Russia and Ukraine and the diversions due to the closure of the Russian airspace. So the Eastern Europe airspace, most very much affected. The tight airspace also led to numerous delays, which had an additional negative impact on the operational performance in Frankfurt, which means you need even more people. Moreover, we have won a very detailed analysis together with airlines and external consultants about the specific reasons for the delays. Delays which have not happened just in Frankfurt, but across the system, but we had a very, very deep focus on Frankfurt here because that's our responsibility. Besides our own loading and unloading services, and that's the reason, no question at all, the catering and boarding processes were in particularly the interfaces, which caused the highest number of delays besides rotations, airspace, weather and so on. So consequently, we are working intensively with our partners to restore the quality on the ground, on the different processes and to get the necessary people in place on the one side, but also to get a better and more reliable processes across the different partners in place. And that's a real intense corporations these days, which is very positive. Although we have done an addition for a better year 2023. Firstly, we reacted quickly and implemented last year so-called local rule. The local rule temporarily reduces the number of maximum flights, maximum movements per hour. We took out about 15% of our slot capacity in Frankfurt in order to balance and to stabilize the slot utilization more evenly across the operational hours. We will not start to ease the local rule over the summer and come back to our 104 slots per hour towards the end of the summer flight schedule. In addition, we intensively continue to hire staff. We recruited more than 1,000 people last year and also took on a high number of temporary external staff, about 800 people in addition. Our task now has to be to ramp up the qualifications of our new colleagues to bring up our quality limits. Over time, we will also have to replace the more expensive external staff by our internal employees to improve our financial results again. To sum up, the operations will run much more stable this year, but it will still be demanding. To achieve a further ramp-up and also to address the demographic changes, we have now started to restructure our HR management by implementing a new project, HRneo. The cornerstones of HRneo are shown on Slide #7. That's a long-running project or a longer-term running project, which is really necessary to address the demographic challenges on the workforce market here in Germany. So HRneo is tailored to address the demographic development, as we mentioned. So mainly the H in society in Germany. HRneo therefore focus on the foreseeable shortness in the labor market, especially of skilled workers. There will be the biggest challenge we face in the future but not just as an aviation sector, it's in principle a topic in Germany or in Western Europe, especially in Germany. So that's the reason we have to get up that way. Consequently, we are changing our internal processes to improve our access to the lower -- labor market and to especially broaden our access. We have extended our outreach to countries in Southern and Eastern Europe, like Spain, Greece or Bulgaria, and we are also using the mean of social media more efficiently. Being aware of higher cost to recruit employees, we are also ramping up our efforts in our employee retention management, so to keep our employees longer within the company to avoid recruitment costs. What are we doing here? It's too early. We just started the project initiated by our new college [indiscernible]. But in principle, it's a topic of, yes, corporate benefits on the one side, competitive salaries, but not just higher salaries. It's more that we have to focus on leadership, motivation creating a sense of, yes, we can. And yes, we do it. With the we in big letters. We are together. And by this, a lot of further topics and team spirit and so on, we have to create a Fraport family, a team Fraport, which is really pushing the topics and making it possible. Among others, it will also mean that we have to think about corporate brand and topics like corporate purpose. That's too early to give you answers today on that side. I can just reassure you it's also on efficiency, but efficiency and attractiveness. Both ways have to go together in such a market environment. Moving on to Slide #8, which provides you an update on our major expansion work here in Frankfurt Terminal 3. As you can see on the chart and also the cover page of the presentation, we are well progressing on our terminal project. We're currently completing the [ glasses side ], and also the highway access is on the home switch. Consequently, we are now moving ahead with the technical installations, especially the electrical installations, and also expect to have first test flight of the new people mover system this year. Having said this, we are confident to be construction-wise completed in 2025. So about 2 years from now, reserving sufficient time for the overall processes, so the testing of the terminal infrastructure, all the technical facilities for the operational readiness. The fact that we need Terminal 3 was only recently reflected by a new forecast published by the federal government in Germany. And the forecast period until 2050, air traffic performance in Germany is expected to increase by more than 2/3 compared to 2019 base year. In absolute terms, this means an increase from 59 million to 99 billion passenger kilometers, so a plus of about 40 billion passenger kilometers compared to 2019, again until 2050. So I think that's a very strong argument also for Terminal 3. Those passengers need to be handled with Terminal 3, Frankfurt is the, as far as I know, only major airport in Germany, probably Europe, which has sufficient capacities to go on the air side as well as on the land side. Moving now on to our international activities. I'm on Slide #9. As you can see on the chart, we have meanwhile completed the new tower and the new runway in Lima. We handed over the infrastructure to the local authorities. Please note here that the new runway will be temporarily lower frequented as long as the new [Indiscernible] terminal is not in operation. This has to do with the longer taxing times to the existing terminal and the crossing of the existing runway. The terminal itself is well on track, and we expect the commissioning in less than 2 years from now, which is enormous progress. Also in the terminal in Antalya is progressing well, and we are confident to complete the infrastructure in about 2 years as well. For Fraport Greece, the expansion works are over consequently, the investment turned free cash flow positive and we expect properties to pay its first dividend this year. For Fraport Brazil, you will have heard this as well, the investment achieved another economic rebalance on the COVID-19 impact for the fiscal year 2022 in the amount, I mentioned it already, of roughly EUR 80 million. All in all, we are very satisfied with the progress of our international airports and expect the segment to deliver again a higher EBITDA than in 2019 this year. Shifting gears to our nonfinancial performance indicators, EU CO2. I'm on Slide 10. Despite the traffic recovery last year, we managed to keep our CO2 emissions under control and even reduced the numbers in Frankfurt and abroad. Here, we are especially [Indiscernible] that we almost achieved the target set by the EU for the CO2 reduction in fiscal year 2030 compared to the 55% reduction target set. We have now managed a reduction of about 50% of EU compared to the base year 1990. This reduction was achieved at a higher passenger number. As you know, probably know, in 1990, we only handled 29.6 million passengers, and we are managing a greater infrastructure. In 1990, there was no Terminal 2 at Frankfurt Airport and no Runway 4. To continue our path and to underpin our road map with clear measures, we also passed on master plan decarbonization for Frankfurt end of last year. The master plan clearly defines the measures to become CO2 free late by the year 2044 -- '45, sorry. We are working to get this done much earlier or at least earlier and continuous reaction fronts. The first action front is a more general one. With all the electricity needed, we include the expansion of our digital energy good which enables us to more efficient load management between purchase and on-site generated electricity. The action fronts also includes more comprehensive energy storage capacities to store surplus green power generated in between some hours and act as a general electricity backup. Second action front covers our Scope 1 emissions. In Frankfurt, about 75% of these emissions result from our car fleet correspondently. We target the conversion of our entire fleet into regenerative engines. We'll also equip our ground power units with regenerative engines and reduce energy consumption of our buildings. The third action fronts are our Scope 2 emissions. Here, we decided, among others, to produce our own green electricity on-site. We are for the photovoltaic plants next to Takeoff Runway West and construct solar panels on building roofs. We also include the procurement of green electricity via our wind park power purchase agreement in this action front. The master plan also supported how to become more ambitious with our CO2 targets. We've now lowered our target for the year 2030 in Frankfurt and correspondently on a group-wide base. Please note here that our targets do not include for compensation measures like offsetting real procurement of CO2 certificates. Our target is to become CO2 free on net zero. That's an important difference. Coming to the last slide of my presentation. Our outlook statement on Slide 11. As mentioned before, we expect continued traffic momentum in Frankfurt and abroad. For Frankfurt passenger-wise, we are confident to see more than 80% and up to 90% of the level of 2019. In absolute terms, it will be more than 56 million passengers and up to 64 million passengers. Financially, this should lead to a group EBITDA of about EUR 1.04 billion up to EUR 1.2 billion. Here, we are satisfied to see the results of our restructuring measures. We expect to achieve more or less the same EBITDA as in 2019 and a lower numbers of passengers. Bottom line, we see the impact of the higher indebtedness and higher depreciation charges, mainly from the new runway in Lima. As a result, the net income guidance does not entirely match the pre-COVID level at EUR 300 million to EUR 420 million. We nonetheless expect a clear improvement year-over-year and continued strengthening of our equity base. For the dividend, as mentioned before, we still don't plan to propose a dividend payout due to the high indebtedness. The net debt to EBITDA, key performance indicator, you can see it on the chart, it's expected to remain more or less stable despite the improvement in EBITDA. Here, the continued expansion program will again lead to an increase in net debt as Matthias will also show you in a minute. So thanks, ladies and gentlemen. And Matthias, please go ahead with the financials.

