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Aeroports de Paris (ADPFP; NR/A-/BBB+) July Traffic & Fraport (FRAGR; unrated) RV

TRANSPORTATION

We were more interested for read-through into Air-France that has been given the cold shoulder on mids. Unfortunately ADP's Paris traffic isn't giving any green shoots. Reminder 3Q (July-Aug) is expected to see a negative €150-170m impact from Olympics on both Air-France & budget arm Transavia with mgmt adding "especially in July". Some analyst have questioned if that number is reasonable given Delta is guiding to a €100m impact - it only has 20% exposure to Atlantic revenue.

  • Paris 2-biggest airports (CDG & Orly) had 9.9m passengers up +1%yoy and at 93.7% of pre-covid 2019 levels. Jan-June traffic was running +4.4%yoy.
  • Big drag in Paris from Middle East traffic that was -9.8% in June. The region is 4.4% of total traffic for the two airports.
  • Mainland France traffic into Paris continued to be weak at -5.1%, intra-Europe including UK firm at +11.4% on summer bump and NA holding firm at +6.6%.
  • APAC was +8.8% which is slower than YTD growth and still only 80% of pre-covid levels. * Group traffic was firmer +4.7% at 103.2% of pre-covid levels and is now +8.8% YTD. India continues to run HSD growth and at 30% of group traffic is carrying the growth. The 4 Indian airports fall under GMR {GMRI IN Equity} which ADP holds a 45.7% economic interest in (see herefor full ownership details)

Outside of Paris/ADP we are seeing larger slow-down in growth for Frankfurt traffic (+1.4%yoy in June). Add on heavy capex for terminal development (leverage to stay unch this yr) and bottom-of the pack margins (vs. ADP and in particular vs. Heathrow, Melbourne & Sydney) - we don't see much positives. Ryanair was also out yesterday complaining about airport taxes there; "whilst other EU markets, such as Hungary, Italy, Poland, and Sweden, are cutting or abolishing their Aviation Taxes, Germany’s Aviation Tax, which recently increased by 24%, is the second highest in the EU and is damaging Germany’s air travel industry". Fraport is unrated but benefits from public equities {FRA GY Equity} and retail denomination (1k) that has allowed the new 32s to hold in-line with the BBB airports.

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