Fraport AG Frankfurt Airport Services Worldwide
XETRA:FRA
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Fraport AG Frankfurt Airport Services Worldwide
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Hello, everybody, and a warm welcome from my side. Welcome to Fraport Q1 analyst call. Time is running. Q1 is already over. We are heading for the summer, which hopefully will be a good one. Today, our CFO, Matthias Zieschang, will guide you through the presentation. No time to wait. So let's start.
Yes. Good. Thank you very much. Good afternoon, ladies and gentlemen, and also a warm welcome from my side. Today, we are having a full agenda, so let's go straight into my presentation.
On my first slide, Slide #3, you will find an update on our latest traffic trends here in Frankfurt. As we already guided with our full year presentation, we are seeing a clear improving trend in terms of passenger momentum. On the slide, you also see the latest results traffic in April. While we started the year at about 50% of the 2019 level, April has marked the strongest month since the outbreak of COVID-19 pandemic. At a passenger recovery of roughly 66%, we welcome close to 4 million passengers at Frankfurt Airport.
Taking a closer look on the passenger performance on a weekly basis. The passenger recovery was even stronger at the end of April when compared to the start of the month. In calendar week 16, we even reached a recovery rate of 71% compared to 2019, mainly driven by Easter holiday makers. Here, the recovery on markets, which were accessible without major COVID-19 restrictions. So the European short-haul traffic was even stronger at 77%. The same is the case for North American traffic, which recovered remarkably at 80%. And having that these traffic regions, which were stronger restricted or even heavily restricted like China, Japan or Korea, underperformed the remaining markets and prevented an even stronger result for Frankfurt Airport in April. In addition to the April traffic numbers, also the trend into May remained very strong.
On Slide #4, you will find a traffic update on our international portfolio during the first quarter of the year. While we already discussed Frankfurt, the traffic performances for our international portfolio was marked by an even stronger recovery in general. For our major participations, so Fraport Greece, Lima, Brazil, Bulgaria, but also Antalya, passenger figures recovered by roughly 70% or even more and therefore, outperformed Frankfurt Airport. The reasons for the outperformance remains the same as in the past year.
Our international airports are characterized by more leisure traffic and so-called VFR, so visiting friends and relatives compared to Frankfurt Airport, which used to be characterized by a higher share of corporate travelers before COVID. Moreover, key markets for our international portfolio were more accessible compared to Frankfurt, which is still negatively impacted by intercontinental traffic restrictions.
As a result of those 2 effects, we expect our international portfolio to continue to outperform Frankfurt Airport going forward. For our minority participations in Russia and China, you see a mixed picture. While in St. Petersburg, the airport is now almost exclusively used for domestic passenger traffic. Xi'an continues to be strongly impacted by mobility restrictions in line with the Chinese Zero-COVID policy. The traffic performances, which we experienced, but also the forward-looking information that we are getting bring us to our midterm passenger outlook on Slide #5. The most important information, we are iterating our traffic expectations to date. During the past few weeks, we faced a lot of discussions about inflation, rising cost of living and the potential impact on our industry. From today's perspective, and based on our experience, we remain fully convinced that leisure traffic will fully recover next year. So fully recover next year. We continue to see that people are willing to travel.
Today, maybe even more than before COVID because they were cut away from the rest of the world for almost 2 years. We also expect that people, even in a negative GDP scenario, we'll rather save on other items like cars when compared to taking 1 or 2 weeks off on holidays. We also expect that aircraft delivery will drive capacities up and keep ticket prices affordable. As a result, we continue to expect that leisure traffic and VFR traffic will be fully recovered next year. Here, we have to highlight that the preconditions are accessible markets, of course.
From today's perspective, we hope for China to come back to the market, but we cannot predict the Chinese market opening. The same is the case for sanctions being imposed on traffic, for example, to and from Russia. Even though the Russian market is of low importance for Frankfurt or Fraport Greece, we cannot rule out that sanctions on Russia may adversely impact our Eastern European airports going forward. Still, we expect very strong traffic results from our leisure-dominated airports going forward.
For corporate, traveling activities. We continue to be more negative and expect a structural leakage also in the future. For us, it remains unchanged. No one can precisely tell the level of the structural leakage. Certain markets like the U.S. may recover quicker, but on European short haul, we clearly expect the leakage due to the rise of virtual meetings, budget cuts and growing CO2 considerations. As a result, we expect Frankfurt Airport to be just recovered by 2025 or '26. While we expect a full recovery in our international portfolio already next year.
Turning the page to an update on our portfolio optimization. On Slide #6, you see the divestment of our 24.5% stake in Xi'an Airport, which we agreed end of March. To be very honest with you, the strategy which we initially pursued in China. To build relations and develop our business to majority holdings has never really materialized. We invested a lot of time and know-how, but we had to come to the conclusion that an exit for us was most reasonable.
As a result, we decided to seek an exit and find a buyer. Based on the market conditions, it was evident that this buyer had to be a Chinese company. Finally, this process, which we were working on for a longer time has been successfully concluded this March. We expect the transaction to close in Q2 this year. At this point, we also expect the financial settlement of the deal.
Financially, despite the devaluation of the renminbi against the U.S. dollar or other currencies, the euro, renminbi conversion is quite okay. So we expect group net debt to go down [Foreign Language] by between EUR 150 million to EUR 160 million.
With regard to our P&L, we already booked a EUR 20 million gain during the first quarter. Upon closing, so in the second quarter, we expect another EUR 30 million positive gain on our group financial results and some EUR 10 million to EUR 20 million gain on our group EBITDA. An update on our staff restructuring program in Frankfurt is shown on Slide #7. On the chart, you see a few developments. The most important information is that we continue to be more than 4,000 employees leaner company. While there is less debate on the need to hire back employees in ground handling, the increase in the segment remained low at about 40 employees at the end of Q1 when compared to year-end 2021. Here, we remain committed to ramp up stuff, but tight labor market conditions prevent a quicker ramp up.
On the other side, we continue to reduce headcount in admin and semi admin functions. As a result, all the ground handling ramp-up was more than offset by reductions in our corporate headquarters. In our airport security management, we also recorded 2 effects. On the one side, we assumed a new contract to operate security checks at Hamburg Airport. This contract added more than 600 people. On the other side, the rest of the airport security team was slightly down compared to year-end 2021. Here, we still have roughly 85% of our peak summer staff level on board.
To be clear, we, as a management team, remain committed to ramp up staff in ground handling in order to support operations. On the other side, we continue to reduce staff in admin and semi admin functions. The later on will support us to achieve our previously communicated restructuring target of about 4,000 employees. Besides staff restructuring, the hottest topic which we discussed during the first quarter was price effects on labor and other cost items, such as electricity.
On Slide #8, you see an update on our ability to pass on inflation at Frankfurt Airport. Yes, you are aware, Frankfurt Airport is a dual regulated airport infrastructure. This allows us to allocate costs incurred to run the airport in the regulated parameter on the users of the airport. As a result, costs incurred in the regulated part of aviation, but also in central infrastructure and ground handling can be passed on. Here, as you are aware, we usually run annual fee schemes at Frankfurt Airport. The annual revision of returns and forward projections bring us into the position to also account for inflation in upcoming years.