Yes. Thank you, Stefan, and also a warm welcome from my side. I would like to start my presentation today with a view on our historic financials and have a look at where we stand today. Here, we are now on Slide 13, you find the development of our group EBITDA on top of the page and our group result on the bottom reaching back until 2017. We are happy to see a very positive development after the total breakdown in 2020, generating an EBITDA back at 87% of 2019 levels. Also heavily impacted by the write-off in the context of our shareholding in St. Petersburg, our group result reached EUR 167 million. Looking forward into the current year, you see that we are on a very good way to reach our former strength again. 2023, we expect more or less the same EBITDA level as in 2019 and up to more than 90% of the corresponding group result. Of course, this is very much depending on the final traffic development as Stefan already mentioned. In 2024, from today's perspective, we expect to be fully recovered financially. Now I would like to come to our cash flow performance and indebtedness on Slide 14. The operational cash flow more than doubled compared to 2021 to EUR 787 million, strongly driven by the traffic recovery in Frankfurt as well as abroad. Putting this figure into a context, we are very pleased that the operating cash flow clearly exceeds our maintenance CapEx for the group by around EUR 500 million. This already indicates the strong cash flow potential once our expansion CapEx programs are over. Taking into consideration the CapEx in Lima and Frankfurt Terminal 3 as well as dividends from our equity consolidated subsidiaries. We generated a negative free cash flow of EUR 366 million. Adding the equity contribution for the new entire concession of EUR 375 million on top brings us to a final negative free cash flow of around EUR 740 million. As a consequence, our group net debt rose to less than EUR 7.1 billion, which was the lower end of our guidance for the year-end 2022. Our net debt to EBITDA improved clearly to 6.9x. On my next Slide #15, you find a repeat chart of 2022, namely the H2 cash flow development. The operational cash flow of EUR 602 million based on a very good recovery, especially in the peak summer season, even outperformed 2019 levels by 3%. With this, we were not only able to cover the maintenance needs, but also our expansion CapEx in the second half of the year so that we were free cash flow breakeven. You see that our maintenance CapEx is well under control, with Brazil and Greece together just contributing EUR 30 million and the remainder of just below EUR 70 million for Frankfurt. Like this, excluding for the growth CapEx, we generated a strong surplus of around EUR 490 million out of the operational cash flow. Let me now move on to our segment performances in the past year, starting with Aviation on Chart #16. Revenues continue to increase further to EUR 828 million, which make up around 80% of pre-COVID levels. Compared to 2021, airport charges were around 75% higher, backed by the tariff increase of 4.3% and the traffic recovery. Security charges are seemingly down by EUR 20 million against the previous year. However, we have to bear in mind that 2021 was positively impacted by a one-off payment by the federal police in the amount of around EUR 58 million. Adjusted for this, also security charges increased significantly. In addition to that, the compensation for COVID-19 losses has been recognized in other income in '21 in the amount of around EUR 160 million. Despite all those positive one-offs in 2021 that have not materialized last year, we were able to increase our EBITDA to EUR 175 million due to strong cost control despite the operational ramp-up. Compared to 2019, we were able to save more than EUR 100 million, which is a remarkable result bearing the inflationary environment in mind. Looking ahead, based on a strong Q4 2022 with an EBITDA reaching more than 85% of Q4 2019 and an EBIT even above pre-COVID levels. We expect a further increase in our operational results this year that should exceed pre-COVID levels. This development will be backed by the 4.9% increase in airport charges that has been valid since January 1, which will already bring an additional price effect of more than EUR 30 million. To end this chart, I would like to come back to the security restructuring that Stefan has been talking about before. After the security transitioning, we will not only account for the revenues and costs of the con causes that traffic has been responsible, but for all security checks in Terminals 1 and 2 at Frankfurt Airport. Therefore, as mentioned before, our revenues and cost will increase by some EUR 100 million without any EBITDA effect. For this reason, the margin of the Aviation segment will be negatively impacted by the carve-out. Moving on to our Retail and Real Estate segment on Chart #17. The revenues reached close to 90% of the pre-crisis level, especially due to the outperformance of the real estate revenues also driven by inflation-linked rent adjustments. However, also parking revenues developed above the traffic recovery to around 80% of 2019 levels without significant price changes that have kicked in beginning of this year. Also, the retail spend per passenger developed much better in the last quarter of the year. And we are very satisfied with the outcome of EUR 3.33, which even represents a slight increase over the year 2019. This is a very pleasing development, mainly driven by services revenues back on nearly 85% of pre-crisis levels despite lower passenger numbers. While revenues from shopping developed more or less in line with the traffic recovery, advertisement is still around 50% below 2019 levels. All in all, the retail revenue more than doubled over 2021 to EUR 154 million. On the OpEx side, we incurred higher energy costs of around EUR 25 million compared to 2019 and therefore, has the same cost base as before the pandemic. However, adjusted for energy costs, we actually realized an OpEx reduction of around 20%. Looking at the fourth quarter of 2022 stand-alone, you will see a very positive performance, not only because of a strong retail business, but also due to a one-off effect in other income of about EUR 18 million from a property development at the airport side. Giving you an outlook for 2023, we expect a clear positive development due to the recovery of Asian markets, especially the Chinese traffic, and therefore, a more favorable passenger mix, an increase in advertising revenues and price increases. We, however, still expect headwinds from high energy prices, which we expect to remain above 2019 level. Turning the page now to our Ground