Annual Report 2004 Annual Report 2004 Introduction Foreword Chronicle Executive board Management team 3 4 6 8 The airport in figures Key figures Ten-year overview Munich in comparison 12 12 13 Flughafen München GmbH in 2004 General development Passenger traffic Air freight and air mail Business performance M-Power: Strategy development and earnings growth Non-aviation business Personnel Subsidiaries and associated companies Environmental protection Corporate communications Marketing Regional relations 14 18 20 22 24 28 32 36 40 44 46 48 2004 year-end accounts Management's review Annex Supervisory board's report Balance sheet Income statement 51 55 63 64 66 2 Foreword In 2004, Munich Airport continued its success story, achieving exceptional growth in all key traffic sectors. Financially, the airport not just met but actually exceeded its targets for the year. Our strong business performance was partly due to the rapid growth in traffic, but it was also down to the success of a number of new initiatives launched as part of M-Power, a long-term project initiated with the aim of realigning the FMG Group strategically and promoting earnings growth. With 26.8 million passengers in 2004, Munich Airport exceeded the total number of movements registered in the prior year by an amazing 2.6 million – an increase of almost 11 percent, the greatest ever recorded in the history of the airport. With this surge in growth, Munich was the big winner among Europe’s ten busiest passenger airports. We also saw the number of aircraft movements reach a new all-time high, with takeoffs and landings in the commercial sector rising 8 percent to more than 370,000. For the most part, this unprecedented growth was the outcome of continued expansion in hub-and-spoke operations at Munich Airport, and, clearly, our strategy of systematically and continuously growing the airport into a leading European hub is beginning to pay a dividend. With passenger numbers up 12.4 percent, Terminal 2 produced a strong result, but Terminal 1 also performed well, achieving passenger growth of 8 percent. In spite of our current successes, it is important that we do not lose sight of the enormous challenges that lie ahead. In recent years, a rapid wave of change has swept through international aviation and has long since hit the airports. It is crucial to our existence that we mount an appropriate response, and this is what we have done with our ambitious M-Power project. Factors like the liberalization of aviation markets, the privatization of airlines and airports, the formation of global airline alliances, and the upgrowth in low-cost traffic are all forcing Munich Airport to modernize and reinvent itself in order to remain a strong contender in the fiercely competitive global civil aviation arena. Through our M-Power project, we have identified more than 400 separate initiatives that can help us to bring about a sustained improvement in our earnings. FMG has also restructured since the end of 2004. The company’s activities have now been organized into strategic business divisions, service and support divisions, and central divisions. We have five business divisions which are responsible for the FMG Group’s core business operations. Our successful strategic realignment, the airport’s continued rapid rate of growth, the immense dedication of our employees, and the backing we have from our shareholders all mean that we are in an excellent position to achieve our primary goal: of becoming the most attractive and efficient hub airport in Europe by 2010. In 2004, we took a major step forward along the road to achieving that. Dr. Michael Kerkloh President and CEO, Earnings before interest and taxes were up 5 percent year on year – more than we had targeted in our business plan. Flughafen München GmbH 3 Chronicle January 9, 2004 Flughafen München GmbH’s (FMG) two common user lounges in Munich Airport’s Terminal 1 now adjoin with the departure lounges to provide passengers with quicker and more direct access to the aircraft. March 11, 2004 A representative opinion poll commissioned by Flughafen München GmbH and conducted by Infratest is published. The poll shows that 88 percent of people surveyed in the airport’s region like living there; 82 percent of the local population rate the economic situation where they live as “good” or “very good”. Eighty-eight percent stated that having the airport nearby has been “very positive” or “mostly positive” for their local area. Most airport neighbors feel that the region has benefited from the presence of the airport, primarily economically but also in terms of its appeal as a place to live. Aspects seen as negative by the majority are the environmental and noise impact and the changes in land prices and rents. March 28, 2004 The number of far-away holiday destinations served by nonstop flights in the summer season increases by 40 percent. Deutsche Lufthansa in particular extends its offering of intercontinental services substantially. The carrier’s new nonstop destinations include Charlotte, with seven frequencies a week, and Delhi, Teheran, Vancouver and Beijing, each with three frequencies a week. Lufthansa also operates long-haul services to Hong Kong, Shanghai and Canton. Attractive travel destinations served by other carriers include Atlanta (Delta Air Lines), Doha (Qatar Airways), Bangkok (Thai Airways), Miami (LTU), and Toronto (Air Transat). Airlines had coordinated around 240,000 aircraft movements for the period from March 28 to October 30, 2004 – 8 percent more than a year earlier. April 7, 2004 Munich Airport gains certification by Bavaria’s Ministry of Economic Affairs, Infrastructure, Transport and Technology to become the first airport in Europe to be officially approved to handle the Airbus A 380. Munich meets the approval requirements specified by the International Civil Aviation Organization (ICAO). The criteria include the length and width of the runways, the width of the taxiways, curve radii, and the load bearing capacity of the concrete paving. In addition, Terminal 2 has two super-size stands large enough to accommodate the Airbus A 380 jet with its wingspan of 79.8 meters and capacity for up to 800 passengers. April 30, 2004 Flughafen München GmbH receives the ”Arbeit plus 2004” award from the Protestant Church in Germany. Since 1999, the Church has given this award to selected companies in recognition of their “outstanding labor policy” and their efforts to create and secure jobs. The award jury, which based its decision on surveys conducted by the independent Marburg-based Institute for Economic Research, emphasized FMG’s broad training and education offering, extensive health maintenance programs, and collaborative projects with other organizations. June 23, 2004 FMG’s technical departments and fire service achieve certification to the international DIN EN ISO 9001-2000 standard. The company’s traffic and operations planning and internal control departments also successfully obtained accreditation, which means that the entire traffic operations and technology division now has a quality assurance system in place. Ground services, terminal and passenger services, traffic services, traffic management, and FMG subsidiaries Cargogate and EFM - Gesellschaft für Enteisen und Flugzeugschleppen am Flughafen München mbH had already been audited and certified to the international standard in 1996 and 1997. Computersimulation 4 June 29, 2004 Since its inauguration a year earlier, Terminal 2 had been used by roughly 16.4 million passengers, and had handled some 240,000 flights. Also, during its first year in operation, 10 million items of luggage had passed through the terminal’s baggage transportation system. Terminal 2, which is used exclusively by Lufthansa, the Star Alliance, and LH partner companies, offers passengers a choice of 2,300 departures a week to 96 destinations in 36 countries, including 17 cities in Asia, the Americas, Africa, and the Middle East. Lufthansa now operates more European flights from Munich than from Frankfurt. July 7, 2004 The results of the most recent workplace survey are published. At December 31, 2003, 23,320 people were employed at Munich Airport – over 3,000 (almost 16 percent) more than when the last survey was conducted in 2000. Over the same period, FMG’s workforce had grown by 20 percent, from 4,045 to 4,891. Including subsidiaries and associated companies, the FGM Group employs 7,248 people at the airport – over 1,100 more than at the time of the 2000 survey. The airport operator is the largest employer at the facility and has also created the most new jobs. Since 2000, the number of companies located at the airport has risen from 471 to 531. August 26, 2004 FMG is one of the companies honored with an Ökoprofit award 2003/2004 by the city of Munich. Ökoprofit is an ecological project set up to promote the use of integrated environmental technology among Munich businesses as a means of improving environmental performance. FMG received the award in recognition of an extensive package of measures it had introduced to improve its industrial environmental protection. At the same time, these measures marked an initial step on the road toward introduction of an EMAScertified environmental management system at Munich Airport. October 2004 In response to the exceptionally rapid growth in the airport’s cargo business, Cargogate Flughafen München GmbH, FMG’s specialist cargo handling subsidiary, begins extending its facilities with the addition of a 4,400-square-meter hall at the eastern end of the cargo area. The company has planned to created a 34-meter-high, 132-meterlong concrete structure that will house two separate complexes. Once the building is completed in September 2005, FedEx will use the northern half, and express carriers DHL and UPS will use the southern half to handle goods shipments. October 31, 2004 Airlines had coordinated more than 155,000 takeoffs and landings for the winter season at Munich Airport – 9 percent more than for the 2003/2004 winter timetable. Deutsche Lufthansa begins operating a new nonstop service to Bangkok. The daily service continues to Kuala Lumpur in Malaysia four times a week and to Ho Chi Minh City in Vietnam three times a week. Lufthansa also begins offering a daily service to Dubai. Other Lufthansa destinations include Miami, Los Angeles and San Francisco. LTU, too, begins serving a new long-haul destination once a week – Fort Myers in Florida. 5 Executive board Dr. Michael Kerkloh President and Chief Executive Officer Personnel Industrial Relations Director Walter Vill Vice President and Chief Financial Officer Peter Trautmann Chief Operating Officer 6 7 Management team 8 9 Thomas Ross Director Senior Vice President Legal Affairs and Security Dr. Brigitte Englert Director Corporate Representative for Government Affairs The Legal Affairs and Security division actively manages and controls the company’s legal affairs, and protects the Group against legal risks and security deficits. The division also ensures that the company’s assets are protected and insured costefficiently as a safeguard against damage or loss. The less attention the division attracts, the more effectively it is doing its job. The Corporate Representative for Government Affairs, a new post created within FMG, is responsible for liaising with government agencies and official bodies with the goal of advancing political, economic and legal frameworks to serve the Group’s interests. Thomas Scheidler Director Senior Vice President Human Resources Josef-Heinz Loichinger Senior Vice President Finance and Controlling The Finance and Controlling division is responsible for commercial oversight at FMG. The division, which comprises units specialized in buying and the award of contracts, accounting and tax, financing and cash management, and group planning and internal control, ensures sound financial management and transparency Group-wide. Strategically and operationally, the Human Resources division pursues a modern, performance-oriented and humancentric style of personnel management. Our task is to ensure that we have the skilled and dedicated people we need to become the most attractive and efficient hub airport in Europe. Florian Fischer Director Senior Vice President Corporate Development and Environment Dr. Karl Heinz Schwarzmeier Director Senior Vice President Terminal 2 Siegfried Pasler Senior Vice President Corporate Services The Corporate Services division is responsible for personnel management and administration, continued education and training, payment management, and other services at Group level. The division also develops tailored solutions in these areas to meet the needs of FMG business, service and corporate divisions and external customers. 10 In partnership with Deutsche Lufthansa AG, the Terminal 2 division is responsible for operating and developing Terminal 2 as a passenger handling facility. The division is also tasked with managing the growth partnership between FMG and Lufthansa. Gerhard Wirth Senior Vice President Security The Security division is tasked with fulfilling the airport operating company’s statutory obligations regarding the protection of the airport and its facilities. These obligations are coordinated with the aviation security authorities and are laid down in the airport’s aviation security plan. The division also implements a range of voluntary operational security measures. The Corporate Development and Environment division analyzes the influence of constantly changing political and economic factors on the company. The division’s assessments and findings are incorporated into master plans, general expansion plans and environmental strategies designed to safeguard the company’s future by focusing on sustainability, balance, and functionality. Rainer Beeck Senior Vice President Corporate Real Estate Management and Development Wolfgang Hammerstädt Director Senior Vice President Ground Handling The Corporate Real Estate Management and Development division is responsible for managing FMG’s complex and heterogeneous real estate portfolio in a demand- and profitdriven way. With its futurefocused building and real estate utilization strategies, Munich Airport has created a unique position for itself in Europe’s aviation arena. To sustain our premium position, we focus on ensuring that the airport provides not just optimum traffic handling but also a diversified service offering. The Ground Handling division offers round-the-clock services and operates as a fully integral part of a smoothly functioning logistical process. Gertrud Seidenspinner Senior Vice President Corporate Strategy, Projectmanagement and M-Power Walter Vill FMG Vice President Interim head of Retail and Services With its operating companies and organizational units, the Retail and Services division provides rich retail, hospitality and service offerings. We deliver high-quality products and services – mixed with Munich’s distinctive local flair – designed to meet the needs of passengers, businesspeople, visitors and airport employees. We support the Group by identifying and addressing strategically relevant issues. We also manage, oversee and coordinate the implementation of the M-Power strategy development and earnings growth project. Michael Zaddach Senior Vice President Information Technology The Information Technology division creates information systems and provides the airport with the support it needs to ensure that its processes are efficient and effective. Our systems and services are modern and cost-efficient, and they provide the stable foundation required to safeguard airport operations and future growth. Andreas von Puttkamer Director Senior Vice President Aviation Johann Bernhard Director Senior Vice President Engineering and Facilities The Engineering and Facilities division unites extensive technical competency with a commitment to exceptional service. Its tasks are to ensure safe, reliable and cost-effective operations and to sustain the airport’s onward development. The Aviation division is responsible for developing and managing traffic operations at Munich Airport. Hans-Joachim Bues Senior Vice President Corporate Communications Corporate Communications’ task is to speak – and listen – on behalf of FMG. Through strategic communications and reputation management initiatives, we communicate the company’s goals and interests to employees, the media and the public at large and ensure that information on societally relevant opinion, currents and trends is made available within the company. 