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Fraport Delays New Frankfurt Terminal as Traffic Growth Slows

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Fraport AG, the operator of Europe’s third-largest airport, said it will start operating a third passenger terminal about 3 years later than previously planned as demand for air traffic slows.

Construction of the new Frankfurt terminal will start in 2015, as the operator will only need it from about 2020, the company said today. Passenger growth will be unchanged this year and remain “weak” in 2014, Fraport said, paring an earlier forecast for higher passenger numbers next year. Chief Executive Officer Stefan Schulte made the comments in an interview with Bild newspaper, and spokesman Christopher Holschier confirmed his remarks.

Airport operators in Europe are suffering from airlines adding capacity at a slower pace as they drop unprofitable routes and aim for higher load factors of their planes in a push to restore profitability. Deutsche Lufthansa AG (LHA), which uses Frankfurt as its main hub, said on May 2 that it will add less capacity on long-haul flights than previously planned, while reducing short-haul services.

Lufthansa operated 6.2 percent fewer flights at its passenger airline business in the four months through April, contributing to a 4.8 percent decline of aircraft movements in Frankfurt. At Charles de Gaulle and Orly airports in Paris, movements were down 3.4 percent in the same period, while Heathrow, Europe’s biggest hub, had 2.9 percent fewer movements in the period.

Additional Spend

Construction of the first phase of the terminal will cost about 1.2 billion euros ($1.5 billion), Fraport today said. The company earlier had estimated the cost to be about 1 billion euros, with an additional 500 million euros to be spend on infrastructure connecting the terminal to existing buildings and highways, parking facilities and apron areas.

Fraport earlier had said inauguration of the new terminal was planned for 2016 or 2017, while construction would start after all individual construction stages had been tendered by the middle of 2013.

“The timing of Terminal 3 is strictly driven by demand capacity,” Schulte said on a conference call with analysts on May 8. “We still have around 10 million spare passenger capacity in Frankfurt, so there is no need to start now. We start with construction only when the demand is projected to come. Our philosophy is better to have Terminal 3 too late than too early.”

Frankfurt handled 57.5 million passengers last year, behind Charles de Gaulle with 61.6 million and Heathrow at 69.9 million.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

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