Here, we already informed you that we will seek an even slightly higher fee increase next year when compared to this year. Also, our airport security business is covered by a legal framework. As a result, the 4.5% wage increase for Frankfurt security staff this year will be compensated by higher revenues in the same amount. Within our nonregulated businesses, revenues in retail and car parking usually follow inflation. Here, inflation on selected goods can even be higher than the average inflation rate. In Real Estate, contracts are usually structured with a price indexation formula. Historic contracts, however, adjust over a longer period of time, so every third, fourth or fifth year, contract renewals will here see a shorter time period to include for a quicker inflation adjustment.
So as a first conclusion, Aviation, Retail & Real Estate as well as central infrastructure are well covered when it comes to inflation. In Ground Handling services, we have to do some more work.
Current contracts are usually equipped with fixed prices. This approach leaves an open angle to out or underperform inflation. New contracts should, therefore, be structured with inflation clauses Here, as a business is very labor-intense we may also consider to link the prices rather to the wage inflation than general CPI. Having said this, while we cannot rule out that inflation will drive our OpEx figures up we feel reasonably protected to pass on inflation in prices.
On Slide #8 (sic) [ #9 ], you see the same focus for our international airports. So how can we pass on prices and how are we protected against inflation? Being conscious of time also to allow for Q&A, we won't be able to walk through each and every airport in detail. You, however, see that the prices for airport charges increased in Lima and our 2 Brazilian airports adjust annually for inflation. Simultaneously, revenues on the non-aviation side are usually collected as a percentage of revenues therefore, are expected to also follow inflation, for example, on retail groups.
In Ljubljana and at Fraport Twin star, there's no annual CPI link. While Ljubljana is more comparable to Frankfurt on the regulatory side, Fraport Twin Star seeks direct negotiations with the concessions -- Concession Grantor. In both investments, inflation will lead to higher OpEx, which is addressed later on. At Fraport U.S., our business model is to develop and rent out retail outlets. The underlying OpEx inflation is limited as we just hired about 50 employees.
On the revenue side, there should be, however, higher inflation-linked revenues from which we will participate in the future. Shifting gears and let us now move on to our group financials in the past quarter on Slide #10. You see that our group revenues and group EBITDA clearly improved compared to Q1 '21. The increase is even stronger and bearing in mind that in the first quarter of 2021, we recorded 2 major one-off items in the amount of about EUR 70 million in total revenues. Adjusted for these items, so the settlement of the legal dispute in the security business at Frankfurt Airport in the amount of roughly EUR 58 million and the cancellation of minimum lease obligations at Fraport U.S. in the area of EUR 12 million.
Total revenues in the period under review were clearly up by more than EUR 180 million or just under 60%. Also, our group EBITDA clearly improved by more than EUR 100 million on an underlying basis. Despite higher OpEx for turnover-related concession charges energy cost and the absence of short-time working. Bottom line, we faced 3 major effects. Firstly, the settlement of the legal dispute in the security business led to a higher EBITDA of EUR 58 million and higher interest income of roughly EUR 18 million in the past year. Secondly, the agreed sale of Xi'an Airport led to a EUR 20 million higher result from investments accounted for using the equity method this year. And thirdly, we impaired our St. Petersburg loan, the shareholder loan in the amount of some EUR 48 million.
In St. Petersburg, we continue with all our claims based on our conservative accounting approach we, however, reduced our book exposure. The loan impairment led to a proportionately high financial result burden and, therefore, reduced our group profit compared to Q1 last year.
Slide #11 provides you an overview on our cash flow and net debt situation in the first quarter. While our operating cash flow in Q1 last year was clearly negative at minus EUR 214 million. Our operating cash flow achieved a breakeven value of plus EUR 3 million this year.
On the CapEx side, you see continued cash outflows for the Lima and Frankfurt airport expansion programs. You also see that those 2 numbers are well in line with our guidance for the full year. So we have not seen any major impact from inflation on the projects so far. After concluding the expansion works in Fraport Brazil and Greece, those 2 investments continue to run on a very low maintenance need. Bearing our full year presentation in mind. Brazil and Greece now invested a combined value of roughly EUR 11 million during the past 3 quarters, so EUR 3 million to EUR 4 million per quarter for both investments, a very low amount.
On top of the expansion CapEx, the visible impact on our net debt development was derived from our new Antalya investment during the first quarter. As we guided with our full year presentation, Antalya will lead to a minimum EUR 300 million higher indebtedness this year. At EUR 375 million, this figure is well in line with our expectations. Moreover, on the level of net debt, we also faced adverse FX effects from the devaluation of the euro against the Brazilian real. This effect increased our indebtedness by roughly EUR 60 million in the reporting period. As a result, our group net debt rose to a level of more than EUR 7 billion, and our net debt-to-EBITDA key leverage figure stood at 9x. How did the negative free cash flow and capital injection into Antalya impact our group liquidity situation.
On Slide #12, you see the breakdown of our available funds, including committed credit lines and secured finance at the end of the first quarter. You see that despite the cumulated cash outflows of EUR 631 million. Our finance team managed to keep liquidity higher at a level of more than EUR 4.1 billion. Based on our current business and financial projections, this amount should bridge us well into fiscal year 2025 without considering additional finance. So we feel well comfortable with our financial and leverage situation at the end of the first quarter.
Let me now move on to our segment performances in the period under review, starting with Aviation on Slide #13. In the table and graphs, we also provided you the fourth quarter performance of the past year as a reference. Due to the reduced application of short-time work and the operation of Frankfurt Terminal 1 and Terminal 2, if you -- Q4 as a good comparable basis to assess the cost development segment. But let me start with the revenue performance first. Despite the absence of the EUR 58 million gain from the securities settlement in the past year, revenues in the Aviation segment improved by roughly EUR 6 million in Q1 this year. The key driver for the revenue increase were higher aviation charges, which also included the 4.3% average fee increase as of January 1.
In security, the underlying revenue figure, so excluding the EUR 58 million extra gain increased from EUR 28 million to EUR 37 million this year. Here, in addition to the passenger recovery, we recorded higher revenues from the takeover of the new Hamburg security contract in the area of EUR 4 million. On the flip side, start-up cost for the Hamburg basis led to higher OpEx in the amount of some EUR 5 million. Without considering those inorganic cost items, total segment OpEx stood at roughly EUR 162 million and therefore, well below the Q1 '19 level and also below Q4 last year. When compared to Q1 of the previous year, the higher OpEx can mainly be traced back to the dropout of short time working in the amount of EUR 12 million to EUR 13 million. Bearing the dropout of the short time working in mind. The Aviation segment was able to offset for higher electricity costs and the reopening of the terminal infrastructure thanks to continued restructuring gains. As a consequence, segment EBITDA marked a clear improvement on an underlying basis by EUR 45 million.
Moving now on to our Retail & Real Estate segment on Slide #14. Looking at the individual revenue streams. We continue to record strong results in our real estate and car parking subdivisions. Both divisions still outperforms the passenger recovery with real estate revenues being already higher compared to the pre-COVID level. In contrast, retail revenues are still impacted by the lower number of passengers and lower advertising revenues. While especially services revenues are holding up well on a per passenger basis, we see a normalization of our retail per passenger key performance indicator due to lower per passenger advertising revenues and normalization of shopping revenues per passenger. Despite this mixed performance, our retail per passenger key performance indicator was still higher compared to pre-COVID at EUR 3.52.