11 The airport in figures Air traffic 2004 2003 2004 / 2003 Passenger movements (total) 26,835,231 24,214,250 + 10.8 % – Commercial traffic 26,814,505 24,193,304 + 10.8 % – Scheduled and charter traffic 26,789,187 24,168,967 + 10.8 % Aircraft movements (total) 383,110 355,602 + 7.7 % – Commercial traffic 370,534 343,027 + 8.0 % – Scheduled and charter traffic 359,568 332,991 + 8.0 % Air freight handled (total, t) 309,828 246,585 + 25.6 % – Carried by air (t) 170,828 140,585 + 21.5 % – Carried by truck (t) 139,000 106,000 + 31.1 % 21,339 21,960 - 2.8 % 10,654,311 9,545,117 + 10.6 % Air mail handled (t) Maximum takeoff mass (MTOM) in commercial and non-commercial traffic (t) Net sales 2004 2003 2004 / 2003 (€ million) 628.4 593.3 + 5.9 % Personnel 2004 2003 2004 / 2003 Personnel costs (€ million) 220.9 220.6 + 0.1 % Employees (at Dec. 31, 2004) 4,946 4,891 + 1.1 % Average employee capacity 4,372 4,253 + 2.8 % Ten-year overview commercial traffic * (thousand) 675 27 370 650 26 30 0 280 250 240 230 30 0 12 220 275 11 210 250 10 20 0 225 9 12 03 04 253,109 260 262,446 270 343,027 330,888 280,067 290 13 95 96 97 98 99 0 0 01 02 302,412 310 321,756 24.19 21.28 16 14 320 19.32 17 15 23.65 555.5 18 330 218,154 325 19 340 199,114 350 361.2 375 20 388.3 40 0 21 17.89 425 22 15.69 442.9 450 455.6 475 23 14.87 50 0 494.0 525 529.8 550 557.5 575 360 350 24 23.16 593.3 60 0 25 23.13 625 370,534 Aircraft movements commercial traffic (million) 26.81 Passengers (in + out + transit) (€ million) 628.4 Sales 190 95 96 97 98 99 0 0 01 02 03 04 95 96 97 98 99 0 0 01 02 03 04 * excluding ferry flights Munich in comparison Traffic figures for German airports in 2004 Passengers (in + out + transit) (commercial sector) Aircraft movements Air freight (t) Air mail (t) Frankfurt 51,098,271 469,187 1,723,791 115,295 Munich 26,814,505 370,534 170,828 21,339 Düsseldorf 15,256,506 189,005 55,955 101 Berlin (total) 14,871,640 197,613 25,140 11,273 Hamburg 9,893,700 129,779 23,821 12,654 Stuttgart 8,821,533 136,927 17,401 8,644 Cologne / Bonn 8,332,961 136,927 605,069 10,392 Hanover 5,249,169 74,251 5,332 10,432 Nuremberg 3,648,580 56,886 10,714 692 Hahn 2,751,585 24,586 66,096 0 Leipzig / Halle 2,026,550 31,207 5,551 4,597 Bremen 1,674,987 34,149 891 14 Dresden 1,620,781 28,080 411 0 Münster / Osnabrück 1,488,661 28,489 549 0 Dortmund 1,179,028 25,743 75 0 Erfurt 526,241 11,008 4,011 0 Saarbrücken 459,853 10,563 43 0 155,714,551 1,954,934 2,715,678 195,433 Total Source: German Airports Association (ADV) Passenger figures for Europe’s top ten airports in 2004 (commercial sector) Ranking Passengers (million) 2004 / 2003 London Heathrow 1 67.3 + 6.1 % Frankfurt / Main 2 51.1 + 5.7 % Paris Charles de Gaulle 3 50.9 + 5.5 % Amsterdam 4 42.5 + 6.5 % Madrid 5 38.5 + 7.5 % London Gatwick 6 31.4 + 4.8 % Rome Fiumicino 7 28.1 + 7.0 % Munich 8 26.8 + 10.8 % Barcelona 9 24.5 + 7.9 % Paris Orly 10 24.0 + 7.0 % Source: Airports Council International (ACI) Status: March 2005 13 General development Record numbers of passengers and aircraft With more than 26.8 million passenger movements in 2004, Munich Airport bettered its prioryear figures by an impressive 2.6 million. At almost 11 percent, growth was greater than at any other airport among the ten busiest in Europe, enabling Munich to firmly underscore its number-eight ranking as well as narrow the gap slightly on the table leaders. Munich also registered a record number of aircraft movements. With more than 370,000 takeoffs and landings by commercial aircraft, traffic increased by 8 percent. 14 Hub traffic drives growth This gratifying trend was driven more than anything by the continued expansion of hub-andspoke operations at Munich Airport, with transfer passengers accounting for 33 percent of all passenger movements, up from 31 percent in 2003. The joint strategy pursued by Flughafen München GmbH and Deutsche Lufthansa AG – to develop Munich Airport systematically and continuously into a leading European aviation hub – has paid off. In particular, the airport’s new Terminal 2, inaugurated in June 2003 and designed specifically to handle transfer traffic, has created the right operating conditions to enable Lufthansa and its partners to continue expanding Munich Airport into a highly efficient aviation hub serving a worldwide route network. Solid growth on intercontinental routes reflects Munich’s growing importance as a gateway: Whereas the number of aircraft movements as a whole rose more than 27 percent, the passenger volume on long-haul routes grew by more than 40 percent thanks to new intercontinental destinations being served by Lufthansa and its partner carriers, and to the long-haul services offered by airlines operating out of Terminal 1. More efficient use of Terminal 1 In contrast to Terminal 2, which was designed specifically from the ground up to service transfer traffic, Terminal 1, with its decentralized facilities, is better suited to handling point-to-point traffic efficiently. No-fills carriers in particular have contributed substantially to the growth in Terminal 1, with passengers on low-cost services accounting for almost 30 percent of the terminal’s traffic. This passenger segment made up 10 percent of the airport’s total traffic in 2004, compared to 9 percent a year earlier. More than 100,000 passengers in a single day Munich’s traffic statistics for 2004 show a number of new all-time highs. On three separate days, the airport recorded more than 100,000 passenger movements, with a new record of 105,040 being set on September 24, 2004. (The highest figure recorded in a single day in 2003 was 91,248.) On average, the airport registered 73,264 passenger movements a day (2003: 66,283). The number of aircraft movements, too, reached a new record high on September 15 with 1,232 takeoffs and landings (compared to 1,088 in 2003), and the average number of movements a day rose to 1,012, up from 940 a year earlier. 15 The number of destinations served from Munich Airport also increased: In 2004, 110 airlines operated services on a regular basis to 237 destinations – 23 domestic and 214 international – in 65 countries. That’s 14 more destinations that in 2003. In spite of the increase in the numbers of passengers and aircraft movements and destinations served, Munich’s on-time rate remained steady at 81.4 percent (2003: 81.8 percent) and marks one of the best results ever achieved since the airport moved to its current location. In comparison with other airports around the world, too, 81.4 percent is an excellent result. grew 4.0 percent and 9.0 percent respectively. In the intercontinental segment, growth in traffic to and from Asia and North America was exceptionally strong at 50.2 percent and 21.6 percent respectively, whereas Africa traffic contracted sharply by 31.1 percent. Maximum takeoff mass (MTOM) figures also were also higher in 2004, as greater use of widebody aircraft – necessitated by the boom in intercontinental traffic – drove the total MTOM in scheduled and charter traffic up 11.7 percent to 10,420,104 metric tons. The mean MTOM increased by 2.0 tons to 58.0 tons. Substantial increase in landing-fee revenue Landing-fee revenue jumped 14.9 percent to €224 million in 2004. The increase was the result of passenger growth at 10.8 percent, an 8.0 percent increase in commercial aircraft movements, price adjustments in October 2003 and October 2004, and the introduction of a security charge in February 2004. A boom in intercontinental traffic In 2004, 62.9 percent of all scheduled and charter flights were operated on short and medium-haul continental routes to and from countries in Europe and littoral Mediterranean states in Africa and Asia; domestic German flights accounted for 32.7 percent of the total volume. Intercontinental long-haul services scored by far the highest rate of growth – a plus of 27.1 percent year on year – to make up 4.4 percent of traffic. In comparison, domestic and continental traffic 16 As in 2003, the most takeoffs and landings – 43,233 – were recorded on routes to and from Italy. Italy also saw the greatest absolute increase in the number of aircraft movements in 2004. France and Spain ranked second and third in the countries with the heaviest traffic. Revenue from ramp services slipped by 1.2 percent. As had already been the case in 2003, this was largely on account of a change in booking procedure: Revenue generated by central infrastructure (for example, the baggage transportation system) in Terminal 2 is booked to the terminal’s operating company and is not included in Flughafen München GmbH’s own yearend accounts. 17 Passenger traffic Landmark growth in passenger traffic With 26,835,231 passengers in total across all traffic segments and 26,814,505 passengers in the commercial sector – in both instances, a rise of 10.8 percent – Munich Airport reached a new milestone in 2004. The increase in the number of passenger movements by 2.6 million year on year is the greatest ever in the airport’s history. 18 High demand for flights to and from Asia Ranked on aircraft movements and on passenger movements, the biggest winner was the intercontinental traffic segment, which registered 40.8 percent more air travelers than in 2003. The numberone growth region turned out to be Asia, with the number of air travelers on routes to and from this continent up 81.9 percent in comparison with a year earlier at more than 1.2 million. Growth in American traffic, too, was high, with passenger numbers jumping 29.7 percent to 1.7 million. By contrast, traffic to and from Africa (already at a modest level) slid again, this time by 27.5 percent. However, this figure does not include littoral Mediterranean states in North Africa, which are classed as continental traffic. Without doubt, new routes to Abu Dhabi, Teheran and Delhi, as well as to Charlotte, Orlando and Vancouver played a substantial role in the success of intercontinental traffic. In 2004, the most passengers were registered on services to and from Dubai, followed by the intercontinental destinations Chicago, New York John F. Kennedy, and Bangkok. Eastern European traffic on the rise In continental traffic, passenger numbers increased by 11.3 percent. Passenger growth was especially high on routes to and from EU member states and countries in Eastern Europe, at 35 percent and 20 percent respectively. Poland, Russia and Romania in particular were popular destination countries. On services to and from Eastern Europe, EU countries and non-EU countries, 28 percent more passengers were registered in total than in 2003. By contrast, domestic traffic grew just 3.1 percent. As in 2003, the highest number of passengers (almost 1.5 million) was registered on the Berlin-Tegel route. The next-busiest routes were Hamburg, Düsseldorf, Frankfurt and Cologne/Bonn. In 2004, the rankings of the busiest countries remained unchanged, with Spain occupying the topmost slot with 2.1 million passengers, followed by Italy with 1.9 million, and Britain with 1.6 million. The table of foreign airports with the highest passenger volumes also remained unchanged in 2003. Almost 900,000 passengers were registered on the London Heathrow route. Secondranked was Paris Charles de Gaulle with nearly 656,000 passengers and Palma de Mallorca with around 538,000. Passenger-dependent landing fees up substantially In 2004, passenger-dependent landing fees grew 26.3 percent to €125 million. This was due to three factors: the 10.8 percent growth in passenger movements, price adjustments effective October 1, 2003, and October 1, 2004, and a shift in the fee structure from fixed to variable landing fees. 19 Air freight and air mail Air freight reaches a record level Growth in air freight at Munich Airport in 2004 was more than impressive. With 309,828 metric tons handled, the volume was 25.6 percent higher than a year earlier. Whereas the volume of freight carried by air totaled 170,828 tons and increased by 21.5 percent in comparison with 2003, growth in trucked freight (goods classed as air cargo but carried by road) was even stronger, with the volume rising 31.1 percent to 139,000 tons. On average, Munich Airport handled 467 tons of flown freight a day in 2004, compared to 385 tons in 2003. 20 More freight on Asia routes Around 80 percent of the goods freight transported by air was carried as bellyhold freight on passenger services, while the share of goods on freight-only services dropped from roughly 25 percent in 2003 to 20 percent in 2004. The volume of freight on services to and from Asia grew by more than 50 percent. This means that, for the first time, more goods were carried on Asia routes than on services to and from America. Of the goods handled at Munich Airport, 47 percent were import freight and 53 percent were export freight. Although growth in the volume of export goods was high at 17 percent year on year, import freight grew even more rapidly at 27 percent. Air mail: The decline continues The gradual downward trend in air mail at Munich Airport persisted in 2004, although the 2.8 percent decline was exceptionally moderate in comparison with the drop of approximately 10 percent at other airports in Germany. In 2004, Munich handled 21,339 tons of air mail – 621 tons less than in 2003. This ongoing trend is due in part to the advance of new communications media, to changes in Deutsche Post AG’s distribution system, and to competition from express carriers. However, the air mail carried by the latter appears in the statistics as air cargo. 