Handling segment on Slide #18. Revenues increased clearly over 2021 to around 78% of pre-COVID levels. Looking at Q4 standalone, we even saw a recovery to 85% of 2019. This outperformance compared to the passenger recovery is driven by weight and movement related charges in the segment. As Stefan pointed out before, last summer, we had big issues with the quality of our operations. To somewhat stabilize operations and keep the airport running, we had to invest heavily in the deployment of external staff and pay for extra shifts and overtime. In addition to that, wage increases at FraGround further increased our staff cost. Therefore, total OpEx more or less reached the pre-COVID level. As a result, EBITDA was clearly negative at minus EUR 74 million, while especially Q4 '22 was hit by provisions in the amount of around EUR 34 million for a potential settlement of claims. If adjusted for this one-off item, Q4 2022 operational results would have been clearly up compared to 2021. Now looking into 2023. Our clear focus is on improving performance and productivity again. We, therefore, continue to hire and qualify especially internal staff. We will still need to deploy a big number of external staff. However, we do not intend to increase the number further. Midterm, of course, we need to reduce external employees and ramp up productivity again. We are well aware that this is still a way to go, and we will be taking one step after the other. However, we will not lose sight of our targets to turn the Ground Handling segment positive again. To end our 3 Frankfurt segments on Chart 19, you will find an overview of our Frankfurt OpEx development in the past year compared to 2019. You see that due to the headcount reduction, we were able to save around EUR 170 million or 19% of the 2019 staff cost. What is important to note is that the savings have been impacted by wage increases over time in the amount of around EUR 30 million, especially from FraSec and FraGround. Adjusted for the wage effects, total staff cost savings amount to EUR 200 million and therefore close to our communicated target. In other OpEx, various negative effects together caused an increase by EUR 7 million compared to the 2019 cost base. An increase of around EUR 70 million has been caused by the quality constraints we faced last summer due to the quick traffic recovery. Out of that, around 50% are primarily linked to the deployment of additional external staff. The other 50% come from the already mentioned provisions in the Ground Handling segment. On top of that, EUR 25 million higher energy costs further weighed on the cost side. Taking all those effects together brings you a EUR 95 million headwind. Adjusting the increase in other OpEx for those effects would have meant a significant decline of around EUR 90 million. Looking ahead into 2023, we will see higher cost from wage increases, rehiring operational staff from the security reorganization, and we expect continuing headwind from energy prices. Now jumping from Frankfurt to our international activities on Slide 20. As you can see, our airport operations abroad have fully recovered financially, not only on the revenue side, but also EBITDA and EBIT-wise. And this is especially remarkable as the total passenger volume has only recovered to 87% so far. Other income was positively impacted by nearly EUR 100 million in total, which includes the gain from the stake sale in Xi'an an as well as compensations for COVID losses increase as well as in Brazil. As a comparison, 2021 even accounted for some EUR 160 million compensation. While staff costs are still down by more than EUR 40 million, higher variable concession fees as well as unfavorable exchange rates led to an increase in other OpEx by EUR 30 million over 2019. Like this, the EBITDA reached EUR 585 million, or EUR 488 million if adjusted for one-offs which is still nearly 10% above reported 2019 levels. This brings us to an underlying margin of 47%. For this year, we expect an EBITDA decline over 2022 due to the high one-off effects last year. However, further traffic recovery to around pre-COVID levels. Overall, in combination with increasing charges, we still expect EBITDA to be above 2019 levels. This again will mark a sharp recovery compared to the underlying value of 2021, so excluding for the COVID-19 compensations. On my next slide, I give you an update on our cash situation for the group. All in all, throughout the year 2022, our cash position remained largely stable with a slight increase by EUR 100 million to now EUR 4.6 billion. The big push comes from the Lima project finance of EUR 1.25 billion -- sorry, USD 1.25 billion signed in December on 2022, and we expect the first disbursement in the upcoming days. This brings our available funds to more than EUR 5.3 billion after having paid back the Lima bridge loan. On Slide 22, you see that we expect some EUR 800 million maturities in Frankfurt to adversely impact our liquidity situation this year. Out of this, we are already well advanced to secure about 50% to be refinanced. The light blue bar, this year illustrates the repayment of the Lima bridge loan. On the top right, you see that our average interest rate of 2.3% has slightly come up from 2.2% mainly due to higher debt from our international assets, but this is still reasonably low looking at the current market conditions. Looking at our net debt position for the year ahead, our free cash flow development is decisive. I will give you an outlook for 2023 on my next slide. As a starting point, we take our EBITDA guidance as an estimate for the operational cash flow, which ranges from EUR 1.04 billion to EUR 1.2 billion. From that basis, we deduct the CapEx in the amount of roughly EUR 1.3 billion. That stems from around EUR 550 million of Terminal 3; EUR 250 million maintenance CapEx, primarily for Frankfurt; EMA expansion CapEx of around EUR 400 million; and a remaining CapEx for the group airports of less than EUR 100 million. Subtracting some further EUR 150 million from fixed concession payments, borrowing costs and IFRS 16 as well as around EUR 200 million cash interest and taxes brings us to a negative free cash flow of around EUR 400 million to EUR 660 million. The fact that Fraport Greece will pay out dividends for the first time this year, unfortunately, has a negative impact on our group net debt due to the cash leakage of 35% of the dividends, which has to go to our shareholders. As a result, we expect our group net debt to grow to a level of around EUR 7.6 billion to maximum EUR 7.85 billion. Having said this, ladies and gentlemen, I'd like to conclude my presentation, and we are looking forward now to your questions.