In total, segment revenues have meanwhile recovered to 73% of the 2019 level. On the cost side, we recorded especially higher cost for energy to energy supply services, which grew by EUR 6 million compared to Q4 '21 of EUR 5 million compared to Q1 2019. Despite this additional cost headwinds, the segment EBITDA recovered to a level of 60% of 2019, pointing to a continued high margin of roughly 70%.
Turning the page to our Ground Handling segment on Slide #15. At EUR 106 million, ground handling revenues were up by 58% compared to Q1 '21 and reached about 65% of the 2019 value. The key drivers for the revenue recovery were higher passenger numbers and charges that are not directly linked to passengers like maximum takeoff weights and movement related charges. On the cost side, ground handling OpEx continued to be down by roughly EUR 30 million compared to Q1 2019. Also, when compared to Q4 of the past year, ground handling performed well and costs were down by some EUR 9 million. Compared to Q1 2021, the higher segment cost of roughly EUR 20 million are almost exclusively attributable to the dropout of the short time working this year. At minus EUR 90 million, the operational leverage of the segment is well on track to achieve an EBITDA breakeven result in the entire year 2022.
On Slide #16, you will find an update on the cost performance of the 3 Frankfurt-based segments. Compared to Q1 2019, we were able to reduce segment costs by roughly EUR 63 million on a like-for-like basis. The cost reduction mainly reflects the staff restructuring that we undertook and that we continue to expect compared to the first quarter of the last year. The OpEx difference mainly arises from the drop out of the short time working. The application of short-time working saved us about EUR 37 million in Q1 2021. Moreover, we faced higher costs for energy supply this year. While the price effect on a quarterly basis amounted to EUR 6 million compared to Q4 '21. The reopening of terminal infrastructure increased our energy bill further. Bearing the impact from inflation in mind, we are well satisfied with the OpEx reduction, which will be achieved.
Moving on to our final segment, International activities on Slide #17. In line with the traffic recovery, we see a quicker revenue ramp-up in the International segment. Excluding for IFRIC 12, segment revenues are already back at 78% of the 2019 level and clearly exceeded Q1 last year. While revenues are recovering quickly.
Also turnover-related concession charges are recovering. At EUR 28 million, turnover-related concession charges grew by roughly EUR 14 million compared to Q1 last year. Despite these higher cost items. Segment EBITDA reached EUR 43 million in the period under review. This EBITDA amount came without any major one-off items. The recovery rate on EBITDA, therefore, stood at a high level of 77% of 2019 base year.
Taking now a look at our outlook section on Slide #18. Costs concluding the first quarter, we don't see any need to change our expectations. We are well encouraged by the traffic and financial trends which we are seeing in Frankfurt and in our international activities. We are, however, still at the very beginning of the year and ahead of our key summer season. As a result, we are waiting for some more traffic and financial results to get a more precise view on the rest of the year. From today's perspective, and we also mentioned this during our full year presentation, we are seeing our sales rather at the upper end of the traffic and the financial guidance.
Summing up, we are clearly seeing improving traffic trends in Frankfurt and international. We have also taken clear steps to streamline our portfolio on an asset basis, but also with regard to our restructuring, especially at Frankfurt Airport. We also do see a clear upward trend in our financial numbers. The financials are also supported by price effects, which will also help us to offset inflation going forward. And we are running a cheaper and more flexible OpEx space. Having said this price effects in combination with our restructuring measures, will enable us to emerge stronger from the crisis than before.
So ladies and gentlemen, thank you for your attention, and we can now open up for Q&A.
[Operator Instructions] And the first question is from the line of Ruxandra Haradau-Doser from Kepler Cheuvreux.
First, going back to April. Airlines in Europe indicated strong bookings for Easter in Q1 and it was for many market participants, you expect it to be one of the traffic peaks this year. Just curious to understand was the traffic recovery in April in line with your initial expectations? And you mentioned the traffic trend in May remained very strong. Did you see a further improvement of the traffic recovery last week relative to April? Second, do you expect to go back to the 80-20 slot allocation rule during the winter flight schedule to 2022, 2023? And third, could you please give us some guidance on retail revenues per passenger for the remaining of the year? In 2018, you mentioned that the entrance of Ryanair at the airport had a dilutive effect on retail revenues per passenger. Ryanair's passengers were flying from an area of Terminal 2, where there were no retail shops, seen some passengers of Ryanair are likely to fit now to airlines in Terminal 1. Should we expect this to support retail revenues per passenger during summer?
Yes. Thank you, Haradau-Doser for your questions, starting with the traffic question. As I mentioned in -- now we showed you the traffic numbers from Q1. We have now already the April numbers, and it looks very positive. So the -- all the trends continue. So we see strong booking numbers and in Frankfurt as well as on the international side. So for example, highlight, for example, is Greece. And based on preliminary figures in April, we have for all the 14 airports. We are back at roughly 98% of the 2019 that which is very strong momentum. And this shows that our hypothesis that we expect more or less latest in '23, a full recovery of leisure traffic is a solid hypothesis. So the summer will become good and the current trends in April as well as in the first May days to confirm this.
Second question, 80-20 this is absolutely open whether this will be reintroduced in the moment is not an issue. We are happy that the traffic is coming back, and we have to manage this ramp up with the enormous challenge in the moment. So it's not a topic in the moment. We have to see in winter, what will happen, whether it makes sense to come back or not, but this is also a European topic. Retail spend per passenger in the presentation, you could see that, of course, compared to the previous quarters, the number went down, but this has to do with the media revenues, which are lower than in former quarters.
On the other side, we still have more or less very minimal traffic going to and from Southeast Asia. So these are the big spenders, the Koreans, the Japanese, the Chinese, and despite this fact, the spend per pax is higher than compared to the reference year or quarter in 2019. So we are higher despite , so to say, negative structure at the moment on the passenger side. And this gives us confidence that we will continue with higher passenger numbers also in the upcoming quarters.
And when whenever it will be the Chinese or Asian markets will open again, and this will happen in the future. Nobody knows exactly when then we expect a strong additional impact on this number. This is also combined to your last question, Ryanair, when they left the airport. On one side, Ryanair left. On the other side, we have the phenomenon that Eurowings took over a lot of routes from Ryanair, so to say, they are transporting more or less the same people, so that the -- in the moment, what we can see in the numbers, we can't see really a negative or positive impact from this shift because, again, it's a new carrier, so to say, who is carrying the same passengers as before. So we don't see any positive or negative impact from the, so to say, Ryanair effect. Yes. I hope I have answered all your questions.
The next question is from the line of Sathish Sivakumar from Citi.
I've got 2 questions here. Firstly, on just to understand the impact of inflation across your business segments actually. How much is pass-through in terms of say aviation? And how should we think about in terms of Retail & Real Estate, like if the contracts of CPI index, it means that when would we start to see 100% recovery of inflation in those segments? And secondly, as we go into the peak summer, right, what are your plans in terms of ramping up to meet the peak summer travel, how do you see challenges in terms of potential hiring?
Your first topic, inflation. As I mentioned, this is for us a hot topic, so to say, because, first of all, we see higher inflation rates. We assume that this higher level will also continue in the next couple of years. So we don't follow the predictions of the ECB. So we will see definitely higher inflation rates, and we have to deal with this. And the good information is that we will be able to protect our business model and the profitability against this threat coming from inflation. And again, going through the segments we have in Aviation itself, we have based on the annual adjustment of fees. We have not just the chance, we have the mechanism to adopt and to adjust on the fee side. So whenever the inflation goes up, on the material expense as well on the personnel expense side. We have headroom to go for higher fees. And I think we showed up from the 1st of January this year was 4.3%, that we were able to pass through in next year.