21 Business performance Aviation earnings grew faster than non-aviation earnings In 2004, Flughafen München GmbH’s net sales rose 5.1 percent to €655 million. Year on year, aviation earnings grew faster than non-aviation earnings, rising 8.7 percent compared to just 2.5 percent. Factors that gave aviation earnings a boost included new security charges levied from January 1, 2004, and an increase in the variable portion of landing fees as a result of the higher overall sales volume. The slow growth in nonaviation earnings is largely the result of Lufthansa and its partners relocating to Terminal 2, the 22 booking of all sales (including rents and concessions) in Terminal 2 to subsidiaries, and the loss of concessions from third-party handling operators following a European Court ruling. Operating costs grow less rapidly than sales Operating costs, including leasing costs, grew 4.7 percent, rising less rapidly than sales (5.1 percent). Here, the first initiatives to improve earnings launched in 2004 as part of the MPower project began to take hold. Substantial increase in materials costs Costs of raw materials, supplies, and purchased goods and services increased by 19.6 percent in comparison with 2003 to €191 million. This increase is entirely due to Terminal 2 (which opened at the end of June 2003) being on the books for its first full year in 2004, as opposed to just six months in the prior fiscal year. The materials costs also include €68 million in variable landing fees booked to Terminal 2 Betriebsgesellschaft (T2-BG), which are twice as high as they were in 2003. In addition, Flughafen München GmbH provides a complete range of facility management services and the power supply for Terminal 2; this also impacts on materials expenses. Personnel costs remain flat Average human-resource capacity increased slightly, rising 2.8 percent to 4,372 employeeyears. Successful efforts to reduce vacation and flextime backlogs in 2004 almost entirely offset the additional costs arising through the marginal increase in the company’s headcount. As a result, personnel costs rose just 0.1 percent year on year, to €221 million. A drop in other operating expense Whereas leasing charges remained almost at their prior-year level of €47 million, other operating expense (excluding leasing) dropped by 8.2 percent in comparison with 2003, to €83 million. This item was affected in particular by initiatives to improve earnings, including a reduction of spending on conferences, trade shows and events, auditing and consulting services, and insurance. Writedowns reduced marginally Writedowns were 0.9 percent lower than in 2003. EBIT doubled Earnings before interest and taxes (EBIT) doubled approximately year on year, rising to €15.5 million in 2004. Sales revenues benefited primarily from the sharp growth in traffic. At the same time, costs rose less rapidly on account of initial successes scored by earnings improvement initiatives introduced as part of the M-Power program. Slight increase in earnings after tax At negative €54 million, earnings after tax (EAT) were 5.8 percent lower in 2004 than a year earlier. Although net income from investment in other companies improved substantially, tax provisions in particular led to a poorer overall result. The increase in net income from investments is mostly due to the positive development of Terminal 2 Betriebsgesellschaft as a result of the growth in traffic. 23 M-Power: Strategy development and earnings growth The FMG Group is making itself fit for the future. Following the successful completion and startup of Terminal 2, Flughafen München GmbH launched M-Power, a strategy development and earnings growth project that has realigned the company strategically, set ambitious earnings targets, and restructured the organization. 24 Flexibility and adaptability have always been cornerstones of success in the aviation industry. Failure to understand and move with change always poses a threat to your existence in the long term. This is as true for airports as it is for other organizations, and these former state-run facilities have long since transformed into market-driven business enterprises. With its MPower project, FMG has set out to establish itself firmly as one of the foremost hub airports in Europe, to map out new and revised strategies for its aviation and non-aviation businesses, and to create the right conditions to foster and sustain strong growth. M-Power also aims to safeguard and expand the company’s assets, and to use the entrepreneurial latitude that this affords to invest in growth. All of the company’s units are to focus on the future and their activities are to be aligned with creating value. A new vision Our new vision – comprising core statements on the company’s values, purpose and mission – points the way forward for the FMG Group. Our values govern our employees’ actions and interaction, and reflect the fundamental transformation in our corporate culture: • We embrace change and seek proactively to shape the future in line with our interests • We are proud of our tradition and our strengths, and we build on them to master future challenges • We create value and opportunities through entrepreneurial thinking and profit-oriented action • We foster respectful, fair win-win partnerships within the FGM Group and with our customers, business partners and neighbors • We communicate clearly, openly and honestly – internally and externally • As employees, we work competently and with dedication, and we are proud of our achievements 25 The action framework within which the Group operates as a business enterprise is defined by the company’s new purpose: “As a leading European hub airport, we provide connections to places all over the world, and in our airport city, we present a comprehensive retail and service offering in an engaging and attractive environment. We bring people together across borders, and we create value for our customers, our employees, our owners, and our home region.” Our new corporate mission sets out our goal: “By 2010, we will be Europe’s most attractive and efficient hub airport.” Strategic alignment in the aviation sector Building on our corporate vision, we defined our aviation-sector goal as being to firmly establish Munich Airport as a leading European hub. Our main focuses here are on servicing additional attractive long-haul and point-to-point routes and on strengthening our offering of flights for the vacation market. We are building on Lufthansa and its partner airlines in Terminal 2 and on new and existing customers in Terminal 1 to help us achieve this strategic goal. 26 Strategic alignment in the non-aviation sector To leverage the airport’s earnings potential, FMG is widening its non-aviation business substantially. The company is working to create an attractive offering of goods and services for all its key customer groups, both in the “city center” (the space between the two terminal buildings) and in adjacent areas. At the same time, the airport sees itself as a driver and facilitator for the onward development of the airport region as a whole, and is engaging in a growing number of initiatives to foster collaboration with organizations in its surrounding area. Earnings growth One primary goal defined for the years ahead is to boost earnings by €100 million in total for the period 2004-2007 and to achieve a sustained increase of €50 million annually from 2008 onwards. More than 400 M-Power programs and initiatives to raise earnings have been defined Group-wide. These target not just an increase in profits, but also reductions in personnel and material costs, greater optimization of processes and interfaces, and higher productivity. Around one-fifth of the targeted earnings growth is to come from higher sales. • The five corporate divisions, Finance and Controlling, Human Resources, Legal Affairs and Security, Corporate Development and Environment, and Corporate Communications, were all released to the greatest extent possible from operational tasks • Clearly assigned accountability • The Group’s management style is now based on the principles of modern corporate leadership, with a target-oriented system of management in place in each individual division • Greater versatility and adaptability In fiscal 2004, we began with more than 100 of the 400 or more initiatives. During the first year of M-Power alone, we succeeded in boosting profits by €15.8 million. Reorganization Another step in the strategic realignment process was to change the old organizational structure that had developed gradually over the years. Reorganization achieved the following: • Five market-aligned divisions – Aviation, Ground Handling, Corporate Real Estate Management and Development, Retail and Services, and Terminal 2 – were formed so as to emphasize the importance of these areas of business within the Group • Primary internal services were assigned to four divisions to align with customers’ needs: Corporate Services, Information Technology, Security, and Engineering and Facilities It is only through the ability to respond rapidly to constantly changing market conditions that we can build on, and carry forward in the long term, the successes scored in past decades. M-Power’s various programs and initiatives will continue through to 2008. We have a comprehensive tracking system in place to ensure that the project’s goals are achieved. The process is to be dynamic, not static, and capable of adapting in line with new developments without losing sight of the designated goals and objectives, in particular our new earnings targets. The new Group structure Finance and Controlling Human Resources Central Divisions Corporate Communications Legal Affairs and Security Corporate Development and Environment Business Divisions Aviation Corporate Real Estate Management and Developement Retail and Services Ground Handling Terminal 2 Engineering and Facilities Support Divisions Information Technology Corporate Services Security 27 Non-aviation business Shopping at Munich Airport Besides ushering in a new era in traffic growth, the opening of Terminal 2 at the end of June 2003, a major milestone in the airport’s development, gave new impetus to the retail and hospitality sectors at Munich Airport. The more than 110 new stores and restaurants on the three levels of the terminal building operated jointly by Flughafen München GmbH and Lufthansa proved exceptionally popular with air travelers and airport visitors during 2004, the terminal’s first full operating year. The rich variety and individuality of the shops and restaurants were widely acclaimed within the industry and are now regarded as the new international benchmark in airport retail. 28 To uphold this quality standard throughout the airport, a number of restructuring measures were started in Terminal 1, primarily in modules C and D. The departure areas were gutted to create space for new, centrally located restaurants. These now offer between 120 and 140 seats per module, most located right next to the building’s façade with a direct view of the apron. The shops, too, were remodeled to enhance product presentation, and the ranges of products on sale were tailored more closely to the needs of air travelers. Shop floor space was increased by around 40 percent, allowing the retail offering to be better aligned with the target group. The stores sell not just goods from major brands but also an extensive selection of newspapers and magazines and a range of souvenirs. The systematic improvements to the terminal infrastructure have done much to enhance the comfort and convenience of the lounge areas for passengers and to raise the efficiency of Terminal 1, which, thanks to its modular design, is especially well suited to handling different types of traffic. Online travel agency extends its service offering In 2004, a major new feature was added to Munich Airport’s online travel portal, www.munich-airport.de. In association with online travel company Opodo, web users can now book attractively priced scheduled flights all over the world. This, combined with the worldwide hotel search service provided on the site by industry incumbent Hotel Reservation Service (HRS), enables users to put together custom travel packages. The growing popularity of the portal is evident from the demand for advertising space on it. The web shop at www.munich-airport-shopping.de has also proved a success and has become thoroughly established in spite of major upheavals in the online shopping market. We will continue to develop the shop as a sales channel. MAC profits from its central location Thanks to its location at the heart of the airport campus, the München Airport Center remained largely untouched by the problems generally affecting commercial real estate outside the airport, and in 2004 had an occupancy rate of around 90 percent. Popular with a large number of service businesses, the MAC had one prominent new tenant, well-known international realtors RE/MAX, from the fourth quarter of 2004. 29 New highlights for visitors, employees and air travelers in 2004 included the completion of an extension to the Airbräu beer garden and the opening of Airbräu Tenne, a new events room in the restaurant that can be hired for special functions. The Edeka supermarket has also increased its capacity to a offer a wider selection of goods, renting additional space at a busy point where the MAC joins Terminal 2. In 2004, the medical center in the MAC saw a renewed increase in the number of patients. With its ten resident specialists and the breadth and the quality of the treatment available, the center is gradually building a strong reputation outside the bounds of the airport. Advertising space in the two terminals In 2004, the company stepped up the marketing offensive to sell advertising space that began when Terminal 2 opened. In spite of the lackluster market, the offering found plenty of takeup. The availability of new forms of ad space and innovative media coupled with advertisers’ interest in addressing business travelers as a target group made for a successful campaign. 