[Operator Instructions] And the first question comes from Cristian Nedelcu from UBS.

The first one on the cost savings that you achieved in FY '22 of around EUR 200 million, excluding the Ground Handling provision. Looking forward at 2023, you told us a bit about the moving parts. But could you be a bit more precise on what's the target of cost savings at the end of '23? Secondly, in terms of CapEx, I think you discussed in the past about the possibility to close down Terminal 2 in 2026 and Terminal 3 will open. Will the refurbishment of Terminal 2 be on the agenda for 2026 and beyond? And if it is, ballpark, what could the CapEx be associated with that? The third and last one, if I may, on your outstanding bonds, the yields today on a sort of 6-, 7-year duration are around 4.6%. Could you talk a little bit about how you see the trajectory of your interest cost over the next few years and also maybe to discuss a bit about how much of your excess liquidity you are ready to allocate to reduce gross debt over the next years?

Yes. Starting with a question regarding cost savings. So what you see in our presentation is in so far sustainable that the underlying base in the moment are about 4,000 FTE less. And now we have looking forward, the situation that we are going to rehire in Ground Handling up to 1,000, so this runs against the 4,000. But on the other side, we still have potential in the admin sector based on early retirement, et cetera, so that we are going to have further reduction in some admin units so that we will end up all along in the range between -- more than 3,000 less than 4,000. So we are continuing with this significantly reduced base of FTEs. And on the material expense side, it's the same thing which happened in the past. So we have this reduction of nearly EUR 100 million, and we continue with these elements. But on the other side, of course, we have running against us the clear inflation impact as well as higher energy prices, and we have to see how they will develop in the future. Regarding refurbishment of Terminal 2, we have to see whether this will start in 2026 or later on. But these amounts are part of the maintenance budgets, which we are year-by-year doing. So we calculate with about EUR 250 million per annum maintenance CapEx, and all the things for T2 are included in the next couple of years in this budget. Regarding the bonds, you can see on the repayment schedule that we have more or less EUR 1 billion ahead of us as a repayment of the existing indebtedness. This means in the moment the total interest cost of our gross debt of EUR 11 billion is exactly 2.3%. If now year-by-year, EUR 1 billion would be refinanced, we have a current cost of debt of about 4% for long-term money. And this means that the average cost of debt, assuming that the current interest level would continue, would go up by about 0.2% per annum. So in other words, there is a very modest increase of the cost of debt. And I hope that now I have covered all your questions. Anything open? Liquidity. Yes, we have a very strong liquidity. This is an impression of our strength, and so we are in a very comfortable situation. We can go into the market and go in for fresh money to repay the EUR 1 billion per annum. Or we can, at the same time, use a part of this liquidity, which is in the moment very strong. And it's also absolutely clear that all along, we are going to reduce it. But in the moment, where we have these ongoing negative free cash flow, I think it's good to have this excess cash. But again, we have this option to go for fresh money or are taking parts of the existing liquidity to bring it down in using these existing funds for the repayment of existing debt, also depending from the interest rate development in the next couple of years.

And the next question comes from Elodie Rall from JPMorgan.

First of all, on CapEx, can you confirm now the overall estimated cost for Terminal 3? I think you had said EUR 4 billion in the past, and now you expect another EUR 2 billion in spending. So just wanted to have an update on the overall cost there. Second, on CapEx as well. We have the phasing that you gave us on Slide 23 for 2023. So it's EUR 1.3 billion plus EUR 100 million of IAS '23. what should we expect for '24? And is the EUR 100 million IAS recurring? And third, on that same slide, you project for '23, EUR 200 million of interest and tax for '23. But we were already at EUR 175 million more or less in '22 if you take the net interest and the cash and the cash flow statements for tax. So how can it be only EUR 200 million next -- I mean in '23? And lastly, just if I can squeeze in on ground handling, would you expect EBITDA to come positive in '23?

Probably, I'll start with some questions, and you have a little bit more time. On the CapEx on Terminal 3, yes, we confirm the EUR 4 billion but in rough terms, whether it's at the end, EUR 4.1 billion, EUR 4.2 billion. So on such a big project which is running for a total of more than 10 years. And you know all the material increases and so on due to the different or the difficult with Russia and with China and so on. So yes, it could be a little bit more, but around that level will be at the end. To be quite honest, I'm not discussing on such a big project of EUR 100 million, EUR 200 million. That's always possible on that side, but we are in line with the numbers we gave you. On ground handling, 2023 will not be breakeven. There's no chance because we will see on the one side this year wages increase. You know that the negotiations are running there. We are not part of them because it's on the federal level, but we are belonging to this at the end. And we are passing a lot over to customers, but it depends on how the duration of the different contracts are. So some contracts, we increased already. Other contracts will follow this year, but there will also be some longer-term contracts where we cannot directly pass it over. So there is, of course, the time that in between. And as mentioned, [indiscernible] still very difficult situation [indiscernible] all the additional qualifications, hiring of people and so on. So I would expect that we are getting to more normal situations in the year 2024. And passing over all the additional costs in the inflation area will be 2024, 2025. Earlier, I wouldn't expect to be breakeven on that side.

So taking...

CapEx 2024, I think that's the open question and interest.

Yes. First of all, starting with the CapEx. So in '24, it's more or less the same as in '23. So EUR 200 million, EUR 250 million maintenance CapEx for the group. Then on the other side, between EUR 500 million and EUR 600 million for T3, and more or less the same amount like in 2023 for Lima. So we are talking about EUR 1.2 billion, EUR 1.3 billion, EUR 1.35 billion CapEx in '24. So it's like a CapEx settle in '23 as well as in '24. Regarding your question for the interest, it's relatively simple. So we have a gross debt of EUR 11 billion, exactly EUR 10.9 billion times 2.3%. So our interest expenses cashed out are exactly or relatively exactly EUR 250 million. On the other side, we are receiving interest income for the existing liquidity, of course, depending from the current interest rates, which in the moment are running in favor of us. So as of today, we [indiscernible] for this year EUR 60 million. So again, EUR 250 million interest expenses, minus EUR 60 million interest income is a net financial interest result of EUR 190 million. And then we are paying some taxes, which is not similar to the taxes we show in the P&L because these are IFRS taxes. In reality, we paid taxes in Germany based on the tax loss carryforward. And therefore, in the moment, it's more or less, so to say, zero, some taxes for the assets outside Germany. So that's the minus EUR 190 million cash out -- net cash out for interest rates, plus EUR 10 million, EUR 20 million taxes are in total generating this amount, which you could see on Slide #23.