So in '23, the fee increase will be higher than 4.3%. And for the following years, we have really to see what will happen on the inflation side, and we already signaled to the market depending from the long-term inflation level we have to pass it through. So whether it's high or low, we have to see, but we will transfer this to the market, and we have to do it, and we can do it.
In Retail & Real Estate. In Retail, as of today, we have this, so to say, perfect inflation protection in a way that we are collecting a share of the revenue realized in the shop. So whenever inflation driven, the revenues go up, we, in the same magnitude in the same percentage. We have also higher income proceeds. And on the other side, having in mind that we have a strong focus on luxury goods, where you currently can see even higher inflation rates. So it could be that on the retail side, we also can be an inflation winner.
On the Real Estate side, we have already in most of the contracts, CPI -- CPI indexation, the only so to say, thing which we have to fix it that in the old contract, there's not an automatic adjustment year-over-year. It's in some contracts, an adjustment after 3, 4 or 5 years. And now we are in so far, when the contracts will be renewed, we are looking that then we are going over into an annual adjustment on the inflation side to have sooner the compensation for higher inflation rates.
But in principle, we have the same inflation protection as on the retail side. In ground handling, we have in some contracts already CPI clauses and some not. And we have permanently due to the fact that we have nearly 100 customers in ground handling. So there's a permanent flow of contracts, which is expiring has to be renewed. So whenever a new contract is on the table, the new contract will have an inflation adjustment factor embedded. So that's in a relatively short time. So our whole business model here at side of Frankfurt is fully inflation protected. And when we step over to the international business, you can see also on Slide number -- Slide 9, you can see that in the most cases or more or less in all cases, we have also inflation protection.
We have a direct mechanism in Greece in Brazil as well as Lima Airport in Greece, it's in so far also very good. We have 0.9% times the Greek CPI having in mind that you should compare the inflation rate increase with the inflation rate in the Eurozone, you can see an even higher inflation impact, and we are -- we have an extremely lean business model there with just 600 employees. So with other words, when the inflation is 4%, 5%, 6%, 7%, times 0.9% in we have a strong impact on the revenue side, which is much higher than the burden on the cost side. So that we are definitely an inflation winner in Greece. In Brazil, it's so far, a perfect inflation protection because we have, on an annual basis, also the inflation rate, which directly increases then the fees. And in Lima, it's more or less the same thing, while at Ljubljana and Twin Star we have more of the, so to say, the German regulation. So we have a higher cost burden. And based on the dual-till regulation, then we have to negotiate higher fees. But the net impact is also more or less the same, but it has not this automatic mechanism like in Greece, Brazil and Lima.
But to summarize all these topics we have market power. We have on most in our contracts, we have already these adjustment factors. And in these contracts where today, we don't have it, we are going forward and looking to bring it in, so that our business model then will be more or less 100% inflation protected.
So second question, ramping up. In summer, this is, of course, it's a challenge. You have to see we came from extremely low traffic numbers. And then in some months, we have to ramp up significantly and the labor market is not like a switch. It's not plus or minus or on or off. So we have to recruit the people, and we also have now the challenge that the utilization during the day is extremely unbalanced. So we have to peaks during the day where we have nearly 100% of the pre-COVID traffic. And in the other remaining hours, is relatively low, and we also cannot let me say, engage 100% of the former people for 2 hours per day peak time. So this is a real challenge, but nevertheless, we do our best. We are ramping up with a number of employees in ground handling, and we will also manage the summer traffic.
Sorry, just a follow-up there, actually, on ramping up. So what is the typical lead time that you should think about in terms of ramping up to pre-pandemic levels, which is traffic recovering back to pre-pandemic levels. Is there is any overlap of the period of time that you need to ramp up to 100% but the traffic only comes back, say, 2 or 3 weeks later.
Yes. First of all, if you look now on the monthly numbers, we have the phenomenon that on the ground handling side, we are increasing with the number of employees on the admin and semi admin side, we are still decreasing so that we have 2 vectors running against each other. The net impact is negative, but on a very slow number. So for example, latest numbers for April. In April, we ramped up on a net effect just with 20 full-time equivalents. Of course, in ground handling, it's much more. So -- but let me say, at the end of the day, the problem is as long as we are not back on the 2019 passenger numbers. We still have or will have an imbalance because we have not an equal utilization of the slots during the day. And again, if you have between 11:00 and 12:00, you have 100% traffic back. And let me say at 15 to 16 hours, you have just 30% or 40% of the former traffic. You don't find a formula where you have, on one side, a perfect operation on the other side, proper productivity. So it's always a compromise. So -- and again, we have -- in the peaks, we still have nearly 100% of the pre-COVID traffic, but we cannot, let me say, engage 100% of the former employees because then we had from a financial perspective, we would have a productivity, which would be a disaster, and no airline is willing to pay for it.
So we have to maneuver through as long as we are not back on the old 2019 numbers because when we are back on 70 million passengers at Frankfurt Airport, then we have a well-balanced operation during the day. And this is what I can tell you is that we are improving month by month. But it takes another year until we are back on track because the general mismatch, we cannot overcome. Nobody can overcome this.
And -- but nevertheless, the number of employees in ground handling will go up. And we expect that up from now to peak time in summer, perhaps, there will be 400, 500 people more. And this will help us to relax the situation on the operational front.
The next question is from the line of Cristian Nedelcu from UBS.
Maybe the first one on Frankfurt cost savings. If the run rate this year is around EUR 300 million cost savings. How should we think about the bridge into 2023. You have some ramp-up of costs as traffic further recovers and I guess, some further inflation on top of that. Secondly, looking at retail and parking activities in Frankfurt, you talked about rising prices even more than inflation in some cases. Could you elaborate a little bit what sort of average price increase are you seeing these days? And how do you think about the demand elasticity to higher prices in retail? And maybe the last one, looking at your gross debt, I think you have roughly around EUR 400 million, EUR 500 million to refinance this year, I think around EUR 800 million to refinance next year. what level of interest rate do you expect to refinance these branches?
Yes. Thank you for your questions. First topic is the cost base and cost effect. So coming from last year, where we had and where we have the full year numbers, we showed you when we presented the full year numbers '21, cost savings of EUR 406 million. So this was -- and in reality, it was even a little bit more because we did some extraordinary things in Q1 last year. So to the communicated EUR 406 million have been in reality about EUR 430 million. What is changing now in this year? We have, first of all, the biggest impact comes from the discontinuation of the short-time work.
We also disclosed that here the effect was about -- or will be EUR 78 million, so close to EUR 80 million minus, then we have a wage increase every year between EUR 20 million and EUR 30 million, also running against us. And we have this inflation impact on the energy side. So again, we came from EUR 430 million, minus EUR 78 million discontinuation short-time work, minus EUR 20 million, EUR 30 million, wage increase, minus EUR 20 million, EUR 30 million higher energy prices so that we will end up around EUR 300 million cost savings always compared to the book 2019 number. So this is the outlook for this year.