30 Parallel to optimizing the retail and hospitality offerings in Terminal 1, we focused on serving the international trend toward large-scale banner space in premium locations. We also provided exclusive display space – for motor vehicles, for example – at prominent places in the area directly behind the security checkpoints. Airport TV is popular with users Airport TV has gradually earned itself a firm place as an advertising platform at Munich Airport, and from the point of view of the advertising industry and passengers, current programming comprising the N24 and CNN news channels has been the right choice. A poll conducted among air travelers showed that more than 92 percent of airport users in Munich are either satisfied or very satisfied with the programming and that, on average, they watch airport TV for just under 12 minutes. For the first time since 2001 and for the seventh time overall, our well-known competition for the creative industry, the Munich Airport Award, was held in 2004 in association with CommClubs Bayern e.V., a body of communications professionals from various fields. An eminent jury panel reviewed the many entries submitted and chose the winners. For the first time, there were two categories – one for ideas that had actually been implemented and one for ideas that had not. The highly positive echo from within the advertising industry regarding the reinstatement of the competition shows that there is still an immense interest in airport advertising, in spite of widespread advertising and media overload. 31 Personnel Slight increase in the headcount The number of employees working for Flughafen München GmbH (FMG) increased slightly in the past fiscal year. At December 31, 2004, FMG had 4,946 employees – 55 (1.1 percent) more than a year earlier. Of the total workforce of 4,946, 2,125 were salaried employees and 2,821 were wage employees. Of the salaried employees, 2,016 had 32 unlimited contracts and eight had fixed-term contracts. Seven employees were temporary workers, 12 were business trainees, and 82 were commercial apprentices. Of the 2,821 wage employees, 2,127 had unlimited contracts, 656 were temporary and part-time workers, and 38 were trade apprentices. In 2004, FMG took on 28 business and 14 trade apprentices. Compared to a year earlier, the number of foreign nationals in the workforce at December 31, 2004, had increased by nine (1.1 percent), from 789 to 798. As in 2003, foreign workers accounted for 16.1 percent of the total workforce. These workers came from a total of 58 countries. The majority, 467, were from Turkey; 52 were from Austria; and 49 were from Italy. Marginal rise in personnel expense In 2004, the company’s M-Power project, set up to improve efficiency, cost-effectiveness, and earnings growth throughout the FMG Group, was very much in evidence in the area of human resources, where initiatives were launched to develop HR capacity and enhance operating conditions. On account of efforts to raise productivity within the company, FMG’s headcount only increased marginally. Year on year, HR capacity grew just 2.8 percent to 4,372 employee-years in total – and this in spite of the sharp rise in the numbers of aircraft and passengers handled. Nonetheless, company units succeeded in meeting the requirements and accomplishing the tasks involved in accommodating the growth in air traffic by boosting productivity. Personnel expense went up just marginally, rising €0.3 million or 0.1 percent to €220.9 million. This was due to the slight increase in the headcount and to changes in provisions for vacation, overtime and flextime pay. A significant improvement was achieved by rigorously reducing vacation, overtime and flextime backlogs. Breakdown of personnel costs (€ million) Wages and salaries (including subsidies for travel and meals) Social security levies, costs of retirement plans and related benefits Total personnel expense 2004 2003 172.0 173.3 48.9 47.3 220.9 220.6 More vocational trainees than ever In September 2004, Flughafen München GmbH took on 42 trainees in September 2004 – 10 percent more than a year earlier – to begin vocational training with the company. This underscores our ongoing commitment to uphold the voluntary pact on apprenticeships between government and industry in Germany. In total, 130 young people trained with us in 2004 – in business administration, office communications, and aviation services vocational programs, as well as in university-level degree programs in commercial informatics, business and airport management, general mechatronics, and specialist mechatronics for standard and specialty vehicles and mobile equipment. In addition, FMG took part in a special program organized by EQJ (a German organization that helps school-leavers without a place on a vocational program to find an entry-level job) to support youngsters trying to obtain entry-level qualifications. Since November 2004, ten young people who signed up for the program have been working as interns for FMG and its subsidiary Cargogate and now have a realistic chance of finding an apprenticeship or career opportunity once they finish. FMG also helped to support young scientists, hosting the Munich West regional “Jugend forscht” and “Schüler experimentieren” competitions for the second year in succession in February 2004. Forty-eight projects in a range of fields, including mathematics, the work environment, chemistry, information technology, and physics, were put on display and appraised by a jury. International exchanges For an international commercial airport like Munich, employees with a globally oriented education and professional training are invaluable. In light of this, we stepped up our collaboration with the Civil Aviation Authority of China (CAAC), the organization that operates China’s airports. In May 2004, Yang Guoqing, deputy director general of the CAAC, visited Munich Airport and signed an agreement on future management programs with FMG president and CEO Michael Kerkloh. Previously, in April 2004, CAAC managers had completed a training program (primarily on safety); and in the following November, heads of security departments from a number of China’s airports attended a program at Munich Airport on security. 33 In addition, an exchange program with Munich’s partner airport, Denver International, was launched in October 2004. FMG department heads had the opportunity to spend a week in Denver sharing their ideas and experience with colleagues; a return exchange is planned for the summer of 2005. Foreign internships for trainees At the European level, FMG again took part in exchanges organized through the EU-sponsored Leonardo da Vinci education program in 2004. Fifteen vocational trainees completed three-week internships to acquire careers experience at a number of European airports. In September, apprentices in business communications visited Lisbon and Faro airports; in October mechatronics apprentices worked at Vienna Airport, and aviation services and business administration apprentices spent time at Malta Airport. Likewise as part of the Leonardo da Vinci program, apprentices in technical occupations from Flughafen Wien AG visited Munich Airport to learn about their German colleagues’ approaches to training and work. Also, employees from business admin, technical, marketing, and passenger and terminal services units at Lisbon, Faro and Porto airports spent time working in a number of departments at Flughafen München GmbH. A popular place for internships FMG was highly popular among students eager to spend an internship with us because of the chance it affords to experience jobs “live” and to get a behind-the-scenes look at the airport. In 2004, several FMG units offered attractive internship opportunities in a wide range of fields for undergraduate and doctoral students as well as retrainees. In particular, students from local schools, colleges and universities had the chance to gain valuable hands-on experience in a wide variety of fields in a real-life work environment. Training programs focus on the traffic sector In 2004, our personnel development and training unit registered a rapid drop in the number of seminar days in comparison with a year earlier. Whereas the number of attendee-days had jumped 58 percent to 24,334 in 2003, demand shrank by 47 percent to 12,998 attendee-days a year later. There were a two main reasons for the sudden decline: Training in preparation for the opening of Terminal 2 was no longer required, and the M-Power project generally placed greater demands on FMG employees’ time. However, although the number of days of training delivered declined, attendees continued to rate the seminars highly. As in 2003, much of the training provided was aimed at traffic sector employees. Three hundred and nineteen workers successfully completed level 1 and level 2 operations exams (internal FMG qualifications) that provide a foundation for subsequent chamber of industry and commerce (CIC) examinations. Fifty-six employees passed the CIC exams to qualify as aircraft handlers; a further 14 successfully completed exams to qualify as junior traffic assistants in preparation for working as dispatchers in apron control and central traffic control. Restructuring with M-Power As part of the M-Power project to boost earnings and realign company strategy, a number of organizational changes were made in 2004 preparatory to restructuring personnel development and training. These changes included the realignment of our training center in Schwaig with market needs and the merging of personnel and organizational development departments to form a single Group-wide unit. In appreciation of their services and with sorrow we remember the following colleagues who passed away in 2004. They will be sadly missed by their fellow employees. Werner Schwarz Ralf Pörschke Herbert Scheuer Hacimemis Altin 34 = = = = February 4, 2004 May 27, 2004 June 23, 2004 September 25, 2004 35 Subsidiaries and associated companies A comprehensive offering for customers With net external sales in excess of €300 million and with almost 2,200 employees under contract, Flughafen München GmbH’s subsidiaries and associated companies play a crucial role in the FMG Group’s business growth and development. In 2004, their products and services were once again indispensable in helping Munich Airport to successfully meet the challenge of fulfilling its role as a major multifunctional European service center. Flughafen München GmbH’s policy regarding subsidiaries and associated companies remains focused on improving – and widening, where appropriate – Munich Airport’s offering for its customers. 36 aerogate München – Gesellschaft für Luftverkehrsabfertigungen mbH The purpose of aerogate is to provide passenger and aircraft handling services in those sectors not already covered by ground services. The company also operates baggage delivery and ticketing services. In spite of competition from several rival service operators, a continued decline in handling service prices, and the generally slow economy, the company succeeded in generating proceeds on sales of €10.8 million. With a workforce of 162 contractual employees, aerogate handled 1.3 million passengers and 19,500 aircraft in 2004. AeroGround Flughafen München Aviation Support GmbH AeroGround primarily plays a supporting role in the provision of handling services by Flughafen München GmbH. The company recruits students and other temporary workers, and hires out their capacity to ramp services to assist with aircraft handling. With a workforce of 80 employees, the company achieved net sales of €2.4 million in fiscal 2004. AFBG Augsburger Flughafen Betriebs-GmbH AFBG’s purpose is to manage business operations at Augsburg Airport. AFBG’s shareholders comprise Flughafen München GmbH (50 percent), the city of Augsburg, the Augsburg administrative district, the Aichach-Friedberg administrative district, and a pool of Augsburg entrepreneurs. Allresto Flughafen München Hotel und Gaststätten GmbH Allresto and its workforce of more than 530 people generated total sales of €52 million in fiscal 2004, making the company Flughafen München GmbH’s third-highest-earning affiliate. Allresto operates the restaurants and bars in both of Munich Airport’s terminals, employee canteens, a Burger King fast-food restaurant, the “municon” congress center, and the airport hotel (managed by the Kempinski Group). Although Allresto manages its hospitality operations itself, its hotel and casino activities (with the exception of the casino in the MAC) are run by third-party operators. In Terminal 1, due to the decentralized structure, the company operates bars in each of the modules in the arrival and departure areas. In addition, there are six snack bars, plus several restaurants, including Airbräu, Käfer, and Il Mondo. In Terminal 2, the company runs the Airbräu and Käfer restaurants, an Italian piazza, and a number of bars in the pier area. The central departure area bars in Terminal 1’s C and D modules, remodeled during 2004, now offer greatly improved service. The departure area bars in the remaining modules are scheduled for remodeling in 2005. In 2004, the popular Airbräu restaurant in the central area was extended; the addition of a new room has created the perfect location for a variety of events, in particular cabaret shows. Bayern-Facility Management GmbH In July 2004, BayernFM, a joint subsidiary set up by Bayerische Landesbank (51 percent) and Flughafen München (49 percent), began operating. With a workforce of around 120, BayernFM runs all of Bayerische Landesbank’s real estate, provides facility management services at the airport, and engages in other activities, including the development of third-market business outside the local region. Among other things, BayernFM is responsible for technical facility management at Bosch Siemens Hausgeräte GmbH and for the IT center operated by Bavaria’s savings banks, and even handles warranty tracking for BMG Records GmbH. With the combined competency of its two corporate parents, BayernFM, which reported net sales of €6.9 million for the second half of 2004, is able to offer customers an extensive portfolio of services. CAP Flughafen München Sicherheits-GmbH With a workforce of 271 employees, CAP provides guard and security services at Munich Airport and specializes in implementing the security measures required specifically under aviation law. In 2004, CAP reported sales of almost €12 million. The company is owned jointly by Flughafen München GmbH (76.1 percent) and SECURITAS GmbH Aviation Service (23.9 percent). Cargogate Flughafen München Gesellschaft für Luftverkehrsabfertigungen mbH Cargogate provides air cargo handling services at Munich Airport. Besides the transshipment of cargo, these services include the storage and documentation of freight goods. In spite of growing competition, Cargogate remained the largest independent cargo handler at Munich Airport in 2004. In the past fiscal year, the company’s workforce of 136 employees handled more than 80,000 metric tons of freight for 73 customer airlines. Cargogate reported total earnings of €10.5 million in fiscal 2004. 