And the next question comes from Stephanie D'Ath from RBC.

The first one is on BARIG in February, which was impacted by operational issues. Could you maybe quantify because if we look at the recovery rate against 2019, we were at 79% in January and 75% in February. So is that 4% deterioration into operational issues? Or is that only part of it? My second question regarding the security responsibilities you are taking over. Could it be that in the midterm as opposed to being neutral on EBITDA becomes positive? And my third question is on ground handling. When would you expect EBITDA to turn positive again?

If I may start, I think the impact on the February numbers have been around 3.6% of the traffic of around 60,000 passengers or 70,000 passengers. I'm not sure exactly. But so without the strike, the traffic recovery would have been 78.6%. I've just mentioned exactly that's the number. So it's more or less in line with the January number, roughly 80% more or less. Regarding security, there are very clear rules how you have to calculate the security revenues compared with the costs by the federal government. Because at the end, it's a service we do for the federal government, but we are now -- we have our own responsibility. That's how to calculate those revenues and fees. There are detailed calculation guides, which you have to follow. So there could be a small EBITDA positive, but that would be really small. It really not changes the numbers. But we nevertheless took over the responsibility. It's really to get away and toward the pain point we had in the past with long fueling times, with a highly inefficient security process [indiscernible], leading up to the point that even business or especially business customers [indiscernible] just mentioned, never flying via Frankfurt. And that was the point that we took it over because that's the process where you have to get control and which we have to manage because at the end, you are also probably a frequent flying person. You want to have a very seamless service and for instance, service on that side. Ground handling, I mentioned already will take a little bit longer due to the environment we have in the market. So I wouldn't see breakeven early as 2025. But I would also expect a much better performance from year-to-year, whether that then really breakeven 2025. So it depends. I don't have at the moment the knowledge how long the different contracts are running, but now that we are increasing the ground handling charges already on a lot of contracts, but not on all contracts as we pointed out on that side. And it depends at what time we get the additional wages, and the wage increases will be there 2023, '24, how we can pass them over on that side. From the point of efficiency and so on, there shouldn't be any shortness or any longer 2024. That's right. So probably 2025, there should be a target.

And the next question comes from Ruxandra Haradau-Doser from Kepler Cheuvreux.

Congratulations on the performance. And thank you very much for this detailed presentation. I apologize if I ask a question that has already been answered. If it's the case, please ignore it. I was kicked out several times from the call. First, your guide for this year on EBITDA up to precrisis level, but you expect traffic below precrisis level. Could you please give us an indication where you see the EBITDA range once traffic fully recovers to precrisis level? Second, at what level do you calculate the regulated cost of capital currently? And you mentioned that ROFRA was at 6% in 2022 and below the level of 2019. Could you please help to understand where the ROFRA would have been in 2022, if you were to calculate the RAB as it will be calculated when the assets under construction will be commissioned? Then once you temporarily close Terminal 2, what happens is the RAB of Terminal 2? Will it remain in the group RAB since the closure is only temporarily? And finally, what dividend do you expect from Fraport Greece?

May I answer your question? This is also on EBITDA. So we have given you a very broad range of EBITDA, EUR 1.04 billion to EUR 1.2 billion. So this is depending, of course, from the traffic recovery when we would end up at the high end of traffic expectation, then it's going to EUR 1.2 billion if we are ending up at the lower traffic numbers. So there are some place to go to the downside. But you know us, we are conservative. Our clear ambition and target is to end up in the upper half of these traffic guidance. Regarding your question, what will happen if and when we are fully back on 2019 passenger numbers. The answer is relatively clear. We will end up with an EBITDA above the old number. Why? Because we have, on one side, sustainable cost-saving effects. And on the other side, of course, in the meantime, we have escalated some prices. And this combination cost discipline plus price increase will lead to a higher EBITDA given the same passenger numbers like in 2019. Regarding the ROFRA. So we always in the past, we already are including the assets under construction. So each and every euro we invest in Terminal 3 is the day after part of the RAB. So when you look into the RAB of 2022, all the investments already done in favor of T3 are part of the RAB, and the same is valid for Terminal 2. So all the historic investments of T2 in the RAB will stay in the RAB because the closure is temporarily and it's a backup terminal. And when the capacity of T2 is needed again, we will not overnight, but in a short time, we will take back this into operation.

Fraport Greece dividend...

Fraport Greece, yes, we -- the dividend, which will be paid in this year in total is exactly EUR 250 million. So today, you find the dividend or the dividend which will be paid in the balance sheet of Fraport Greece, excess liquidity. And from this EUR 250 million based on our shareholding of 65%, we are going to receive EUR 160 million, and EUR 90 million will be paid to our co-shareholders. This is Copelouzos on one side and the French fund on the other side. So there's a leakage of EUR 90 million going to the co-shareholders and EUR 160 million from Fraport Greece to Fraport AG. And that's the reason why you find in the cash flow projection in the last slide on the presentation, when you look on the total free cash flow, a minus of EUR 100 million, this is exactly the dividend leakage because today, the whole liquidity is fully consolidated from Fraport Greece in the Fraport Group numbers. And by paying dividends with co-shareholders, we have the leakage in the amount of these money, which will flow to the co-shareholders. .

Maybe coming back, what's the level of the regulated cost of capital currently? And if I remember correctly, you include the assets under construction at 100% of the CapEx in the ROFRA. Could you please help us to understand where the ROFRA would be if you were to calculate the RAB as it will be calculated once these assets under construction will be commissioned?

Yes. First of all, the WACC in 2022 is 7.3% pretax. And the second part of your question, give me just a second, we have -- so the RAB in aviation is -- just in aviation is for the Fraport, not the RAB. Fraport assets are EUR 4.1 billion. So -- and your question is without -- what was your question?

So what would be -- maybe if you don't have the figure now, you can send it later.

Yes, but we will give it to you later on.

And the next question comes from Johannes Braun from Stifel.

I have 2 quick ones. First one, what would be the terms on the interest rates for the additional financing for Lima, the additional EUR 750 million? And then secondly, on the cost side, what will be the cost savings from replacing the expensive temporary staff with normal staff in ground handling? And also what will be the OpEx savings from closing down Terminal 2, please?