And looking forward in 2023, we will continue on the labor side with roughly 4,000 employees less because we have now what we showed you, minus 4,300 employees. So then I said, we are going to rehire in this year about perhaps 500 FTEs in ground handling. So this would be 4,300, minus 500. But on the other side, we still do all to bring down the numbers on the admin and semi admin side.
Perhaps another 200 guys, which will be less on board of Fraport so that we will end up this year with about minus 4,000 in total. So with other words, this structural advantage will continue also in 2023. But having in mind that there will be, as every year, further round of higher wages of EUR 20 million to EUR 30 million, which we have to deduct then from these structural cost savings also in 2023. And then, of course, the unknown factor is the ongoing inflation on the energy side. Will it be flat in '23? Will it be even a little bit lower? It can also be much higher. So this is the unknown the unknown number for '23, but we will start in '23 with EUR 300 million minus for '22. And then we have 2 negative effects. This is higher wages and yes, the unknown impact from energy inflation.
So then second question was regarding retail. Again, we have a direct. We are directly benefiting because we have in all contracts with our tenants. We have percentages, which we collect from the revenues realized in the shops.
And when the total revenue goes up, and given the fixed percentage rates, we have an automatic increase on the revenue side, and this is supported by the fact that if you look in the -- or in the structure of our products and goods, we have a strong focus on luxury goods. And here, when you look at the statistics, you see higher inflation rates for luxury goods as well as a relatively low price elasticity because these customers have the deep pockets and whether the [indiscernible] is going up by 10% or 20%, if you want to have one back, you pay the money for it, so to say.
So we do not expect negative compensation or reaction based on high price elasticity for luxury goods. You have always to have in mind that when you look on the people using an airport of airlines, most of these people have an income, which is above the average society. So this means also that the available money for things like food and beverage on one side as well as on luxury goods on the other side is given in their price elasticity when they decide to travel is relatively low.
So to make the long story short, we are optimistic, and we think that even if a recession will come, and I think there's a good probability that from a macroeconomic perspective, 2023 will show a recession. We are not negatively impacted because we have the best class of customers, so to say, with stable and high income and the willingness to spend money.
Very helpful. And sorry, on the gross debt and refinancing roughly the cost of debt...
What your third question on the gross, we have let me say our gross debt is relatively high. That's the reason why we are working on this issue. We -- you can see when you look on the Chart #12, you see the average debt conditions of 2.3%. This is a combination, of course, of the indebtedness which we have on the balance sheet of the AG with an average just 1.5% interest burden and then a relatively high interest burden for the project financing outside Frankfurt because all of these project financings are realized on a nonrecourse basis.
So with other words, because looking outside, we are that we say the indebtedness more or less goes down. So the interest burden is not going higher. And here, we had in the past to 1.4%, 1.5%, of course, the trend goes up, that's for sure. But we -- in the moment, we are still below 2.3%. This can change in the next couple of months when the trend will continue. But we do not see, let me say, a risk that the new debt conditions always compared to the existing average of 2.3% will create an additional burden for us. Here, we are also confident that the new debt on the AG balance sheet will be higher than this, what we realized last year, but below 2.3% or just on this level.
That's very helpful. And sorry, just to squeeze one more, a very short one, business traffic as a percentage of '19, where does that stand these days for this year, what their expectations?
This is -- the question is good. The answer is very difficult. And because at the end of the day, nobody knows what will happen. We are relatively skeptical regarding the recovery. When you go to the airlines, they are much more optimistic. We hear from the airlines a recovery of up to 90%. And as of today, I don't believe this, but I hope that the airlines have the better understanding of the market, we are more skeptically. So in the moment, we are less than 50%. And perhaps during summer times, there can be a recovery up to 70% on the business traffic, but you also have to have in mind that in the last 2 years, a lot of business trips haven't been possible. So there is a compensation from this what not has been realized in the last 2 years.
The question is, is this -- will this -- will there be a continuation in '23 and '24? You see the trends which are going against business traffic. This is the virtual meetings, the cost cuttings on travel budgets, the CO2 footprint of companies and also clear targets for the travel managers trying to bring down intercontinental journeys. So it's difficult to predict, but I wouldn't be too optimistic. It's better to be a little bit more conservative. And then there will be, at the end of the day, perhaps a positive surprise, but we calculate that perhaps there will be a recovery up to 70%, and we hope that we are wrong, but we have to see it.
The next question is from the line of Michael Rae from JPMorgan.
It's actually Elodie Rall from JPMorgan. Sorry. I have 2 questions. First of all, you are quite confident in the ability to pass through inflation even with a lag. And you've talked about looking for tariff increase at Frankfurt above 4.2% next year. So I was wondering if you have any feedback from the airlines from Lufthansa and any other relevant airlines on that? Have you already been speaking to them because presumably, they're also under quite a high burden from costs as well on their side. So just wondering if you have already spoken to them and if you have some feedback.
And second, just on leverage, if you could remind us on your financial leverage expectations in terms of net debt-to-EBITDA in the next -- I mean, this year, next year, and if you could also remind us of the covenants you have, if any, at the moment?
Yes. Thank you for your questions. Starting with the fee topic. So of course, we have permanent discussions with the airlines. And you know from the past in the last 10 years, there was always, so to say, the stumbling block on the road to talk about fees and increase or decrease of fees. I think the during the crisis, this has significantly improved the relationship to more or less all airlines because it also showed that at the end of the day, of course, fees are a part of the cost items of an airline, but this is not the relevant part. You see now huge increase on the fuel cost side. Prices for aircraft went up personnel cost inflation driven or wages are going up. And so the -- let me say, the importance to say of fees has decreased. And I think decisive now is also for the airlines that on the revenue side, they can pass through the higher costs. And when you look to the interviews with the CEOs of all the big airlines, all these guys permanently are telling the press in the market that the ticket prices will go up significantly. And there's also willingness of people to pay for it because now to go into holidays, this is after 2 years, COVID risen, a nice thing and a clear preference of the people. So with other words, yes, the fees will go up, but the discussions with the airlines are very constructive. They saw what we did on the cost side. I think we did a tremendous job on the cost side. This was appreciated from each and every airline. And now we have to ramp up with the -- on the volume side, but also on the price side because otherwise, we cannot come back to the old numbers. This is more or less accepted. And we are doing a good job, and everybody could follow this and see it when looking the cost base. That's the reason why the discussions with the airlines are relatively relaxed in the moment and the relationship is in the moment extremely good.
Leverage is, as I said, indebtedness is too high. We are working on this topic and net debt to EBITDA is the relevant number. And we gave already in the beginning of the year a guidance for the net debt for the full year. We said we expect end of 2022 a range of minimum EUR 7.3 billion up to EUR 7.5 billion. We have to see whether we end up at the lower or the higher end in the moment, it looks very good. We have, on one side, of course, we have the expenses for the acquisition for Antalya. On the other side now, we will see EUR 150 million, EUR 160 million coming in for the sale of the Xi'an shares. If you look on CapEx is absolutely under control.
On the EBITDA side, we expect even EBITDA on the high side of our guidance. So that we feel very comfortable with our guidance for the full year regarding net debt. And yes, it's running in the right direction to fix the balance sheet and the key financial numbers.
And how about covenants?
We don't have any covenants. Not here on the balance sheet for Fraport AG. We have some covenants on the international side, where we have the project financings, but this is a minority of our net debt. So more than EUR 8 billion of the gross debt is on the balance sheet of the AG. And here, we don't have any covenant.