37 EFM – Gesellschaft für Enteisen und Flugzeugschleppen am Flughafen München mbH Co-owned by GlobeGround GmbH (51 percent) and Flughafen München GmbH (49 percent), EFM is responsible for de-icing aircraft at Munich Airport. Its services also include aircraft pushback and maneuvering on the apron and in the maintenance area. With a workforce of 112 people, the company achieved record sales of almost €22 million in the past fiscal year on account of the exceptionally hard winter. eurotrade Flughafen München Handels-GmbH In spite of the generally slow economy, eurotrade and its workforce of around 600 people succeeded in boosting sales by €17 million to €95 million to become the second-highest-earning Flughafen München GmbH affiliate. Eurotrade runs a range of retail outlets at Munich Airport, such as duty free and TravelValue shops, newsagents, and stores selling travel goods, souvenirs, cosmetics, clothing and toys. The company also operates cafés and snackbars embedded in retail units. Flughafen München GmbH owns 74 percent of eurotrade; Mr. Herbert Wolter holds the remaining 26 percent. In Terminal 1, the company has to operate duty free, Travel Value, and newsagent outlets in every module because of the building’s decentralized structure, but in Terminal 2, these stores are all set up at central locations. In 2004, Spazio Italia, a new 120sqm departure-area bar, opened in Terminal 2. Here passengers can relax and enjoy Mediterranean specialties and short films in an Italian atmosphere. Spazio Italia was created as a joint project organized by eurotrade, Air Dolomiti, Flughafen München GmbH, and Deutsche Lufthansa. 38 FMV – Flughafen München Versicherungsvermittlungsgesellschaft mbH FMV brokers and manages insurance of all kinds but specializes mainly in corporate insurance for Flughafen München GmbH and Terminal 2’s operating company, and insurance for company employees. FMV, which also provides consulting and advisory services for Dresden, Leipzig and Nuremberg airports and, as of 2004, for Cologne, Münster, Bremen, Hamburg, Düsseldorf, and Stuttgart airports, reported sales of more than half a million euros in 2004. Since the beginning of fiscal 2004, FMV has been wholly owned by Flughafen München GmbH. MediCare Flughafen München Medizinisches Zentrum GmbH MediCare operates Munich Airport’s medical center and provides emergency care to airport employees, passengers, and visitors. The company additionally offers occupational healthcare services and serves as a contact and intermediation point for foreign patients at the airport. MediCare also owns AirportClinic München, operated on a concession basis as a private clinic as per Section 30 of Germany’s Trade Regulation Act (GewO). The company, which has around 35 employees, is co-owned by Flughafen München GmbH with 51 percent and by MAHM GmbH, a group of doctors, some of whom are based at Munich Airport, with 49 percent. In fiscal 2004, MediCare reported total sales of €3.4 million. Terminal 2 Betriebsgesellschaft mbH & Co oHG This company’s purpose is to purchase, create and finance movables and equipment, to lease buildings, to let buildings and facilities, and to provide and purchase services – in particular services required in connection with air-side and land-side handling operations – required for the operation of Terminal 2 (and future facilities at Munich Airport), and for carrying out all of the ancillary activities associated directly and indirectly with the company’s activities and the operation of the terminal. T2 BG is co-owned by FMG (with 60 percent), and by Passage Services Holding, a wholly owned subsidiary of Lufthansa Commercial Holding GmbH (LCH), which, in turn, is a wholly owned DLH subsidiary. Terminal 2 Betriebsgesellschaft reported sales in excess of €200 million in fiscal 2004. FM Terminal 2 Immobilien-Verwaltungsgesellschaft mbH & Co oHG The purpose of the company is to finance and build the second passenger terminal at Munich Airport, which has now been rented out to Terminal 2 Betriebsgesellschaft mbH & Co oHG as the primary tenant. The company is co-owned by the FMG company Terminal 2 Holding GmbH and by Lufthansa Commercial Holding, a wholly owned Lufthansa subsidiary. The company reported €73 million in revenue from rents in fiscal 2004. Terminal 2 Holding GmbH The purpose of the company is to hold Terminal 2-related and other FMG investments, which currently include FM Terminal 2 Immobilien-Verwaltungsgesellschaft mbH & Co oHG. Group sales In fiscal 2004, Group sales revenue totaled €788.0 million – up €73.9 million or 10.3 percent, year on year. Earnings from the servicing of air traffic were 11.5 percent higher than in 2003, totaling €408.3 million, or 52 percent of earnings. Non-aviation earnings (from rents, leases, hospitality, etc.), which accounted for the remaining 48 percent of total earnings, were up 9.1 percent, or €42.1 million, on 2003 at €379.7 million. Group operating expenditure Operating costs in fiscal 2004 were roughly €772.2 million – €18.3 million or 2.4 percent more than in fiscal 2003. In spite of the 10.3 percent increase in external sales, the Group succeeded in reducing its materials expense slightly to €192.2 million. This was largely the result of extensive measures to improve productivity and earnings. Personnel costs were down €2.2 million year on year at €279.8 million as a result of efforts to reduce vacation and overtime backlog across the Group. Group writedowns were €18.0 million higher than in 2003 because of Terminal 2’s first full year of writedowns. Group net earnings Compared to 2003, in which the FMG Group reported a loss of €51.6 million, net earnings were similar in 2004, with the Group posting a loss of €50.1 million. The primary reason for the negative earnings was the need to make provisions for tax liabilities, in particular to accommodate differences between the accounts prepared for tax and financial reporting purposes. 39 Environmental protection Continuous monitoring of aircraft noise As in prior years, the airport monitored aircraft noise levels continuously at 16 fixed measuring stations and at a further 12 locations using a mobile measuring station. All key readings are published within a short space of time on Munich Airport’s web site. Complete sets of results are available in regularly published noise and emissions reports that are available for download on the airport web site. 40 In spite of an almost 8 percent increase in air traffic year on year, none of the measuring stations recorded a continuous sound pressure level of more than 60 dB(A) in 2004. Greater use of larger aircraft types was evident from the records of individual noise events. The incidence of levels in excess of 75 dB(A) increased by 18 percent, but readings of more than 85 dB(A) were registered just two or three times a day, which also points to a low overall noise level in the airport’s surrounding area. Deployment of an environmental management system In early 2004, Flughafen München GmbH decided to deploy an environmental management system so as to improve legal certainty and to identify and utilize potential for preserving resources more easily. Certification to DIN ISO 14001 and the EU’s Eco-Management and Audit Scheme (EMAS II) is slated for October 2005. The environmental statement for this project – a public report on FMG’s environmental initiatives and performance – will be published in 2005. More night flights In 2004, the number of night flights increased significantly for the first time since current nightflight regulations were introduced in March 2001: The number of takeoffs and landings rose from 42 to 49 per night, on average. However, 71 percent of the additional flights were due to delays and just 29 the result of scheduled nighttime movements. All night flights are governed by a noise quota which must not exceed a set maximum volume on an average night over the period of a calendar year. The actual noise level is calculated based on the number of takeoffs and landings and on the sizes of the different types of aircraft. Only 39 percent of the noise quota was used in 2004. Noise-optimized arrival and departure routing In a research project supervised by the German Aerospace Center, air-traffic control operator DFS and Flughafen München GmbH are collaborating on finding ways to reduce the noise caused by aircraft takeoff and landing operations. Given that advances in further reducing engine noise anticipated for the years ahead will only help to improve the noise situation at airports in the longer term on account of the time it will take for these improvements to find their way into new production aircraft, the aim of this joint research project is to bring about shortterm improvements. The project focuses on minimizing noise on departure routes by taking into account the average wind direction and its impact on noise propagation; on gauging the potential for noise reduction in mapping flight paths to the course of autobahns; and on estimating the potential for noise reduction through weather dependent flight paths. FMG is contributing to the project by supplying data recorded by its noise monitoring installations. Airborne pollutants remain at non-critical levels Airborne pollutants at the airport remained below critical levels in 2004 and were roughly equivalent to those typically found on the edge of cities. Nitrogen dioxide levels were partly affected by factors not related to the airport; at the same time, the concentrations of nitrogen dioxide caused by the airport have increased on account of the growth in traffic. More significant in this context is that the regulations governing this pollutant have been made more stringent. When the airport moved to its current location in 1992, the annual limit was 80 micrograms per cubic meter of air; for 2004, though, the limit was set at 52 micrograms per cubic meter. The figure of 33 micrograms per cubic meter recorded at the airport in 2004 is within acceptable limits. 41 However, the limit is to be reduced still further – to 40 micrograms per cubic meter – by 2010. To address this issue, FMG has set up a third measuring station and has relocated another station with the approval of the relevant authorities – measures that will allow the airport’s share of the overall concentration to be computed more exactly and corrective action to be taken if necessary. More engine tests To avoid additional disturbance to neighboring residential developments at night, airlines use a hush house at Munich Airport to conduct tests on aircraft engines. The hall-type steel structure is open on two sides, but thanks to its conical form and heavy insulation – 20-centimeter reinforced concrete walls with 10-centimeter acoustic panels on the inside and on the ceiling – the building breaks up and absorbs sound waves extremely effectively. Additional steps were also taken to reduced noise in nearby residential areas. These included the provision of a special stand for propeller aircraft, training programs for technical personnel, 42 new microphone equipment, and more precise analysis through filtering of extraneous noise. To maintain tight controls and ensure transparency, the installation is monitored by video cameras 24 hours a day, all test runs are analyzed in detail, and monthly reports are submitted to Bavaria’s Ministry of Economic Affairs, Infrastructure, Transport and Technology. Since the start of operations in 1992, the facility has been used more frequently every year. In 2004, a total of 1,052 tests were carried out, compared to 829 in 2003. A new environmental film In 2004, Flughafen München GmbH produced a new environmental film, a 27-minute documentary (available in German and English on DVD or in German on video cassette) reporting on all the initiatives undertaken and the technologies and procedures in place that are designed to ensure environmentally compatible operations and avoid nuisance to neighboring communities. The film covers a range of topics: aircraft noise, airborne pollutants, water, recycling, and energy. 43 xx Corporate communications Top rating for FMG’s media relations work Flughafen München GmbH’s intensive media relations efforts in 2004 once again helped Munich Airport to achieve a high profile and gain positive coverage in the media. Besides the annual press conference and the traditional halfyearly Press Club briefing, FMG organized numerous other press appointments and events to deliver information on airport-specific topics to the media. The airport also published 72 press releases and around 60 current press photos. 44 Just how successful Munich Airport’s media relations efforts were in 2004 emerged in a study by an independent communications research institute, Dr. Doeblin - Gesellschaft für Wirtschaftskommunikation. In May and June 2004, the institute carried out a written survey among business journalists to rate the quality of 72 Bavarian companies’ media relations work. In all four of the categories covered, Flughafen München GmbH made it into the top ten. Munich Airport ranked fourth behind Siemens, BMW and Audi among companies that were especially successful at drawing attention to themselves through their media relations work. Scored on its commitment to its location and how this was reflected in the company’s media work, FMG was top-ranked alongside BMW and Messe München. Conferences, trade shows and exhibitions A whole range of events was held at the airport in 2004, including a panel discussion on EU enlargement, an economic reception by the city of Freising and its local district, and even a fireside chat with representatives of the U.S. chamber of commerce. Exhibitions held in the airport’s catchment area to inform the public at large about the airport were again popular and well attended. Our trade show team were much sought-after contacts at the CBR show in Munich and at trade shows in Regensburg, Rosenheim, and Kempten. Other activities included mounting FMG’s presence at the Aviation congress in Berlin and organizing the first airport M-Power Run, in which close to 300 employees gave an impressive demonstration of their stamina. A rich information offering and strong ratings In 2004, FMG printed more than 413,000 brochures and flyers – an impressive figure that underscores the interest in Munich Airport shown by passengers, visitors, and the public at large. Information on passenger handling, airport facilities and other airport-related topics was in high demand. Given the level of interest among the public, brochures on Terminal 2 and the airport’s environmental initiatives were updated and published in German and English. In 2004, Munich Airport also hosted six interesting exhibitions; these included displays of beautifully executed metal sculptures and bizarre human figures carved in wood with a chainsaw. The company’s M-Power project, an altogether more complex topic, featured prominently in 2004 and received a large amount of carefully prepared coverage in specials and supplements in Flughafen Report, our monthly employee newsletter. The goal was to raise awareness of the project’s goals among the FMG Group’s workforce. The information is retrieved from a Group-wide content management system in which data can be edited and then exported to a range of media in a consistent corporate design. Content relevant for Terminal 2 can be filtered out of the mass of data and published in the information kiosks. Terminal 2’s operating company can also add important information to the system and publish its own pages on the Internet and corporate intranet. Published six times a year, our newsletter for airport customers and neighbors, M terminal, scored well in a survey carried out in its distribution area. Around 94 percent of those surveyed rated the publication’s information content, readability, and design as “good” or “very good.” In addition, 95 percent ranked the newsletter as “important” or “very important.” Networking between online media A new service was launched in Terminal 2 in 2004: Information previously only accessible on the Internet is now available to air travelers, airport visitors, and meeters and greeters at 17 passenger information kiosks. 