We -- in last year, we spent exactly EUR 35 million for the external staff, so we are not going to zero. That's also for clear in the future. But this is a maximum now, and I would say that minimum 50% of this amount is a potential cost saving looking forward. In a situation where we just run our own staff, then it would be EUR 35 million. For Lima, do we have the number exactly? What was the margin -- so give us just -- okay. So I just found that it will be fixed. It has a margin -- a risk margin. And when the payment will take place, and it's fixed. So it's 3 months LIBOR plus x for the risk margin.

It's a typical project finance margin for South America for U.S. dollar and such a project in US dollar base.

We'll have to give you that number, so we [indiscernible] as soon as it is fixed, but we can give you the calculation of what is the next stage. So Mr. Nanke will call you .

And the OpEx savings from closing down Terminal 2?

This was about EUR 50 million.

But be careful, then you have additional OpEx of Terminal 3, so you can just take the net. So just to put down EUR 50 million. That's, of course, not correct.

So any indication on the net impact? I guess Terminal 3 is much more energy...

Yes, it will be more efficient, but Terminal 3 is bigger. So I can't give you today a net figure, but we will -- yes, we can calculate it, but I don't have the figure because Terminal 3 is much bigger than Terminal 2. It's more efficient, Terminal 3, of course, and it's a brand new one. So as mentioned, maintenance CapEx also will be at the beginning lower. But then the question is at what time do we really start with waiting Terminal 2 and so on and then how is this going into the full year schedules, so that's a little bit too early. That's the reason we're not prepared for that question today.

The next question comes from Sathish Sivakumar from Citi.

I got 2 questions. Firstly, in terms of the cost, like compares to '22 going into '23, can you just give color like what are the elements of inflation that is not fully felt or pass-through into your cost element? Where could you see the more like increased risk of inflation impact? And then the second one is around the real estate performance into '23. And do you see like 2022 trends continue because you did have a good year on real estate? And what other drivers are? And how we should think about into '23? And the third one is actually related to retail contracts. So first part of that exactly, what is your exposure to inflation pass-through on the retail contracts? And the second one just relates to the retailers. If you look in Q4, you had a really good performance on retail revenue [indiscernible], i.e., around 13% year-on-year increase. Can you share any color on what the drivers are? And just that today, one of your peers has mentioned, they expect average spend per passenger to decline as we go into '23. So can you just give some color why you actually think that will be slightly different for you?

I can start with the first question, but that's a very differentiated answer because you have to go through the different segments. That's not the one answer. If you take the regulated business and if you look at inflation, so additional material costs and so on, of course, this inflation is going on different sizes. But it goes in higher material costs, higher CapEx and so on, on the CapEx projects, as well as higher wages and loans for the people, so for the staff. And that goes into the next amount of aviation charges and increases of aviation charges where we will ask for increase of aviation charges. There's no question we have to compensate this, but there's always a time league in between. If you take the ground handling, I mentioned already before, but you have direct contracts. There are customer contracts. There are some contracts with an inflation clause in the other contracts, which are linked to salary increase, so wage increases. But there are third contracts, which have a fixed increase independent from the inflation. And then you have to have direct negotiations, which we do, even if there's no contract rule. And sometimes we are more successful, sometimes less, and there are other contracts which are even longer running where we don't have such a clause. And as mentioned, we have to go into direct negotiations. That's the reason if you see on the lowest level of employees, higher increases on wages this time or this period, that's affecting us on ground handling because we have a high number of staff, which is more on the [indiscernible] and there you will see overproportional salary increases over the next 12 or 24 months, whatever the result will be at the end. So there are some compensation measures. But not everything is simultaneously like on retail, where if inflation goes directly into higher prices, we also have a higher shift on that one. So if we get 30%, 35% commission, then of course, if the price is going up by 10%, we have our 30%, 35% or 25% whatever topic it is directly out of the higher price. On real estate, as Matthias mentioned already, this are, most times, directly inflation-related contracts. So it goes directly through here with the next round of rental adjustments normally next 1st of January, but that's where we direct that effect. On real estate performance in Q4. Retail materials, do you have more details on that one? Or...

Just some general remarks regarding inflation exposure. So if you look on the OpEx side at Frankfurt side, combining all 3 segments and without looking on cost of capital, the OpEx, you can divide into 70% personnel cost and 30% material expenses. So this is a general allocation of the cost elements. And if you look on the remaining 30% material expenses, thereof, you have 1/3 for energy. And now you can make your own calculation what you expect as inflation rates or wage increases. You can calculate the cost impact on the Frankfurt P&L. And whichever mentioned, we -- our key ambition is to bring it through on the revenue side by inflation-linked prices in retail as well as real estate and all other operations.

In terms of the unit spend [indiscernible] performance in Q4, why has that been so strong? And do you expect that to actually continue into '23?

Different mix of topics. The first was a little bit more positive passenger mix, more [indiscernible] passengers on that side, but also destination-wise, more Korean passengers and so on. So that comes back. So that's positive. But also inflation with higher prices, as mentioned. These have been the 2 most important topics on that side. And sometimes also periods where you see that suddenly every passenger [indiscernible] or something like this was campaign on that one, which I can't give you an argument of why this is a topic. But that's sold out, and you see also those positive effects on airports if you are in that segment.

Perhaps in addition to this, food and beverage runs excellent, so there was a huge increase in F&B. So the spend [indiscernible] in shopping was comparable to 2019 despite unfavorable passenger mix without the Chinese. But on the other side, in services, we outperformed. And inside services, especially F&B, was brilliant in Q4.

Next question comes from Achal Kumar from HSBC.

So first of all, going back to the retail spend per passenger. So as you mentioned, I mean the Q4 was very strong. I mean of course, Q1, Q3 would have been impacted by many events. But do you think going into 2023, we should expect a further retail spend closer to Q4 rather than the full year average? That is my first question. Secondly, on the traffic side, do you think you can actually accelerate your traffic by giving some more incentives? Would you think about that? Third question is about how confident -- how comfortable are you with your balance sheet? Of course, your liquidity is strong. But then in 2024, again, you mentioned your EUR 1.4 billion of CapEx and the similar amount of debt maturing in 2024. So it looks like probably a cash outflow of almost like EUR 2.8 billion, which seems to be much higher than EBITDA [indiscernible] could be still negative, and I'm not sure if how net debt to EBITDA would move. And then you are already very high in net debt to EBITDA. So how comfortable are you in terms of your balance sheet? And finally, my last question is about your international assets. So could you give us a bit of a brief break-up as in what kind of flexibility would you have to increase your airport charges at your different international assets, mainly including Greeks and Lima and Antalya where we have very strong trading. What kind of increase in revenue and EBITDA we should expect at your international assets in 2023?

