Course of business

Key events in the past fiscal year

Impact of the coronavirus pandemic on Munich Airport

For the second year in a row, developments at Munich Airport have been dominated by the coronavirus pandemic. Drastic travel restrictions and repeated lockdowns in key foreign markets have greatly unsettled passengers and changed their booking and travel behavior. The significant easing of travel restrictions by mid-2021 led to a strong surge in demand in the summer months – following an extremely weak first half of 2021. The positive development of the summer continued in the fall with a noticeable expansion of services, which was also accepted by passengers. This upswing was dampened by the omicron variant that appeared at the end of November. For further information on traffic development, please refer to the section Aviation business.

In contrast to the previous year, there were no general orders or closures of retail and restaurant units in 2021. In the first half of the year, individual tenants were able to decide for themselves how to open their units in view of passenger forecasts. As of July 30, 2021, a limited operating obligation has been introduced in core areas. For further explanations, please refer to the section Commercial Activities business.

In order to counteract the continuing low earnings figures and secure liquidity, the countermeasures initiated in the previous year were continued in the Group in both the expense and investment areas. With strict cost management, the operating loss could be reduced in 2021.

With the onset of the pandemic, the satellite building was no longer used for passenger handling. A partial opening did not take place until December 1, 2021. Terminal 1 was also temporarily closed during this time to reduce costs. In addition, some of the maintenance and conversion work was also postponed until later in 2021. All non-personnel expenses that were not operationally essential were eliminated. In addition, some of the employees at the Munich site have been on short-time working since the beginning of April 2020.

The «Restart» change program initiated in the previous year was continued in order to sustainably reduce costs at the Munich site and to align Munich Airport with the changed market environment in the future. Organizational and efficiency-enhancing measures were developed, and efforts were made to adjust personnel capacity. As of January 1, 2022, these organizational changes were implemented as part of the realignment of the Group.

Many of the planned investment projects from the general expansion plan were examined, among other things, with regard to their operational necessity, their strategic importance and in the context of existing contracts. This review resulted in corresponding reductions or postponements. This did not affect projects with a high degree of completion.

In total, operating expenses remain at a low level in fiscal 2021.

To further expand liquidity and create additional financial flexibility, the Group took out loans totaling €425 million by the end of the year.

Milestone on the way to the Erding ring closure

After three years of construction, the shell of the tunnel extension of the Erding ring closure, as a continuation of the rail line from Freising via Munich Airport to Erding, was completed on schedule in September 2021.

The costs for the shell are being borne by Munich Airport and pre-financed in the form of an interest-bearing repayable subsidy from the Free State of Bavaria. Payment of the investment costs will fall due for Munich Airport when the tunnel extension is commissioned.

Progress on various construction measures despite coronavirus pandemic

In 2021, the expansion of the eastern apron in the area of Terminal 2 by a total area of 180,000 m2 could be completed. As a result, 23 new parking positions are available.

The expansion of Terminal 1 by a pier also continued. The central goals of this expansion measure are to adapt the security controls in the non-Schengen area in particular to meet demand and to increase the quality of one’s stay and the services in Terminal 1.

In addition, the «LabCampus» project is progressing on the AirSite West areal. The construction of the first two office buildings was consistently driven forward. Completion is expected in 2022/2023.

Aviation business

Recovery of traffic figures in the second Corona year compared to the previous year

Traffic figures for Munich Airport

 

 

 

 

 

 

Change

Deviations possible due to rounding

 

2021

 

2020

 

Absolute

 

Relative in %

Aircraft movements

 

153,097

 

146,833

 

6,264

 

4.3

Passengers (in millions)

 

12.5

 

11.1

 

1.4

 

12.4

Airfreight throughput (in tonnes)

 

166,713

 

145,113

 

21,600

 

14.9

Airmail throughput (in tonnes)

 

6,594

 

5,815

 

779

 

13.4

With 12.5 million passengers (+12.4%) and 153,097 aircraft movements (+4.3%), Munich Airport exceeded the traffic results of the first year of Corona. However, the traffic figures are still far below the results of the last regular operating year 2019: on the passenger side by about -74%, on the aircraft movements side by about -63%, and on the airfreight side by about -48%. The negative impact of the coronavirus pandemic is therefore far from over.