45 Marketing Munich is a leading gateway A key factor that shaped the past fiscal year was the introduction of a number of new intercontinental routes by Deutsche Lufthansa during the summer season. Growth in the long-haul sector was fueled additionally by successful new acquisitions among airlines. Etihad Airways began flying nonstop to Abu Dhabi, and Air China introduced a new nonstop service to Beijing. In addition, carriers stepped up frequencies on a number of routes. Delta Air Lines, for example, extended its summer-season service to Atlanta with a second daily flight, and Air Transat, began operating a second service each week to Toronto via Halifax. 46 One of our primary tasks was to market the new long-haul routes through a variety of promotion campaigns, not just locally but in the destination regions, too. The initiatives consisted of classic marketing work like direct marketing, trade shows and events, as well as marketing programs conducted on site in foreign cities, such as Teheran, Delhi, Bangkok, Beijing and Shanghai, not just to advertise the new long-haul services, but also to promote Munich as a gateway for onward flights to destinations in Europe and beyond Association of German Travel Management (VDR) and in 2004 became a member of the National Business Travel Association (NBTA) to establish a presence in the important north American business travel market. FMG’s marketing department designed and produced a new information brochure, MUC – Your Gateway to Successful Business, designed specifically to address business travelers, which was sent out to leading business travel agents and travel managers through our representations in North America and Asia. A resounding success: The Bavarian Travel Summit One major event early on in our 2004 calendar was the Bavarian Travel Summit in New York, organized in association with Bayern Tourismus Marketing and Travel Weekly, America’s foremost travel and tourism newspaper. The goal was to make Munich and Bavaria more widely known in the North American tourism market and to promote not just existing nonstop services connecting Munich with the U.S. and Canada but also new services to Charlotte, Vancouver, and Halifax, and a second service to Atlanta, all launched in the summer of 2004. At a business travel get-together hosted by FMG at Munich Airport at the end of April 2004 for the business travel industry in the airport’s catchment area, airlines had the opportunity to present their products, services and offerings for business travelers. A destination workshop was held for 30 leading managers in the U.S. travel and tourism industry at which we showcased Munich Airport as a gateway to romantic Europe and the Alpine region. Thanks to extensive coverage in Travel Weekly and a press lunch with more than 40 travel and tourism journalists, the Bavarian Travel Summit succeeded in reaching more than 50,000 multipliers throughout North America’s travel industry. A key target group: Business travelers Our marketing activities also focused in particular on business travelers. It was with this target group in mind that FMG in 2002 joined the Important acquisitions in the freight sector With the acquisition of Cathay Pacific Cargo, Munich has been offering three freight-only services a week with a B 747-200F to Dubai and Hong Kong since August 2004. Since November 2004, Emirates has been operating a freight-only service with the same aircraft type on the route Dubai – Munich – New York. Both of the new scheduled freight services have helped to drive an unprecedented increase in flown freight in Munich. For the sixth time in seven years, Flughafen München GmbH was honored with an award for the best marketing among airports with 10-25 million passengers. At Routes 2004 in Madrid, an international conference for airports and airlines, the majority of airlines picked FMG for the Airport Marketing Award 2004. The airlines evaluated the quality of airports’ approaches to attracting new business as well as their efforts to maintain and expand existing traffic. 47 Regional relations Dialogue with local neighbors Flughafen München GmbH seeks constantly to foster a common understanding between the airport and its neighbors as to how the airport benefits its home region and vice versa by taking local and regional interests into account in its plans for the airport’s onward development. FMG believes firmly that it can only succeed in developing the airport into an aviation hub for Central Europe with the support of its neighbors and local communities. 48 Flughafen München GmbH’s regional relations policy sets out to promote an open dialogue with neighboring towns and communities. One of the bodies through which the company does this is the Airport Forum, a committee staffed by local politicians, representatives of various interest groups, and Flughafen München GmbH employees, and chaired by Bavaria's Minister of Economic Affairs, Infrastructure, Transport and Technology, Dr. Otto Wiesheu. The Airport Forum convened in 2004 to discuss such issues as the development of transportation networks, public infrastructure, housing, and the labor market. FMG’s regional relations officer took part in the Forum’s sessions as well as a series of neighborhood meetings, held for the first time in 2004, with officials from the Erding and Freising districts. The purpose of these meetings, which currently represent the only district-wide platform for sharing ideas and opinion, is to establish Munich Airport as an integrating body within the region. Contact point: The regional relations office Roundtable discussions between FMG executives and citizens’ initiatives in the region served to promote communication with local communities. The airport also engaged in a number of joint projects with local business community members, set up with the goal of promoting greater networking between companies located on campus at the airport and companies in the airport’s surrounding region. In 2004, Flughafen München GmbH’s regional relations office, a central point through which people can contact with the company’s regional relations officer, fielded a large number of inquiries from airport neighbors. Structure and traffic report completed To optimize the airport’s functional and structural integration into its surrounding area, Flughafen München GmbH took part in a study and dialogue process initiated by the Airport Forum. The first phase of a structure and traffic report was completed in July 2002. The report examined changes in population numbers, the labor market, residential and commercial real estate, and the transport infrastructure since Munich Airport began operating to assess the current situation as well as the potential needs in terms of residential housing, the labor market, and transportation through to the year 2015. Development roadmap for the region The second phase of the study was completed in 2004. The concluding report looks into ways to develop the airport region as a future highgrowth settlement area. Given that the development roadmap could only be prepared on the basis of an open dialogue with the region’s towns and communities, key administrative bodies and other groups involved in the planning process were invited to participate in a number of workshops and hearings. Flughafen München GmbH is highly satisfied with the outcome, not least because the structure and traffic report’s findings were partly responsible for driving forward important regional transport projects in 2004. Bringing about improvements to the road infrastructure servicing the airport was one of the regional relations officer’s primary objectives. Valuable suggestions and ideas now being pursued were provided by the Hallbergmoos Traffic Survey, published in the summer of 2004, which was carried out jointly by the Hallbergmoos local authority, the Freising administrative district, and Flughafen München GmbH. 49 2004 year-end accounts 50 Management’s review of fiscal 2004 General economic environment and situation in the industry The worldwide economic recovery that began to emerge in 2003 gradually gained momentum during the course of 2004, and the global economy moved into a phase of strong growth. Hopes that Germany’s domestic economy would keep pace with the boom in other world economies were disappointed, with the result that leading economic research organizations were compelled to reverse their initially optimistic forecasts for the German economy as 2004 progressed. World aviation, which had shown signs of picking up again in 2003, did indeed recover in 2004, with airport operators announcing that the aviation crisis of recent years, caused by the war in Iraq and the impact of the respiratory disease SARS, was now over. In 2004, the German Airports Association (ADV) and its member airports saw a solid 7.9 percent increase in the number of passenger movements, which rose to 155.7 million – more, even, than in 2000, the “pre-crisis” year, when movements totaled 143.6 million. Business trends Terminal 2, the new passenger building co-built and co-financed by Flughafen München GmbH and Deutsche Lufthansa which opened on June 29, 2003, completed its first full operating year in 2004. The terminal has given Munich Airport a highly advanced handling facility capable of advancing Munich’s development as a high-performance aviation hub within a worldwide route network and enabling the airport to occupy an optimum competitive position. In comparison with a year earlier, Munich Airport registered an outstanding, double-digit increase in passenger numbers, achieving the highest rate of growth among Europe’s ten busiest passenger airports. With more than 26.8 million passenger movements, the passenger volume increased by 2.6 million year on year, a rise of 10.8 percent. Aircraft movements in all traffic segments were up 7.7 percent compared to a year earlier, with 383,110 takeoffs and landings. With a volume of 170,828 metric tons, freight carried by air grew 21.5 percent. Flughafen München GmbH’s sales rose 5.9 percent, year on year, to €628.4 million. Thanks to the rapid growth in traffic, revenue from aviation increased by €27.5 million, or 8.4 percent, to €355.2 million. Landing and parking fee revenue grew sharply, rising €29.2 million to €224.3 million, whereas earnings from ramp services slipped €1.7 million, or 1.3 percent, to €130.9 million. In fiscal 2004, a number of airlines took their business to a competing ramp services operator, which led to a small drop in revenue. Growing €7.6 million in fiscal 2004 to €273.2 million (an increase of 2.9 percent), non-aviation business contributed 43.5 percent of total earnings – much the same as a year earlier. Although non-aviation revenue from parking fees, utilities and other services all showed solid growth, revenues from concessions, rents and hire charges were €6.1 million lower in 2004 as sales and rent revenue streams for the entire year were booked to Terminal 2, which is operated by a company co-owned by FMG and DLH. Operations at Terminal 2 caused materials expense to rise sharply by €31.3 million to €190.9 million. The increase was due to the transfer of variable landing fees for T2 passengers (which rose by €36.8 million) to Terminal 2 Betriebsgeselleschaft. Without the transfer of variable landing fees, materials expense would have dropped by €5.5 million, from €128.3 million to €122.8 million, year on year. In spite of an increase in agreed pay rates effective January 1, 2004, and a marginal increase in employee capacity, personnel expense rose just 0.2 percent to €220.9 million. 51 Management’s review of fiscal 2004 Interest, leasing and writedowns – all key factors affecting the company’s cost situation – amounted to €164.6 million, or 25.0 percent of the total costs, not taking into account income from affiliates or income tax. This marks a drop of €2.0 million or 1.2 percent, year on year. The financing of the Terminal 2 building and related movables is mostly managed by subsidiaries set up as joint ventures with DLH. Having reported a loss of €51.2 million in 2003, Flughafen München GmbH again posted a net loss – of €54.1 million – in fiscal 2004. This result is primarily due to differences between the figures determined for income tax and financial reporting purposes, the formation of a €28.4 million reserve for deferred trade tax, and the formation of a €10.1million reserve for trade tax from prior years. High financing and writedown costs in the review year (which was also Terminal 2’s first full operating year) led to loss takeovers from Terminal 2 Betriebsgesellschaft mbH & Co oHG of €13.3 million, plus €3.7 million from Terminal 2 Holding GmbH, which essentially includes the results posted by FM Terminal 2 ImmobilienVerwaltungsgesellschaft mbH & Co oHG. Publication of the year-end financial statement The year-end financial statement for the 2003 fiscal year was published in issue number 235 of the Federal Gazette on December 10, 2004. Financial position and capital structure Compared to a year earlier, the balance-sheet total at December 31, 2004, slipped 2.3 percent to €2.22 billion. This is largely due to fixed-asset writedowns. Additions to tangible assets totaled €17.8 million, compared to disposals of €19.3 million, and writedowns of €95.9 million. Affiliates The €24.7 million rise in the company’s income from affiliates is a reflection of the positive growth in air traffic at Munich Airport. However, on account of the high investment burden associated with the construction of Terminal 2 and startup losses resulting from operations, the overall balance showed a net loss of €14.3 million. After a loss-making year in 2003, subsidiaries eurotrade and Allresto both returned to positive earnings territory with €1.8 million and €0.2 million respectively in fiscal 2004. Aeroground and Cargogate, too, reported positive earnings of €0.1 million. Other Group companies showing positive earnings in fiscal 2004 were FMV – Flughafen München Versicherungsvermittlungsgesellschaft mbH, EFM-Gesellschaft für Enteisen und Flugzeugschleppen am Flughafen München mbH, and CAP Flughafen München Sicherheits-GmbH, with €0.6 million in total. 