The next question is from the line of Andrew Lobbenberg from HSBC.
I'm sorry. I know we're a board inflation. But just in that last question to Elodie, you stated that you are confident about CapEx and that it's under control. Can you really be confident that CapEx does not get hurt by inflation when raw materials are going to be under pressure over the coming years, let alone labor for the workforce of building, building the term of CapEx and inflation fees? Second question relating to the write-down of the loan to St. Pete. How did you guys come to decide on the EUR 48 million? I think that EUR 48 million out of EUR 150 million, but perhaps you can guide us on that. What's the risk of more of it? And how did you treat that level of a write-down?
And then the third question would be just on the exposure to Russian passengers. You said in your remarks on the presentation that the Eastern European external assets might be vulnerable. I'm guessing that Bulgaria but are there others? And yes, I mean, otherwise, I guess how are things shaping up at Antalya, how much it seems like St. burg a Russian planes are going in and out of Antalya at the moment. So how is the demand for Antalya for the summer?
Yes. Thank you, Mr. Lobbenberg for your question. Starting with the second topic because it takes more time loan to St. Peters, the whole Russian exposure. Loan to St. Petersburg. You know -- you mentioned the depreciation, the impairment loss of EUR 48 million. How does it come? So we have, at the end of 2021, we had in the books nominal value of our shareholder loan of exactly EUR 155 million. Then the question is how to deal with the value of this loan, which is very difficult in the moment because payback. So all the interest is always accrued. So in the last couple of years, the interest has not been paid for the loan. There's a bullet payment in 2034. So very long in the future. and how to deal with the current value. And we -- on one side, you know from the traffic numbers that the international traffic more or less went down nearly to 0.
On the other side, domestic traffic is extremely strong. So that's what you can see on our slide in the presentation, we have the highest traffic numbers compared to 2019 at St. Petersburg. Nevertheless, we made with a new traffic structure, so relatively strong domestic traffic with lower fees, more or less no international traffic with high fees. We permanently adjust our business case, which is much lower than before the war. And based on these permanently adjusted business case, we are calculating the key financial numbers.
And then comparing these numbers with the Standard & Poor's and Moody's methodology. And based on the new adjusted numbers, where the outcome is a rating of CCC, and CCC is combined with a default rate of about 30%, and we're exactly in line with the auditors. We are using this default probability times the nominal outstanding amount as of 31st of December last year. And then as a mathematical result, we derived the EUR 48 million. So -- and we are permanently doing this exercise whenever we have new information, we adjust the business case. We are looking how the development of the financial KPIs will be.
And then we compare it again with the metric of Standard & Poor's and Moody's in combination with our auditors. Then we have a higher or lower default probability in this will lead to a higher or lower depreciation of the loan. This is a methodology on how we dealt with this shareholder loan. The real exposure, so to say, on the operational side regarding passenger numbers. We have let me say, we have 2 strong exposures: One at Antalya, one in Bulgaria. When difficult to predict whether the Russians will come or will not come. When we look now on the actual preliminary figures, for example, for Bulgaria in April, we have a recovery rate of 90% compared to 2019.
So with other words, it seems to be that the loss of the Russians at Bulgaria will be compensated by other European nations. In Antalya, we -- let me say, when we made the business plan for '22, we expected about a little bit more than 30 million passengers in total and thereof about 11 million passengers coming from Russia as well as from Ukraine. So if you assume 0, we would fall down to roughly EUR 19 million, EUR 20 million. But we see now that still some Russians are coming, and we see also an overcompensation by other European countries. So to make the long story short, we don't know what will be the final outcome. But one thing is clear. We will not end up. We originally planned EUR 30 million at Antalya, but we also will not end up with 0 Russians or no compensation for other nations. So the reality will be in the middle. And as of today, I would say 24 million, 25 million passengers will be welcomed at Antalya Airport.
So with other words, yes, we see some negative impact, but we see still some Russians coming to these 2 destinations, and we see an overcompensation by compensation or partly compensation by other European countries going to Antalya as well as to Bulgaria.
So first question, inflation impact on CapEx. When you look on the numbers, you see our guidance for this year, we expect in the existing infrastructure at Frankfurt about EUR 250 million. And for Terminal 3 guidance of about EUR 550 million. So on the maintenance CapEx, we have in so far we can a little bit maneuver with the volumes to do a little bit more or less. So if the prices on the maintenance side will be higher there is some compensation potential what we can delay a little bit in the future. So with other words, we have measures to compensate.
Regarding Terminal 3, what we construct now the cash outflow now is based on contracts, which we signed 1, 2, 3 years ago. So we have binding contracts with clear prices. So with other words, the inflation, which takes place on the material side is a burden for the construction companies, but in the moment, not for us because nearly 75% up to 80% of the whole CapEx regarding T3 is already awarded. And so the inflation is then the problem of the companies, the construction companies.
And also, when you look, say, where we are now, all the concrete, all the steel is already built. So all the, let me say, the material which is heavily exposed to price increases is already realized. Looking forward, we are we are looking for, let me say, material for the inner of the terminal for technology. And here, as of today, we the inflation rate is not so high like on for material like concrete and steel, iron, et cetera.
And yes, on the other side, in our CapEx budget, we have still reserves and the reserves exactly are for such things like higher prices. So as of today, -- we don't see the risk that the budgets, which you know, the EUR 4 billion for the whole terminal are, let me say, under risk.
The next question is from the line of Marcin Wojtal from Bank of America.
Yes. So the first one is on your funding strategy. Can you remind us what is the latest on funding for your capacity expansion project in Antalya and Lima? Is that fully confirmed? And what is what is the level of interest that you have. Question number two, it will be on -- also on your funding. You have a significant cash position, gross cash, EUR 3.6 billion, I believe. So what is your view? Are you planning to keep it at a high level given the uncertainty in the market as a liquidity buffer? Or you're actually planning to run it down a little bit to perhaps reduce the negative carrier effect that you have? And lastly, on asset divestments, I mean, you are selling the airport in China. Is it just a one-off and a very specific situation or you could be looking to sell some of your other smaller assets as well?
Starting with the liquidity question. We have a high liquidity. And at the moment, we feel very comfortable, and this is showing the market we can bridge each and every problem. So to make a huge power and good for us. And so in the moment, there's no intention to run it down. Of course, all along, we will reduce it. But in the next 2 years, let me say, in the next 1.5 years, we will keep liquidity on this level on which it is in the moment.
In Antalya, so as far as I understood your question, so CapEx, we have to invest to expand the existing 2 terminals for the future, for the next concession period. You can see in the appendix of the presentation, the CapEx number for Antalya it's about...
what do we have is the capital injection, there will be the CapEx locally funded.
So -- but we have already given this is about EUR 600 million, EUR 700 million. So EUR 600 million, EUR 700 million CapEx for the expansion of the existing infrastructure.
And we still have signed a contract with the construction company with fixed prices. So also the potential inflation risk is managed by this EPC contract in Turkey. And of course, the interest rate for the project financing is a mid-single-digit percentage rate, much higher than for the loans here on the AG balance, but this has to do, its Turkey risk. It's a Russian operational exposure. It's nonrecourse, and that's the reason why we are talking about single -- mid-single-digit percentage interest burden for these project financing.
Lima. We will conclude the project finance. Yes. It's not signed yet.
And Antalya is fully signed, can you confirm that?