We start with the spend [indiscernible] your question is Q4 is a good guidance or more the average. Yes, Q4 was very strong, but Q4 is always the most strong quarter, so I would more take the average than the Q4 because that's probably a little bit misleading even if we hope that also this year Q4 is very strong, and we have a good year. But [indiscernible] a better guidance on that side. Accelerating traffic growth. The booking situation is very good. That's not a question. If necessary, we also have incentives out. You know that we had incentives after -- on the recovery side after corona, and that made a lot of sense. At the moment, it seems to be that it's not so much the topic of incentives. It's more the topic of resources. So to have a stronger growth, it's only possible if everybody has the necessary resources in places and it's not a topic of incentives for this year. At the moment, at least our perspective and discussions we have with airlines. On the international assets, I think we gave some time ago already indications. Most times, we are working there on concession contracts, which are very clear and have very clear rules in how the aviation charges can be increased or whether they are stable. So if you take Antalya, there is an increase from the next concession period onwards at 2026 as far as I know. But in between a concession period, the fee level, the fee per passenger is fixed. It's not increasing by inflation, and we have seen there are always a very good increase of passenger growth. So that's compensated that one. Greece, there's a clear rule that you can pass over the inflation. Brazil and Lima in principle, also we can pass it over, but we have a productivity figure against it. So that's really comfortable, the situation. Yes, we have to work on the productivity. That's the one thing, but that's okay. But you can, in principle, you have a right to pass it over. These are the 4 major assets on that side. Balance sheet?

Yes, I will take over this question. So first of all, I think there is a clear transparency what will happen in this year. And looking on our last chart in the presentation, so we expect a stable net debt-to-EBITDA number, 6.9, and this is driven by 2 elements. On one side, the increase on the EBITDA side up to EUR 1.2 billion. On the other side, the indebtedness, which is driven by CapEx. And so that we will end up in '23, more or less at same 6.9. And perhaps with a little tailwind, perhaps a little bit lower. So then the interesting question is what will happen in '24? In '24, of course, EBITDA will be significantly higher than '23. On the other side, the CapEx is more or less the same like in '23. So we are still in the negative free cash flow zone, but the increase will be dampened by the higher EBITDA. So from today's perspective, we will overcome the EUR 8 billion threshold, so to say, as the absolute indebtedness, but the net debt to EBITDA will be clearly lower than 6.9. And then in '25, this year, the Lima expansion program is finished. So there's a [indiscernible] on the CapEx side. We are back on a positive free cash flow neutral or even positive. And then we have stopped the absolute increase of the indebtedness at a number, which is 8.0x.

But then you have -- but then you have debt repayment also falling in '24 of $1.4 billion. So don't you think that will have an impact on cost?

As I mentioned, we are in an extremely comfortable situation because we have this huge liquidity, and we can always, at that point of time, decide whether we are going again into the market, depending also from the interest rate situation or we are bringing down our excess liquidity. And [indiscernible] it's clear that we are not going to run a company in this size with such a huge liquidity. This is due to the fact that we are coming from COVID and we survived on our own. In the long run, of course, we are going down to perhaps EUR 1.5 billion maximum excess liquidity and not any longer EUR 3.6 billion plus available credit lines.

And the next question comes from Dario Maglione from BNP Paribas.

Four quick questions from me. What was the energy bill in 2022? Second question, wage inflation of Frankfurt employees expect 2023? Third question, replacing the temporary staff in ground handling with your own staff, could that save? Last question, what was the concession payment for the Greek airports '22 with respect to 2023?

The energy bill in 2022 was EUR 110 million. That's compared to 2019 when it was EUR 85 million, so EUR 25 million in addition. Wage inflation, you mean what the wage increase will be this year. That's too early because the negotiations are running. We are belonging to the federal system on that side [indiscernible] so it's federal contract or a public contract for federal and national services where airports are [indiscernible] they are asking for plus 10% on the unions, but with a minimum of plus EUR 500 per employee, which would mean on average more plus 15%. And in our opinion, that's predictable, but we have to see how we get out. And I wouldn't -- please understand I'm not commenting here. We are this general or what, I believe, what the solution will be at the end because next negotiation around will be 27th of March up to the 1st of April. Temporary works, I think was mentioned already that the additional cost has been around EUR 35 million, but that's not going completely ours. Matthias mentioned also that the additional costs are around 50%. Because if you would replace them with normal employees, then they are 50% cheaper. That's the message behind. Concession charges, we are EUR 20 million in the year 2022 because that's the variable chart. The fixed charge was waived because of COVID [indiscernible] how they pay the compensation amounts, as we mentioned already. 2023, the variable should also run. I would assume the fix is also compensated by this compensation mission is, so it should be around EUR 20 million. Maybe because of traffic growth, EUR 25 million, something like this, but not a big change.

[Operator Instructions] The next question comes from Graham Hunt from Jefferies.

The questions are just 3 from me. Firstly, on retail sales per pax. Could you just -- are you able to give any indication of the spend per passenger from the Asian origins in Q4 and how that compares to pre-COVID levels, specifically for those passengers? Secondly, on dividends. I know that you said you're not looking to resume payments in '23, and I think your overall guidance is to look to propose resuming when leverage returns to 5x EBITDA. Could you remind us when you're expecting that threshold to be reached and whether there are any other thresholds that you're considering with regard to resuming dividend payments? And given your strong balance sheet position or liquidity position, is there any flexibility around that in your perspective? And then thirdly, quickly on the summer and potential disruption around labor. Can you be able to give any sort of color on the contingencies that you have in place to potentially avoid the disruption that we saw last year if talks break down or if we just see an increased level of disruption again over this summer?

I will start with the disruptions on summer '23 compared to summer '22. Yes, it was a very difficult operation in '22. It was very much stressed, but it wasn't -- it hasn't breakdown or broken down. We could manage it together with the airlines through a lot of measurements to stabilize it, but with the high uncertainty. The target for this year 2023 is very [indiscernible] must and who will want it with a higher punctuality, but much more stabilized. And there are a lot of processes in place, hiring of people, qualifications of people and so on and so on, but also changes of processes and much better cooperation. So I'm optimistic regarding summer '23. That will be much better than summer '22. Even if it's not achieving the top performance in out of years, we would like to see like 2016, '17, something like this, but we are getting back to that level. On dividends, yes. I think we gave you the indication that we have to get clear to 20 -- to the 5x EBITDA. That's the main topic, and we will not propose a dividend payment for the year 2023. There was indication we gave you, so somewhere around 2024, '25 that we should come back with the dividend payment. That's the best estimate I can give you today, and I hope that we are then also getting to a positive signal to the market. But let's give us -- let's see how the traffic is recovering over the next 12 months and then what the outlook then is for the year 2024, and then we'll probably be more precise on that one. On retail sales per pax, do we have any information there?