Aircraft movements at Munich Airport during the year (commercial traffic)

Aircraft movements at Munich Airport during the year (bar chart (horizontal))

Unlike in the previous year, the Corona restrictions took effect from the beginning of the year. With the Easter vacations and especially from Pentecost onwards, a noticeable recovery set in, accompanied by travel facilitation measures, until the winter flight schedule. The sharp increase in Corona case numbers from mid-October onwards, as well as renewed tighter travel restrictions and concerns about the «omicron variant» that emerged at the end of November, dampened traffic development at the end of the year.

In 2021, long-haul travel was the most affected by global travel restrictions. From the second half of the year, this segment slowly recovered. U.S. traffic initially suffered from the unilateral entry restrictions on EU citizens, but picked up significantly in November after they were eased. Connections to Asia remained extremely limited. In total, long-haul traffic fell short of the previous year with 1.2 million passengers (-31%), and was down by as much as -86% on 2019.

Domestic German traffic was initially the mainstay of traffic volumes with stable demand, but lost its top position to continental traffic as the year progressed. The introduction of the 3G regulation for passengers in the domestic German market further tightened the framework conditions. This resulted in passenger declines of -10% compared to the previous year. Compared to 2019, the 2.3 million domestic passengers achieved represent a decrease of -76%.

Passenger development at Munich Airport during the year (commercial traffic)

Passenger development at Munich Airport during the year (bar chart (horizontal))

As European travel restrictions were increasingly reduced over the course of the year, continental air traffic in Munich picked up again and developed into the most successful segment with an increase of almost +32%. Nevertheless, 9 million passengers represents a drop of almost -70% compared to the 2019 result. It was not until the end of the year, when numerous countries reacted to rising case numbers with renewed travel restrictions, that this momentum slowed.

Over the course of the year, passenger and transfer traffic stabilized as a result of expanded services and the associated improved connectivity. This manifested itself in particular from the end of September with the reintroduction of the fourth transfer hub by Deutsche Lufthansa. On a year-over-year basis, the transfer passenger share was 36%, up from 34% a year ago but down from 38% in 2019. In December 2021, the share of transfer passengers even reached a peak of 48%, underpinning the strength and importance of hub traffic at the Munich location.

Airfreight remained an important pillar of traffic development in the second year of the pandemic, reporting a significantly improved result compared to the previous year (+14.9% and 166,713 tonnes of commercial airfreight handled). The global disruption of traffic flows, especially container shipping, increased demand for airfreight. However, Munich’s special status as a passenger hub with a historically high share of ancillary cargo of over 80% dampened this effect considerably. In principle, this offer disappeared when the long-distance passenger service was largely discontinued due to the pandemic. As a result, ancillary cargo again declined slightly year-on-year by -0.4% to 94,519 tonnes. All-cargo transported on all-cargo aircraft filled the large supply gap and grew massively by 43.7% to 72,194 tonnes. The proportions shifted sharply, and the share of ancillary cargo in freight volumes was only 57% in 2021.

Airmail throughput grew to approximately 6,594 tonnes (+13.4%), but remains -64.2% below 2019 results.

Compared with the airports organized in the ADV, Munich Airport’s performance was slightly below average compared with the previous year, despite an increase in traffic figures. During the crisis, Deutsche Lufthansa bundled its traffic at the Frankfurt hub, so Munich was particularly affected as a second hub. In the course of the second half of the year, however, Munich Airport was able to catch up and in December was even above the ADV average, as Deutsche Lufthansa also expanded its services in Munich again.

In cargo traffic, the main beneficiaries were the pure cargo airports with 24-hour operations and Frankfurt Airport as the home base of Lufthansa Cargo.

Traffic results 2021 in comparison1)

In %

 

ADV

 

Munich

Aircraft Movements (total traffic)

 

+11.4

 

+4.3

Passengers (commercial traffic)

 

+23.0

 

+12.4

Cargo (airfreight and airmail including transit)

 

+16.9

 

+14.8

1)

ADV, ADV Monthly Statistics 12/2021, January 2022

The ranking of the European airports with the highest passenger numbers has been subject to extreme distortions since the beginning of the pandemic. For example, London Heathrow, formerly the busiest airport, temporarily fell out of the top ten. Munich Airport was also badly affected, slipping to 20th place over the course of the year but improving to 16th by the end of the year. Airports in Russia and Turkey in particular were less affected due to strong domestic traffic. Thus, at the end of the year, the top ten included five airports from these countries.27)

In order to achieve the necessary savings, the use of the terminal infrastructure was adapted to the fluctuating passenger volume and applicable spacing regulations. Until December 1, 2021, the Terminal 2 satellite was closed. The subsequent partial opening was based on the special inspection conducted there for USA flights. Terminal 1 was closed from December 1, 2020 to June 22, 2021.

