European Airlines X Airports: Tensions flare again, snatching away fuel relief (Jul tracker)

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European Airlines X Airports: Tensions flare again, snatching away fuel relief (Jul tracker)

s capacity and aging infrastructure, and traffic growth, while still solid, is capped by aircraft supply

constraints, weaker corporate travel and rail competition. The tariff step-down (-10%) pressures margins, but the

allowed return has increased by 50bps to 5.5%; together with the roll-over mechanism, this protects earnings in downturns

but removes upside from traffic outperformance. Upside relies largely on international assets, notably Noida. But the

greenfield project has faced delays and ambitious traffic assumptions remain questionable. We value FHZ for its

predictability, downside protection and balance sheet strength, but remain unconvinced that Noida will deliver as expected.

• Fraport: The turnaround story that keeps getting better (Market-Perform, TP €74.00). Fraport is our top improver

among European airport operators over the next cycle. Its heavy investment phase is ending with the commissioning of

T3, coinciding with a benign tariff agreement and traffic uplift from Condor’s network reshuffling. While T3 weighs

on near-term earnings through higher depreciation, interest and opex, it materially strengthens the medium-term outlook by

adding c. 20m passengers of capacity, expanding retail space by c. 50% and improving passenger flows and layout. Ground

Handling is also recovering, with operational issues largely resolved, operational leverage returning and pricing upside from

renegotiations with Lufthansa. The international portfolio comprises high-quality assets, notably Antalya and Greece,

which are key profit drivers. A stock in transition, Fraport’s turnaround story is only beginning. At the same time, Fraport