52 At €304.4 million, equity was lower by €54.1 million, the amount of the net loss sustained in fiscal 2004. Shareholder loans remained unchanged year on year at €1.28 billion. Provisions increased by 3.7 percent to €173.3 million in comparison with 2003. Provisions for trade tax were raised by €38.5 million. (Due to differences between the figures prepared for income tax and financial reporting purposes, these provisions for the first time included €28.4 million for deferred trade tax and €10.1 million for trade tax from prior years.) At the same time, due to the advanced stage of billing for Terminal 2’s infrastructure, €33.5 million in provisions for construction work not yet invoiced were reversed and allocated in 2004. Liabilities in fiscal 2004 were €11.2 million lower at €394.8 million. The year-on-year decrease was due almost entirely to a reduction of €11.0 million in payables to banks. Under the terms of a contractual agreement governing the utilization of supply and disposal services, Terminal 2’s real-estate company was obligated to pay construction cost subsidies for installations owned by Flughafen München GmbH. The deferred income item of €50.0 million formed in fiscal 2003 was supplemented in 2004 with €10.6 million in deferred income for water and wastewater; at the same time, there were writebacks of €3.7 million. To minimize possible financial damage, Flughafen München GmbH has insurance covering key areas of liability risk and potential damages. The risk covered is limited to an appropriate maximum sum in each case. Capital investments We do not regard the Lufthansa Star Alliance’s takeover of SWISS as a threat to our position as the second major hub in Germany; rather, we believe we will benefit from the Alliance extending its catchment area. After a phase of heavy investment a year earlier, mainly in connection with the construction of Terminal 2, Flughafen München GmbH’s capital spending was much lower in 2004. Additions of €17.8 million to tangible assets mainly consisted of €3.4 million spent on extending the cargo building for subsidiary Cargogate, and remodeling work on the departure lounges in modules C and D of Terminal 1 (with €2.1 million in assets not yet finished). Flughafen München GmbH also spent €12.3 million on ongoing operations and on additional investments in Terminal 2. Risks Flughafen München GmbH’s system of risk management is designed to identify and gauge potential risk facing its companies and covers all of the company’s operative and strategic business processes. The primary goal of risk management is to take a controlled approach to risk and to define preventive measures to avoid it. All risk information is processed internally on a quarterly basis to enable executive management to respond swiftly and effectively to shifts in risk scenarios. When the need arises, management responds immediately to new or changing risk situations. The latest risk reports are also made available to the members of the supervisory board. Risk information largely centers on assessments of market and business risk, legal risk, risk associated with the operation of the airport (e.g., air accidents or terrorist incidents), and risk associated with subsidiaries. Outlook We will continue to pursue our strategy of steadily and systematically developing Munich Airport as a leading European aviation hub. We have set a clear course for the future with the construction of Terminal 2, operated jointly with our strategic partner Deutsche Lufthansa AG. We have created the right conditions in which to expand Munich Airport into a high-performance hub airport serving a worldwide network of routes. In the European traffic sector, Munich Airport already has an exceptionally strong offering, comparable with that of any other major European hub. Additions are planned for a number of segments and will be initiated through a range of focused marketing activities. Other efforts to strengthen Munich’s role as a hub center primarily on the future development of intercontinental traffic. In 2004, the number of intercontinental flights at the airport increased 27 percent year on year, causing passenger volumes on long-haul routes to grow at a rate of more than 40 percent. 53 Management’s review of fiscal 2004 Further additions of frequencies and new routes to places like Washington, Chicago, Calgary, Vancouver, Beijing, Mahé (Seychelles), and Mauritius are planned for 2005. For the years thereafter, our marketing efforts will focus on further strengthening long-haul traffic and, thus, Munich’s role as a transfer airport. FMG’s joint venture with DLH offers provides an excellent basis for this. Following on from the expansion work on Terminal 1’s modules C and D, we will modernize the common user lounges and expand the hospitality and retail offerings during 2005. This will create an opportunity for Munich Airport to tailor its service offering to different categories of traffic and target groups. Terminal 1’s modular structure puts us in an optimum position to accommodate the needs and requirements of low-cost carriers and major airlines that are not part of the Star Alliance, and to provide packagetour airlines with a suitable infrastructure to support hub-and-spoke operations. Since March 9, 2005, no-frills carrier Hapag-Lloyd Express has been operating services from Munich to destinations in Sardinia, Sicily, and the north of England. Munich already covers more than 10 percent of this traffic segment, and this share will increase in the future, thanks to the airport’s appeal. Overall, Munich Airport has succeeded in strengthening its position substantially among Europe’s top ten commercial airports as the fastest growing hub, and with its two highly modern and attractive terminals and optimized connecting times it is ideally equipped to compete strongly in the international arena. Besides redefining strategic goals for the aviation sector, FMG has also set itself new objectives in the non-aviation sector. Our aim is to greatly increase the profit volume contributed by real estate, retail and services through a range of initiatives designed to boost not just earnings performance but also Munich Airport’s appeal for passengers and other airport user groups. 54 Realignment of our organizational structure from October 1, 2004, based on business divisions and business units and a widening of the entrepreneurial responsibility carried by managers heading these divisions and units will promote a greater focus on business and earnings within the company and its subsidiaries. Parallel to refining our business segment and corporate strategies and restructuring our organization, we are concentrating our efforts on boosting earnings growth. Our M-Power project, which comprises a large number of initiatives spanning all company units, will enable us to operate at a profit much sooner than expected (by 2007 at the latest) and will substantially improve our earnings situation in the years that follow. The successes that we have achieved to date are not just much greater than originally targeted, they also show that the airport is well on its way to achieving its goal of becoming Europe’s most attractive and efficient hub by the year 2010. Munich, June 3, 2005 Dr. Michael Kerkloh Walter Vill Peter Trautmann Annex I. General notes and information on the year-end accounts 1 Accounting and valuation principles The year-end accounts as at December 31, 2004, were prepared in accordance with statutory financial reporting requirements for large corporations and for limited liability companies. The income statement was prepared according to the total cost method. The accounting and valuation principles are the same as those applied in fiscal 2003 with the exception of the changes noted below in connection with writedowns. Minor-value assets are written off in full in the year in which they are added. 3 Investments Long-term investments are stated at their original cost. Low-interest employee loans are stated at their nominal value at the balance-sheet date. 2 Tangible and intangible assets 4 Current assets Tangible and intangible assets are valuated at their original cost or at their mandatory capitalized cost of production in accordance with statutory fiscal requirements. Assets with a limited useful life are written down over their anticipated overall service life as per the write-down tables for airport operating companies. Movable items of plant and office equipment, which until December 31, 2003, were generally written down according to the declining balance method, are now written down as per the straight-line method, effective January 1, 2004. This change had no significant effect on the year-end results for fiscal 2004. Due the sale of land in fiscal 2004, €0.3 million were booked as a special reserve item as per Section 6b of the German Income Tax Code (EStG). At the same time, €0.5 million were withdrawn from the prior reserve and assigned to two newly purchased plots of land and a building. Inventories are mostly stated at their weighted average cost for the past three months and are written down at the lower of cost or fair value to cover risks arising from slow-moving items and drops in price. In 2004, the difference between the additional depreciation reported in the accounts prepared for tax purposes and the additional depreciation reported in the accounts prepared for financial reporting purposes totaled €18.6 million. As per Section 7, Paragraph 1 of the Income Tax Code, this pertains to buildings which constitute operating business assets but which are non-residential in character. For the most part these are buildings belonging to the passenger handling facilities. Substitute plots of land reported as inventories are capitalized at the lower of cost or fair value. Receivables, other current assets, and liquid assets are stated at the lower of nominal or fair value. Identifiable risks are accounted for in valuation adjustments. Appropriate provisions are made to cover general credit risk. 5 Provisions Provisions for pensions are valuated according to their actuarial value at a 6% rate of interest and according to 1998 tables produced by Dr. Klaus Heubeck. Other provisions, including taxation provisions, are allocated on the basis of sound business judgment. All identifiable risks and uncertain obligations were taken into account. Due to new statutory requirements effective January 1, 2004, affecting writedowns of movable assets, additions to assets are written down on a monthly basis. 55 Annex Due to differences in the treatment and valuation of accounting income and taxable income, we are required to report deferred tax liabilities. To reflect changes in long-term planning, the company for the first time made a €28.4 million provision for deferred tax liabilities as part of overall trade tax provisions of €38.5 million in fiscal 2004. Other significant provisions include €24.6 million for conditionally paid landing fees, €15.0 million as a contingency for rental losses, €13.5 million for marketing activities, and €11.2 million for settlement backlogs and future obligations in connection with partial retirement arrangements. In addition, provisions of €10.1 million and €7.7 million respectively were made to cover prior years’ trade tax liabilities, residual vacation pay, and overtime and flextime compensation. Other key provisions include €5.5 million for outstanding invoices and neglected maintenance obligations, €4.6 million for cleanup and remedial work following water damage in the central area, €4.4 million for anticipated losses in connection with interest swap transactions, and €3.6 million for the possible reclamation of permission fees. 6 Liabilities Liabilities are valuated at the respective amounts repayable. Liabilities for annuity payments are stated at their cash values. II. Notes and information on the balance sheet 1 Changes in non-current assets Acquisition and production costs Jan. 1, 2004 Additions Retirements Reclassifications Dec. 31, 2004 € € € € € 16,778,207.72 859,997.67 - 216,966.67 7,960.00 17,429,198.72 16,778,207.72 859,997.67 - 216,996.67 7,960.00 17,429,198.72 Intangible assets 1. Franchises, intellectual property, and similar rights and assets Tangible assets 1. Land and buildings 2,554,513,627.47 1,596,661.61 - 5,307,284.02 3,664,439.61 2,554,467,444.67 2. Technical equipment and machinery 1,057,131,004.34 2,515,660.08 - 10,501,039.99 376,103.92 1,049,521,728.35 167,752,429.18 4,843,718.37 - 3,475,123.95 531,375.69 169,652,399.29 11,788,912.44 8,816,855.42 - 7,276.69 - 4,579,879.22 16,018,611.95 3,791,185,973.43 17,772,895.48 - 19,290,724.65 - 7,960.00 3,789,660,184.26 19,537,562.32 12,562.06 0.00 0.00 19,550,124.38 802,699.07 122,500.00 0.00 0.00 925,199.07 0.00 0.00 0.00 0.00 0.00 3. Other equipment, plant and office equipment 4. Construction in progress and advances on fixed assets Financial assets 1. Investments in subsidiaries 2. Investments 3. Non-current marketable securities 4. Other loans 56 863,269.74 80,000.00 - 144,381.19 0.00 798,888.55 21,203,531.13 215,062.06 - 144,381.19 0.00 21,274,212.00 3,829,167,712.28 18,847,955.21 - 19,652,072.51 0.00 3,828,363,594.98 Accumulated depreciations Book values Jan. 1, 2004 Additions Retirements Reclassifications Dec. 31, 2004 Dec. 31, 2004 Dec. 31, 2003 € € € € € € € 14,402,048.92 1,392,954.99 - 216,966.67 0.00 15,578,037.24 1,851,161.48 2,376,158.80 14,402,048.92 1,392,954.99 - 216,966.67 0.00 15,578,037.24 1,851,161.48 2,376,158.80 773,569,181.93 45,463,481.83 - 40,182.87 320,040.15 819,312,521.04 1,735,154,923.63 1,780,944,445.54 745,828,547.79 39,844,695.36 - 4,180,532.44 - 313,017.37 781,179,693.34 268,342,035.01 311,302,456.55 143,150,348.40 10,559,28.,67 - 3,322,358.53 - 7,022.78 150,380,254.76 19,272,144.53 24,602,080.78 0.00 0.00 0.00 0.00 0.00 16,018,611.95 11,788,912.44 1,662,548,078.12 95,867,464.86 - 7,543,073.84 0.00 1,750,872,469.14 2,038,787,715.12 2,128,637,895.31 0.00 0.00 0.00 0.00 0.00 19,550,124.38 19,537,562.32 0.00 0.00 0.00 0.00 0.00 925,199.07 802,699.07 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 798,888.55 863,269.74 0.00 0.00 0.00 0.00 0.00 21,274,212.00 21,203,531.13 1,676,950,127.04 97,260,419.85 - 7,760,040.51 0.00 1,766,450,506.38 2,061,913,088.60 2,152,217,585.24 57 Annex 2 Currency conversion 7 Other financial obligations Foreign-currency receivables and liabilities are booked at the respective buying or selling rate and converted to the less favorable rate on the balance-sheet date. Existing real-estate lease contracts are expected to incur costs of around €47.1 million in 2005. The burden through to the end of the basic lease term in 2020 will amount to €471.7 million. 3 Share ownership (see table facing) Holdings in subsidiaries and associated companies are stated at cost. Existing construction, supply and service contracts and agreements with planners, architects and engineers pertain essentially to ongoing business operations and are of a scope consistent with such operations. There are also additional obligations for environmental protection measures and the honoring of public-law requirements. 