Ruble Slide Swells St. Petersburg Loss as Fraport Shopping Hit

The ruble’s slide against the euro as the Ukraine crisis mounts swelled financial losses at St. Petersburg’s Pulkovo airport, the Russian hub partly owned by German airport operator Fraport AG.

Pulkovo, in which Fraport has a 35.5 percent stake, had a first-quarter loss of 71 million euros ($98 million), including a 66.2 million-euro hit from currency translations relating to some 700 million euros of financial liabilities on credit for a new terminal building.

The ruble is down 6.9 percent against the euro this year after the annexation of Crimea was followed by sanctions on Russia and people close to President Vladimir Putin. Fraport’s share of losses at Pulkovo amounted to 25.2 million euros, with Fraport only avoiding a financial hit because it wrote down the equity value of the stake to zero in the fourth quarter. The currency swing hit shopping revenue per passenger, which declined to the lowest in more than 2 years.

“Russians are high spenders, and they are spending less” after the ruble’s slide made goods paid for in euros more expensive for them, Fraport Chief Financial Officer Matthias Zieschang said on a conference call with analysts. “There is a heavy impact from the currency side.”

Less Shopping

Net retail revenue per passenger dropped 1.3 percent to 3.69 euros in the quarter, with sales generated from shoppers falling to 26 million euros, the lowest in nine quarters. Fraport last year said a target for the measure to climb to 4 euros may only be reached in 2016, while the company had earlier planned to reach it in 2012.

About 2.1 percent of total passengers in Frankfurt flew directly to or from Russia in the first quarter, a proportion little changed from the previous year. In absolute terms, the number of Russian travelers declined 1.2 percent, spokesman Christopher Holschier said.

The Frankfurt airport operator owns its stake in Pulkovo, the country’s third-largest airport after Moscow’s two main hubs, via the Northern Capital Gateway consortium, which has a 30-year deal to develop the hub. Russia’s VTB Bank (VTBR) is the majority owner and Greece’s Copelouzos Group has a smaller holding. Pulkovo had a 3 million-euro first-quarter profit last year.

Fraport’s earnings before interest and tax rose 22 percent to 61.2 million euros in the quarter as a mild winter cut operating expenses, with net income advancing to 6 million euros, the company said in a statement today.

Passenger numbers at Frankfurt, Europe’s third-busiest hub, rose 1.7 percent in the first four months even after pilot strikes at Deutsche Lufthansa AG (LHA) limited April’s gain to 0.8 percent. The total will advance as much as 3 percent this year, Fraport reiterated, with sales and profit also rising.

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

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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