Fully signed. Everything is signed. Everything is signed.
I do the question...
Lima will happen in the next 2 months. We will have the signature. So we are in the final discussion with the banks. So everything is fine. We don't see any obstacle and the finance will work and will run.
Further divestments, yes, we always said we have, let me say, all investments where we have a majority where we have a full consolidation, these are our strategic assets, and we have the clear intention to keep these assets. But on the other side, when we have a minority stakeholding then it's -- we behave a little bit opportunistic. So -- and you see the example of China, where we sold it, we realized an internal rate of return of about 11% on an annual basis. And we have further assets in our portfolio like, for example, India, the 10% stake for new daily. And when you are interested in, please, phone us.
The next question is from the line of Johannes Braun from Stifel Europe.
Yes. Just 2 left for me, actually. First one would be on the retail performance in Q1. You already mentioned that the retail sales per passenger was higher than in 2019 despite the negative mix effect from lower Chinese passengers. I was wondering why that is -- was there any change in the retail layout? Was it because Terminal 2 was not yet fully utilized or maybe people just want to treat themselves. What's your feeling there? And then secondly, and the fee increase for next year, to what extent will that be diluted by incentives again? So will there be another incentive program for next year?
Mr. Braun, first question, it's difficult to answer what are the reasons for the good performance. So it had nothing to do with improved or new layouts more or less nothing changed really. Also the T2 effect you can't measure. So we think that it has to do with the COVID pandemic. So the people there is a change in the mindset. So we see in F&B, a clear willingness to accept higher prices and to spend more money because people the people who survived the COVID pandemic, they are living more in the current now and saying, I'm happy, I'm healthy. I spent some money, and I don't care whether the sandwich cost EUR 4 or EUR 6. So there is a willingness to spend more for F&B as well on the luxury side. And this has to do also with inflation things to transfer to change money into valuable goods in extremely expensive watches or I don't know bags or whatever it could be jewelry. So it has to do with COVID.
So as a willingness to spend more money for consumer needs, et cetera, and it has nothing to do with better improved layouts or shops. This could be a second step whenever we do something on the layout side, but we don't think that this has, in the moment, impact on the spend per passenger number.
On the fee side, you mentioned the incentives we have there could be or there can be some incentives, but the incentives are just paid if the passenger numbers exceed threshold demand. So with other words, when it is extremely high, there is a willingness or the offer of us to share some of these additional money with the airlines is these incentives just works if we have extraordinary traffic and then it's just for this year. So there is no effect for further years, sustainable effect. That's the reason why we can live with this effect and whether at the end of the day, incentives will be paid or not depends really from the final outcome regarding the passenger numbers. And it can be that -- in next year, we are using the same mechanism.
But then again, just on the very high end of the passenger expectation when this will be exceeded or would be exceeded then it could be that we share something of these additional revenues with the airlines. This is possible, but this is just then for always 1 year.
So -- but I mean, for next year, what would be the threshold then -- is it -- I mean I think this year, it's 65% of 2019 levels, right?
Let me say it absolutely open because we have to see what is the current trend, then we have to see what is the base case for '23. And when you have a base case, you have always a high case and when you could overcome this high case, then there's a willingness to spend and to share this on top revenue. But today, it's too early.
The next question is from the line of Dario Maglione from BNP Paribas Exane.
Two questions from me. Regarding the OpEx, I'm pleased to see no negative surprise.
I couldn't hear you. Yes. I just understand OpEx, but nothing more.
Hello, Can you hear me?
Yes, we can hear you.
Okay. Great. So regarding OpEx.
Yes.
Yes, I would say I'm pleased to see no negative surprise on OpEx this quarter. Regard to your guidance, savings of EUR 300 million this year. Just to clarify, that's for the 3 for segments and is also to 2019. So if I want to get the number for this year, I get 2019, minus EUR 300 million and I get to the final figure for 2022? Or shall I add some inflation to that? That's the first question.
Second one is on the ramp-up in the summer.
Yes. The second question, we cannot hear you.
No, we don't need to add inflation to that. So second question on the ramp-up of operations in summer. Yes, the second question, ramp up in the summer. Is there a risk that the airlines in Frankfurt needs to cut capacity as it happens in Schiphol or Heathrow. And the third question is on leverage. The net debt to EBITDA 9x and the Fraport threshold of 5x as a maximum leverage long term. Are you still comfortable with this leverage? Any thoughts on capital increase.
So OpEx again, we expect or the guidance for this year is EUR 300 million OpEx savings in '22 for the 3 segments of Frankfurt compared to the booked 2019 numbers. Second question what was traffic cuts. It's not difficult to understand you because the line was not so good. So traffic cuts in summer, let me say, we -- I think I mentioned the problem what we have. We have 2 peaks per day where we already see 100% recovery. And in the well East during the day, we have sometimes relatively low traffic numbers. And this is a problem of imbalance.
And to solve this, we have to bring in more employees on one side but the airlines have to bring in more traffic into the well to regain more in equilibrium between the utilization of the slots during the day on one side and the available resources on the other side. So I mentioned this is difficult as long as we are not back on more or less a 2019 volume numbers. But month by month and the values will be filled up. There will be a relaxation of this problem because parallel to this, we are permanently ramping up with a number of employees in ground handling. So when we now look into the summer, we have to see, and this is a discussion which we have more or less to all airlines, we ask them, you see the problem with the peaks, you see the [ wellies ]. And we ask them to shift some traffic from the peaks into the [ wellies ]. This, of course, is not so easy for the airlines because they are doing a network optimization. And when we say please transfer 1 hour before or 1 hour later, this is in so far, and so far, a conflict to the optimization of their operation, their business. But nevertheless, at the end of the day, it must be a give and take between the airports on one side, and the airlines on the other side.
We are working on this topic to realize a more balanced traffic during the day, and we are optimistic that based on the good discussions with the airlines, this could be realized in the summer peak. And that's the way that we think we can manage the summer peak, and the passengers will not experience is what they had at Amsterdam or Heathrow. The question regarding indebtedness. We -- I think it's relatively simple to calculate the net debt-to-EBITDA number for this year because we have an EBITDA range of up to EUR 880 million on one side, and we gave you already the net debt guidance, EUR 7.3 billion to EUR 7.5 billion for this year, and there's a reconfirmation as of today, saying that we expect on the EBITDA side, even the upper level of the guidance, so it's simple to make the calculation. And you have to have in mind that the indebtedness or the increase in this year was heavily, let me say, impacted by the acquisition of the new concession at Antalya. This was, so to say, a chance, and we have to use the chance.
Timing wise, of course, this was not good for us. But for next year, we do not expect any additional acquisitions. So with other words, you will see the -- again, the discipline on the CapEx side. Further ramping up on the EBITDA side, and this means net debt-to-EBITDA next year will go down significantly to our target number of 5x. And we are absolutely convinced that in the next couple of years, we will come back to the 5x. And this is saying this. I also give you directly the answer regarding is there a threat of an equity increase clear answer no. There will be no equity or capital increase in the future.
The next question is from the line of Jose Arroyas from Santander.
Three quick ones from me, please. On Lima, can you please provide an update on the situation and whether the grantor has finally accepted the downside solution for the new passenger terminal? Second question on ground handling. You said earlier that before the summer peak there will be about 500 new employees being added. My question is, is this can be really the end of the rehirings? Or if more rehirings will be needed if traffic continues to recover in the next couple of years as we all hope? And last question is on the Hamburg Security contract. It has been slightly loss-making at the EBITDA level in Q1. Can it become EBITDA positive this year or in 2023?