Yes, some additional information regarding spend per pax. So for the full year, we had these EUR 3.33 spend per pax. This is a little bit above 2019 levels. The difference is 2019 was with about 5% Chinese or Asian customers. Now we made a little bit better spend per pax without more or less the Chinese. So the structure changed. Nevertheless, we were able to outperform 2019. And if we drill down into the subsegments of the spend per pax in this EUR 3.33, we have EUR 2.10 for shopping, and this was exactly the same like in 2019. But again, the structure [indiscernible] because we had no Chinese. So the other ones spend more so to say. Then on the advertising side, there was a huge reduction compared to 2019. So this is upside for the future. While on the other side, we clearly outperformed in the subsegment services, and services is dominated by F&B. And we had -- here, we had an extremely strong performance in Q4. And now looking forward, we assume that for the full year 2023, the spend per pax will be higher than the EUR 3.33 as of today. And of course, depending from when and in which dimension the Chinese will come back to our Frankfurt market, this shows the upside potentials because the spending behavior of Chinese is 5 -- 4x higher than the average. So this is showing -- and again, in 2019, we had 5% of Chinese, 4% to 5%. So this is defining the potential. But again, the whole thing depends from when are they popping up here at Frankfurt Airport.

The next question comes from Jose Arroyas from Santander.

Two quick clarifications, please. Could you, first of all, give us your best estimate of the cost savings at Frankfurt by year-end 2023 compared to 2019? And secondly, on Terminal 3 CapEx. I think you mentioned that the EUR 4 billion indication still stands, but that there could be some deviations of maybe around EUR 100 million. But I was running a calculation here at my end. I think between 2017 and 2022, amount of spend is EUR 2.3 billion. And today, you are telling us that there is slightly more than EUR 2 billion that needs to be contracted. Does this not make the new budget closer to EUR 4.4 billion to EUR 4.5 billion than to EUR 4 billion? It's a fair quantification?

I can start with the cost savings. So from our presentation, you know that regarding personnel expenses, we showed in '22, EUR 169 million. So EUR 200 million coming from the 4,000 people running against the wage increase in the meantime. And now looking forward, we are going to lose something from the 4,000 due to the ramp-up in ground handling, a little bit compensated by further reductions in admin having in mind that, of course, the salaries in admin are much higher. So this can, at the end of the day, more or less awash. But what we will see in this year is, again, a wage increase, which today we cannot calculate because, as discussed, there are the ongoing negotiations regarding the new wages. But it can be another EUR 30 million increase, but this is just depending on the outcome of the negotiations. So it's EUR 200 million minus EUR 30 million in '22, minus x in 2023. On the material expense side, so the net impact was zero, but we showed the underlying was EUR 90 million. And now we had in the material expense side, of course, some special items like the provisions, which we do not assume will come back again in this year. So there is a implicit saving of EUR 35 million for the provision, and then we have to see what we can do on the external staff side. But in '23, this is very limited. To make the long story short, it can be -- and we have, of course, inflation -- regarding further inflation on the energy side and other material things. But I would say, as of today that the saving of the provisions, which will not come again a second time, can compensate all the inflationary things which might come from monetary expansion policy.

Regarding Terminal 3, to be quite transparent and quite open, the internal number of the project Terminal 3 has, at the moment, a budget of EUR 4.3 billion, but that's including a risk budget of EUR 150 million. And now the question is very simple. Of course, behind this risk budget, risk buffer is, of course, there are several risks with probabilities. And on best case, if we don't need it at the end, we are on a EUR 4.1 billion or EUR 4.15 billion. If we would need at the end more, then it's your calculation of EUR 4.4 billion. So it's -- I'm not always an optimistic guy, but I would say that the reason I mentioned EUR 100 million, EUR 200 million could have been more at the end that we are working on that also with legal stuff and so on that we don't use the full risk buffer. But we will see at the end 2025, 2026, and then some claims will also take longer, and then we have to see how we get out of that.

And we have another question from Christian Cohrs from Warburg Research.

Yes. 3 questions from my side. First of all, your WACC has increased due to higher cost of equity. Can you maybe share some color what's the backbone of that? And secondly, with higher cost of equity, do you -- we're talking a lot about cost inflation. So it's fair to assume that airport charges prospectively next year will be higher than the increase you're benefiting from this year? And lastly, with regard to your indebtedness. Do you have any non-core assets? Or do you have anything in your portfolio which you could or would you be willing to sell in order to reduce and improve the financial leverage?

Cost of equity, you mean the WACC calculation. Here, we had in the past an increase because the interest rates for the indebtedness went up. Second, the beta factor also increased due to higher volatility. And now I think the higher interest rate levels are given also in the next couple of years. So we don't see a reduction. Perhaps also, again, some risk of a further increase, but we have to see. But again, due to the fact that our indebtedness is long term, so our exposure, as I mentioned, is about 0.2% per annum on the indebtedness side. So regarding beta factor, nobody knows. But again, it can be that there will be a slight increase of the WACC in this year but depending from the variables. And...

Regarding non-core assets, it's a question of definition, what's core and what's non-core. Of course, you can sell if necessary, a lot of topics like parking areas and whatever. But then you're also losing the earnings, all of that and the revenue results of all of that business, that's the reason we haven't gone for this up to now. There's no plan on that.

Okay. That's clear. And with the higher WACC, is there any chance or is there any likelihood now with higher WACC in place that you will go for a bigger airport fee increase to the regulator for next year?

This has nothing to do with the WACC because we have a huge headroom because our return on assets is significantly below the WACC regardless how the WACC will perform. So the headroom is...

But you are right, we cannot go put a figure on the table. We are not going for 2%. It's absolutely clear. So it will be a bigger amount, but I don't want to discuss this at the amount because we are still in preparation and some pre-discussions there.

There are no further questions at this time, and I hand back to Christoph Nanke for closing comments.

Thank you, everybody, for attending. Thank you for this good and productive discussion and conversation. Yes, if you have further questions, please give us a call in IR, and happy to see you soon on one of our roadshows and conferences. Thank you. Bye.

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