As the pandemic-related traffic declines continued in 2021, Munich Airport took advantage of the situation to carry out fundamental renovation work on the runway system. Corresponding measures would otherwise have had to be carried out at night in the coming years and at considerably higher cost.

Ground handling services in a difficult economic environment

For the two subsidiaries AE München and AE Berlin, as for the entire German aviation industry, 2021 was marked by low handling figures in the first half of the year as a result of the global coronavirus pandemic.

There are two ground handling licenses at Munich Airport. One of these is permanently assigned to the subsidiary AeroGround Flughafen München GmbH (AE München). In 2021, AE München recorded an increase in handling volumes of 10.4%. Market share increased by 3.9 percentage points to reach an average of 55.1% in 2021. This can be attributed, among other things, to a shift in market share at Deutsche Lufthansa, which also resulted in a higher market share in Terminal 2.

In Terminal 1, too, the stronger recovery of customers compared with the competitor Swissport-Losch also resulted in a slight increase in market share.

AE Berlin handled 17,661 turnarounds in the reporting year (2020: 10,077 turnarounds). The market share at the Berlin location increased year-on-year in passenger traffic to 43% (2020: 24%) and in freight traffic to 18% (2020: 3%). The increase in market share is attributable to the two newly acquired major customers Lufthansa Group and Eurowings, which AE Berlin has taken over from the opening of the new BER airport in November 2020.

Commercial Activities business

Compared to the previous year, revenue in the Commercial Activities business unit remained at the previous year’s level due to the ongoing coronavirus pandemic and the resulting continued low passenger volume. Due to the passenger slump, terminal areas at Munich Airport were already closed in 2020 and gradually reopened in 2021:

  • Opening of the check-in area in the central building on March 26 and check-in in Module C on May 19
  • Reopening of departure areas in Terminal 1, Modules B, C and D, Module A from June 23 in peak times
  • Partial opening of the Terminal 2 satellite on December 1

There were no ordered closures of retail and food service units during the fiscal year. In the first half of the year, it was up to the tenants themselves to decide whether to open their units in view of the passenger forecasts. Beginning July 30, a limited duty to operate in core areas from 7:30 a.m. to 4 p.m. was implemented.

In order to reduce the burden on tenants and retain them at the Munich location in the long term, adjustments were made in individual cases to rents and leases in line with 2020, primarily for passenger-dependent retail and gastronomy and differentiated according to the type and scope of the restrictions, where legally permissible and necessary.

Retail – sales development slumped more sharply than passenger numbers

Despite the increase in passenger numbers and the gradual opening of terminal areas, retail sales revenue grew at a disproportionately low rate. Included here is the full-year effect of the Corona crisis that occurred in 2021.

Gastronomy and hotel continue to suffer from the coronavirus pandemic

Sales in restaurants and bars, which slumped due to the coronavirus pandemic and related restrictions, increased slightly in absolute and per passenger terms compared to the previous year, despite the full-year effect of the crisis.

The hotel once again recorded declines in revenue due to lower demand for overnight stays and conferences. The time could be used for modernization measures. At the 2020 Skytrax Awards, the five-star hotel in the central area of Munich Airport was named the second-best airport hotel in Europe.28) This award was suspended in 2021 due to the pandemic.29)

Parking – demand increases with passenger volume

Passenger development at Munich Airport has a strong influence on the parking business. Although the proportion of trips made by car or car sharing has increased compared with the 2020 financial year, this is only a very small absolute amount. The tenant parking business, which is not directly passenger-dependent, recorded slight declines in sales.

Advertising – challenging market environment

Contrary to the industry trend in 2021, revenues at the airport have declined due to low passenger volumes, making it a less attractive advertising location. In addition, the number of long-term contracts (including passenger boarding bridges and smoking lounges) decreased due to the terminal closures, some of which will continue in 2021.