Starting with the last one. Yes, we assume that the contract for Hamburg will be providing us with positive EBITDA, not in the first 2 months because this was the start-up phase. But for the full year, we see and expect a nice positive EBITDA contribution.
Also some remarks regarding the security business. Because you mentioned this Hamburg contract. You can see on the slide in the presentation, Slide #7. And you see on these slides, 640 additional full-time equivalents for Hamburg. We have also to consider that next year means up from the 1st of January 2023, we have the takeover of the majority of our -- part of our security business by the Sasse Group. So -- and when you're right on the right-hand side, you see that then from these 4,300 employees in the security business, you will see 2,300 or 2,400 then deconsolidated because the Sasse Group is controlling the business, we are just have 49%, and we treat this company then at equity.
So with other words, you see a further significant FTE reduction in 2023 and the discussion, what is in, what is out, what is the burn from security business? What is a compensating effect on the revenue side is gone because then you see just the positive net income from the company in our financial results.
And when we look then on aviation as well as ground handling, you see the pure cost ingredients for this business here at Frankfurt and nothing more. This creates more transparency. And on the other side, we have less employees in the consolidated numbers. And ground handling second question the 500, yes, for this year, more is not possible because we cannot recruit more. The availability of the market is not given. We think and we hope that with the 500, then we have a much better quality, and we can manage all the traffic.
And then looking forward in '23, where, of course, we expected again a significant ramp-up on the passenger side. We also expect a significant improvement on the productivity side. Why? Because, as I mentioned, in the peaks, we still have 100% recovery. The lack of passengers we have in the [ wellies ] and all then the additional traffic will and has to come into the [ wellies ] this automatically will lead to a significantly improved productivity in ground handling so that if there is a need for additional employees.
This is a clear underproportionately need, but we have at the end of the day to calculate what could be a further ramp up. But this will not be a big number. And what it will be exactly, we have to see when the summer is through, and we can see what has been the quality, what has been the productivity and what is a passenger expectation for 2023.
In Lima, your first question on the 29th of April, we signed an agreement with the Ministry, Ministry of Transport and Communication. And now we based on this contract, we have to present now in the next 30 days, a new conceptual design which then has to be approved from the DGAC. And these new conceptual design will include a plan on how the new passenger terminal will be. And let me say the open discussion point has been not the terminal itself. It has been the way and which point of time we are going to construct the modules of the terminal.
Our plan was to start with a smaller or with just one part of the terminal. And when it will be open, we also still are using the existing Terminal 1. And later on, we are going on a modular basis in the second step to expand the terminal. And here, the ministry in the first step, they wanted to have immediately the full fledged new terminal. So from a budget perspective, it's the same. But on the time axis, we -- our approach is to allocate the CapEx over a longer time period because we do not need immediately the full expanded new terminal while they want to see it immediately.
Now we are in a discussion that said we have to show them our plan how to deal with this modular way. And we are very optimistic that this will now be approved. But for the unlikely negative outcome, they will not approve this. Then, of course, we are going to construct immediately the full-blown terminal. This means the total budget will not increase. But the CapEx will allocate it in a shorter time period. This is an open discussion. And in the next 30 years, you will see an outcome between us and the ministry. So this is a Lima topic.
The next question is from Nicolas Mora from Morgan Stanley.
Just last one for me. Just when we look at Aviation and your guidance to have EBITDA in '22, broadly in line with '21. I was just wondering how you see the kind of cost base evolving. So you said you had around EUR 165 million of costs in Q1, that includes some one-off from the Hamburg contract starting. But if we quarterize a little bit this, should we expect the same kind of level of cost Q2 onwards in order to hit your guidance in EBITDA? Or is there a bit of pressure there and the guidance might be a little bit at risk?
But difficult to understand you, but I understood that your question is regarding the cost reductions in Q1 times 4, how we come to our guidance. Is this correct?
Yes, exactly. It seems to be a bit of a struggle. So just trying to seperate the cost base here by clearly stick to the rest of the year.
I think what a little bit, let me say, is when you look just on the cost savings in Q1, it's a little bit less. So if you make a Mickey Mouse calculation, the EUR 64 million times 4, you will not end up at EUR 300 million, then the question is how do we come to this guidance of EUR 300 million. Here, you have to see 2 or 3 things. First of all, we -- as you mentioned, we have, let me say, in the EUR 64 million, there is additional cost burden from the Hamburg contract, which you have to adjust.
Second, we -- when you look on the dynamics in the next quarter 2, 3, 4 looking on 2019. So there is -- in Q2, Q3 2019, the cost base goes up, while now we assume the cost level, which we showed in Q1 2022 will be more or less flat. So the discrepancy between the quarters will increase. And there's also a third special topic, which is difficult to explain. We have. We have the 3 segments at Frankfurt aviation, ground handling and retail and real estate. Then we have a fourth segment and everybody believes this is just including our international assets, but it means international assets and services.
So in IAS, we have also included facility management, IT and project management. And for example, especially in IT and in facility management, we also realized significant personnel reductions. And normally, these departments, they are managed and controlled as cost centers. And though they have shown a high productivity. But in Q1 they didn't transfer these productivity gains to aviation, ground handling and real estate. So there was a higher EBITDA because they made gains. And normally, the gains should be transferred to the customers.
But in Q1, you have some positive EBITDA in IAS coming from facility management as well as IT. And you couldn't find these productivity advantages on the side of the customers. This will change in Q2 and Q3 because then the new prices, so to say, for facility and IT services will be lower and the customers will benefit from the productivity gains of these service providers. This is a very, let me say, difficult effect, but which worked in Q1. And that's the reason why the cost reduction shown is relatively low compared to this what everybody expected.
Okay. And if we take all this in, so you are still confident you can hit around EUR 160 million EBITDA in Aviation this year despite a bit of a slow start. And yes, annualizing low cost. Okay.
Yes.
Okay. And last one, if I may. Just on Greece. I mean, you flagged the strong summer expectations. I mean if we all look at the seat capacity data, it's super impressive. Could we -- could we or should we actually from here, expect a traffic materially above 2019? Is that -- I mean, we...
No, no, no. It will be not more. But the question how close do we come to the 2019 numbers. And in 2019, we had about 30 million or 31 million passengers at Greece. And I think we can come close to these 2019 numbers, but we will not overcome. This is not -- this is not realistic.
But spring capacity is at 10% versus 2019 and 25% over summer?
Yes. Yes. Let me say, for example, summer would be 100% then we are close to 2019, but not more. This is what we do not see. But you have to see what -- when you look on the fees, in 2019, the fees have been on a level of EUR 13.50.
EUR 13.50.
Yes, EUR 13.50. Now we have EUR 18. So the fee level is much higher. We have more retail spend per passenger. So on the revenue side, we are much better than 2019, so that as of today, the EBITDA contribution of Greece for 2022 will be above EUR 200 million.
So there are no further questions at this time, and I hand back to Christoph Nanke for closing comments.
So thank you all for your questions, productive call. But anyway, if there are more questions coming to your mind, please give us a call later on in the coming days. Wish you all a nice day and evening for now, and we will stay in touch. Thank you all.