4 Liabilities (see table facing) 8 Derivative financial instruments 5 Net sales/earnings/expenses Net sales of €628.4 million comprise €355.2 million from the servicing of air traffic (including €224.3 million in airport fees and €130.9 million in ramp service fees) and €273.2 million from licenses, rents, leases, and other sources. The latter include €10.1 million from the sale of power (2003: €8.9 million). Power sales accounted for 1.6% (2003: 1.5%) of total net sales and are of just minor significance. Other operating income includes €10.0 million from the reversal and allocation of provisions. Additional operating income items include €6.2 million in transferred charges for vacant capacity in Terminal 1, €3.7 million for the provision of the utility infrastructure for Terminal 2, and €1.2 million from long-term building rights. In fiscal 2004, Flughafen München GmbH’s materials costs included a charge of €68.1 million for capacity provisioning from the operation of Terminal 2. 6 Contingencies To cover and secure all claims in connection with MediCare Flughafen München Medizinisches Zentrum GmbH’s current and future liabilities to the Kreis- und Stadtsparkasse ErdingDorfen bank, Flughafen München GmbH posted surety of €250,000 in 2004. Following are derivative financial instruments employed by Flughafen München GmbH in 2004: – 2 payer swaps with a volume of €50 million at a negative market value of €7.8 million at December 31, 2004 – 3 receiver swaps with a volume of €80 million at a positive market value of €2.5 million at December 31, 2004, and – 3 caps with a volume of €80 million and a negative market value of €0.8 million at December 31, 2004 From the airport operator’s perspective, these provide the following vales. A valuation unit of €22.0 million was formed for the two aforementioned payer swaps so that the swaps do not impact on the balance sheet. A provision of €4.4 million was formed for anticipated losses for the swap volume not covered by the valuation unit. With regard to the three receiver swaps and the three caps, a valuation unit was formed so that there was no cause to report them in the balance sheet. Moreover, three loans in existence at the balance sheet date that were originally taken out in Japanese yen were transferred into euros by means of cross-currency swaps (total volume: €60.4 million). 9 Net result The executive board proposes carrying forward the net loss for the year of €54.109 million. 58 Details of share ownership Seat Share of Capital Result for capital stock the year % € thousand € thousand 13 1,8131 eurotrade Flughafen München Handelsgesellschaft mbH Munich 74.0 Allresto Flughafen München Hotel und Gaststätten GmbH Munich 100.0 26 1781 Bayern Facility Management GmbH Munich 49.0 376 126 aerogate München Gesellschaft für Luftverkehrsabfertigungen mbH Munich 100.0 779 181 Cargogate Flughafen München Gesellschaft für Luftverkehrsabfertigung mbH Munich 100.0 511 161 CAP Flughafen München Sicherheits-GmbH Freising 76.1 242 141 EFM – Gesellschaft für Enteisen und Flugzeugschleppen am Flughafen München mbH Freising 49.0 2,909 1,324 FMV – Flughafen München Versicherungsvermittlungsgesellschaft mbH Freising 100.0 26 1801 FM Terminal 2 Immobilienverwaltungsgesellschaft mbH & Co oHG Freising 60.0 25,000 (6,067)2 AeroGround Flughafen München Aviation Support GmbH Munich 100.00 250 1381 Oberding 51.0 (168) 4 Radiologisches Diagnostikzentrum München Airport GmbH Oberding 20.0 (63) 85 Augsburger Flughafen Betriebs-GmbH Augsburg 50.0 59 7 Terminal 2 Betriebsgesellschaft mbH & Co oHG Oberding 60.0 3,025 (22,129)2 Freising 100.0 15,025 (3,671)1 MediCare Flughafen München Medizinisches Zentrum GmbH Terminal 2 Holding GmbH 1 Profit transfer agreement (pre-transfer) 2 Losses transferred on account of shareholders' agreement Liabilities table December 31, 2004 December 31, 2003 Residual term Liabilities to banks Trade accounts payable up to 1 year 1 to 5 years over 5 years € € € € € € 316,798,109.72 62,343,194.86 148,281,726.74 106,173,188.12 327,752,746.83 84,497,167.35 1,737,011.36 0.00 20,364,827.65 18,504,995.22 up to 1 year 20,562,676.51 18,825,665.15 Liabilities to associated companies and subsidiaries 29,161,023.28 28,849,314.38 311,708.90 0.00 35,983,360.16 35,671,651.26 Other liabilities 28,246,446.59 12,224,727.10 1,501,233.85 14,520,485.64 21,856,659.50 6,338,138.13 (14,303,088.33) (273,239.11) (14,029,849.22) (0.00) (14,303,088.33) (273,239.11) (3,759,056.60) (3,759,056.60) (0.00) (0.00) (3,324,591.06) (3,324,591.06) of which to insurance companies of which in taxes of which in social welfare (4,949,597.39) (4,949,597.39) (0.00) (0.00) (115,050.36) (115,050.36) 394,768,256.10 122,242,901.49 151,831,680.85 120,693,673.76 405,957,594.14 145,011,951.96 59 Annex III. Additional information 1 Executive board Members of the executive board: Dr. Michael Kerkloh President and Chief Executive Officer Personnel Industrial Relations Director Walter Vill Vice President and Chief Financial Officer Peter Trautmann Chief Operating Officer 2 Supervisory board Robert Scholl Director-General, Federal Ministry of Transport, Building and Housing (supervisory board member from July 29, 2004) City of Munich Christian Ude Chief Mayor, City of Munich Dr. Reinhard Wieczorek Councilor, City of Munich Members of the supervisory board: Employee representatives Prof. Kurt Faltlhauser Minister of State, Bavarian State Ministry of Finance, Munich, Chairman Josef Bals Cook (supervisory board member until July 29, 2004) Oliver Gebauer Personnel management clerk (employee representative) Vice chairman (supervisory board member until July 29, 2004) Thomas Bihler Clerical employee Free State of Bavaria Georg Herrmann Certified aircraft handler Full-time works councilor (supervisory board member until July 29, 2004) Hans Spitzner Undersecretary Bavarian State Ministry for Economic Affairs, Transport and Technology Klaus Weigert Director-General, Bavarian State Ministry of Finance, Munich Josef Poxleitner Director-General, Board of Building and Public Works in the Bavarian State Ministry of Home Affairs Federal Republic of Germany Dr. Dieter Knoll Ministerial councilor, Federal Ministry of Finance, Bonn Peter Keidel Director-General, Federal Ministry of Transport, Building and Housing (supervisory board member until July 22, 2004) 60 Heinrich Birner Director of the ver.di labor union, Munich region Orhan Kurtulan Certified aircraft handler Full-time works councilor Otto Siegl Clerical employee Gerhard Halamoda Managing director, Allresto (supervisory board member until July 29, 2004) Hans-Joachim Bues Clerical employee (supervisory board member from July 29, 2004) Anna Müller Clerical employee (supervisory board member from July 29, 2004) Ralf Krüger Works council chairman (supervisory board member from July 29, 2004) Willy Graßl Certified aircraft handler (supervisory board member from July 29, 2004) 3 Remuneration of and loans granted to the supervisory and executive boards Remuneration of the supervisory board totaled €17,200. separate balance sheets and income statements for their power generation, transmission and distribution activities and for their non-power activities. Former members of company management received remuneration totaling €473,900. Provisions of €6.404 million were formed for future pension payments and accrued pension rights of surviving dependants. Given that revenue from power business accounted for just 1.6 percent of total sales (2003: 1.5 percent), we have chosen not to report separately on our power activities, just as a year earlier, as these are deemed not to be significant. Executive board members’ remuneration totaled €722,400 in fiscal 2004. Munich, June 3, 2005 4 Employees Dr. Michael Kerkloh As per Section 267, Paragraph 5 of the German Commercial Code, the workforce comprised, on average, 2,045 salaried employees, 9 casual workers, 2,147 wage employees and 607 temporary workers in fiscal 2004. In addition, 104 apprentices were undergoing vocational training with the company. Walter Vill Peter Trautmann 5 General Section 9 of Germany’s Energy Industry Act (EnGW), which passed into law on April 29, 1998, requires public utility companies to draw up 61 62 Supervisory board’s report The supervisory board was informed regularly and in detail by executive management through written reports and at meetings about the company’s situation, its development, and important business events. On the basis of the reports and the information received, the supervisory board monitored the management of the company’s business and made such decisions as it was called upon to make in accordance with its statutory responsibilities. The yearend accounts as per December 31, 2003, and the report on the economic development and position of Flughafen München GmbH and its group of companies presented by executive management have been audited and approved by Deloitte & Touche GmbH, the appointed auditors. Having conducted its own review, the supervisory board accepts the auditors’ findings and raises no objections. In accordance with Section 42a, Paragraphs 2 and 4 of the Limited Liability Companies Act (GmbHG) and Section 171, Paragraph 2 of the Stock Corporations Act (AktG), the board approves the yearend accounts of Flughafen München GmbH and the FMG Group. The supervisory board proposes that the shareholders endorse the yearend accounts of Flughafen München GmbH and the FMG Group. In fiscal 2004, Director-General Peter Keidel and employee representatives Josef Bals, Oliver Gebauer, Gerhard Halamoda and Georg Herrmann left the supervisory board. The board wishes to thank its members who departed in 2004 for their expert and committed service to the company. The supervisory board also wishes to express its gratitude and respect for the work carried out and the successes achieved by the company’s executive management and employees in fiscal 2004. Munich, July 26, 2005 Flughafen München GmbH The supervisory board Prof. Kurt Faltlhauser Chairman 63 Flughafen München GmbH, Munich Balance sheet as at December 31, 2004 Assets € Dec. 31, 2004 2003 € € thousand A. Fixed assets I. Intangible assets Franchises, intellectual property, and similar rights and assets 2,376 1,851,161.48 1,851,161.48 2,376 II. Tangible assets 1. Land, rights similar to land, and buildings, including buildings on property owned by others 1,735,154,923.63 1,780,945 268,342,035.01 311,302 3. Other equipment, plant and office equipment 19,272,144.53 24,602 4. Construction in progress and advances on fixed assets 16,018,611.95 2. Technical equipment and machinery 11,789 2,038,787,715.12 2,128,638 III. Financial assets 1. Investments in subsidiaries 19,550,124.38 19,538 2. Investments 925,199.07 803 3. Other loans 798,888.55 863 21,274,212.00 21,204 2,061,913,088.60 2,152,218 B. Current assets I. Inventories 1. Substitute plots of land 2. Raw materials and supplies 28,298,095.45 27,167 4,398,395.48 5,289 32,696,490.93 32,456 II. Receivables and other current assets 1. Accounts receivable 17,399,510.33 22,491 2. Amounts due from subsidiaries 79,261,007.50 36,371 3. Amounts due from associated companies 1,871,490.06 529 4. Other current assets of which €0.00 due from shareholders (2003: €9,360,022.06) 9,783,423.72 13,829 108,315,431.61 III. Liquid funds C. Prepaid expenses Total assets 64 73,220 13,003,773.97 10,693 154,015,696.51 116,369 583,780.64 432 2,216,512,565.75 2,269,019 Liabilities € Dec. 31, 2004 2003 € € thousand A. Capital stock I. Subscribed capital II. Capital reserves III. Earnings reserves Other reserves IV. Balance-sheet loss 306,776,000.00 306,776 102,258,376.24 102,258 596,812.29 597 - 105,260,785.23 - 51,152 B. Conditionally repayable shareholder loans C. Special reserve items (Section 6b, Income Tax Code) 304,370,403.30 358,479 1,276,226,461.37 1,276,226 9,558,432.39 9,663 D. Accrued liabilities 1. Provisions for pensions 10,289,689.00 2. Provisions for taxes 38,547,000.00 0 124,418,324.19 156,822 3. Other provisions 10,308 173,255,013.19 167,130 E. Liabilities 316,798,109.72 327,753 2. Trade accounts payable 20,562,676.51 20,365 3. Liabilities to subsidiaries 26,453,260.85 35,737 2,707,762.43 246 1. Liabilities to banks 4. Liabilities to associated companies 5. Other liabilities of which €3,759,056.60 in taxes (2003: €3,324,591.06) of which €4,949.597.39 in social welfare (2003: €115,050.36) F. Deferred income Total liabilities 28,246,446.59 21,857 394,768,256.10 405,958 58,333,999.40 51,563 2,216,512,565.75 2,269,019 65 Flughafen München GmbH, Munich Income statement for the fiscal year from January 1 to December 31, 2004 € 1. Net sales 2. Other capitalized labor, overheads and material 3. Other operating income 2004 2003 € € thousand 628,386,138.18 593,270 617,853.55 957 26,130,394.94 29,043 655,134,386.67 623,270 4. Materials costs a) Supplies, raw materials and merchandise b) Purchased services - 33,303,722.78 - 31,361 - 157,588,803.04 - 128,251 - 190,892,525.82 - 159,612 5. Personnel costs a) Wages and salaries b) Social security, pension costs and support of which €12,920,044.11 for pension plans (2003: €12,543,802.68) - 173,279 - 171,924,750.73 - 47,272 - 48,948,844.87 - 220,873,595.60 6. Depreciation and amortization on intangible and tangible assets 7. Other operating expense 8. Income from investments of which €140,083.44 from associated companies (2003: €96,560.67) 9. Income from profit transfer agreements 10. Expense from loss transfers 11. Income from financial assets 12. Other interest and similar income of which €1,624,864.28 from associated companies (2003: €1,571,811.15) 13. Interest and similar expense of which €216,180.68 from associated companies (2003: €313,679.88) - 220,551 - 97,260,419.85 - 98,175 - 129,550,933.94 - 137,087 - 638,577,475.21 - 615,425 16,556,911.46 7,845 587 434,083.44 2,324,724.54 617 - 17,063,411.45 - 40,186 33,218.02 34 3,102,879.35 1,990 - 21,123 - 19,934,358.00 - 31,102,864.10 - 58,081 14. Results of ordinary operations - 14,545,952.64 - 50,236 15. Taxes on earnings - 38,547,000.00 - 78 - 1,015,911.06 - 838 17. Net loss for the year - 54,108,863.70 - 51,152 18. Loss carried forward from the previous year - 51,151,921.53 0 - 105,260,785.23 - 51,152 16. Other taxes 19. Balance-sheet loss 66 Publisher: Flughafen München GmbH Finance and Controlling Tel.: +49 89 975-00 Fax: +49 89 975-3 50 06 Concept/editor: Corporate Communications Dr. Reingard Schöttl Internal Communications and Publications Flughafen München GmbH Postfach 23 17 55 85326 Munich Germany www.munich-airport.de Photographs: ACA-Design Alex Tino Friedel Dr. Werner Hennies Martin Ley Herbert Stolz Zefa Images Design: Pantos Werbeagentur GmbH, München Printing: Alfred Aumaier GmbH, Unterhaching
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