Real Estate business

Ongoing site and real estate development

The effects of the coronavirus pandemic were also felt in the Real Estate business unit. Various planned construction projects are still suspended or on hold. In ongoing projects, construction companies reported additional costs and obstructions. Overall, however, earnings were roughly on a par with the previous year. While rental income fell slightly, costs were reduced by deferring and prioritizing conversion and maintenance measures. The requests made by various tenants in 2020 and 2021 for payment extensions and rent reductions were resolved amicably.

The development of the future LabCampus project on the AirSite West site is making progress. In the previous year, construction work began on the first two office buildings, which are scheduled for completion in 2022/2023. The marketing activities showed first successes.

Extensive development measures were required to improve access to AirSite West. These could be completed in 2021.

In the eastern area of the airport, Munich Airport continued the tunnel works related to the Erding ring closure to improve rail access to the airport. The existing tunnel, which currently ends at the level of the satellite building of Terminal 2, will be extended in an easterly direction by around 1.5 kilometers and supplemented by a 300-meter-long ramp structure via which the trains will return to the surface. FMG completed the tunnel shell in 2021. DB Netz AG is now equipping it with the technical equipment required for train operations.

Munich Airport is currently building a new pier at Terminal 1. The extension will help to improve the handling of wide-bodied aircraft and non-Schengen passengers:, which was urgently needed due to the changing traffic structure. In addition, because the requirements for security checks have increased constantly since Terminal 1 was opened in 1992, checks on persons and luggage must be expanded. With the addition of this pier, the handling quality in Terminal 1 can once again meet the demands of passengers, airlines and authorities.

The overall concept for the extension includes a structure on three levels, comprising a core building adjacent to Terminal 1 and a pier. This will be connected to the existing Modules A and B and extend some 320 meters into the western apron of Munich Airport. Up to twelve aircraft will then be able to dock at the pier. The total area of the expansion, including the renovations in the existing arrival area B, is around 95,000 m2. The shell construction work was largely completed in 2021. Work on the facades and roof was started in 2021. The four connecting bridges to Terminal 1 have been contracted. In 2022, the tenders for the interior construction and building services are to be issued, with the start of interior construction planned from the first quarter of 2023.

Residential properties of various types have been rented since 2019 in order to provide suitable living accommodations for employees already working at Munich Airport as well as for new employees. Apartment buildings owned by the airport have also been renovated and converted into residential facilities. The 196-bed hotel for employees opened in Hallbergmoos at the end of 2019 will also remain available. Due to the current personnel policy (hiring freeze, partial retirement and volunteer program), there is currently hardly any demand from employees. Nevertheless, the «FMG and Housing» project is to be continued in the long term as an HR marketing tool, but in the short term, apartments and rooms will be marketed to external parties to minimize the deficit.

In the AirSite West area, the P44 parking garage with 2,000 parking spaces was opened this year. Advancing real estate development at AirSite West (LabCampus, FMG corporate headquarters) requires more parking capacity to meet future needs.

Following a successful search for a location in Germany, the company Argo AI GmbH commissioned the first construction phase of a research and development site for autonomous driving in the southern development band in mid-2021. In addition to the approximately 55,000 m2 site, a lease agreement was concluded for workshop and office space in the building currently under construction on the LabCampus. Construction of the second and thus final phase will start in 2022.

The modernization measures at the Hilton Hotel are progressing: In November 2021, the modernization of the rooms and corridors in the east ward building was completed, and it is currently the turn of the west ward building and the replacement of the atrium roof glazing. Completion of the entire project is expected by the end of 2022.

27) Airports Council International and self-survey, February 2022

28) SKYTRAX, World’s Best Airport Hotels 2020, December 2020

29) SKYTRAX, World’s Best Airport Hotels 2021, December 2021

Airports Council International (ACI)
An international organization, headquartered in Montreal, which represents airport operators. Around 1,950 airports in almost all of the countries in the world are ACI members, including more than 500 airports in 55 European countries.
German Airports Association (ADV)
The umbrella organization of all passenger airports in Germany, Switzerland, and Austria. The organization works to promote Germany as a strong and competitive center of aviation.
Schengen/non-Schengen
Departures and arrivals areas for passengers from member states that have signed up to the Schengen Agreement; these passengers have either arrived directly from one of these states or want to travel to one. No border or passport controls are needed. Non-Schengen refers to areas for passengers who have arrived from countries that are not party to the Schengen Agreement. Passports and customs checks are required in this case.

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