Topic: Last Friday, FWAG released Dec'24 traffic results and issued a passenger and financial guidance for 2025, which arrived in line with our expectations. In detail:

2025 guidance in line with estimates: Despite a weak macroeconomic outlook in Austria and the western European destinations, demand for air travel should remain stable thanks to the prioritization of travel at the expense cutting spending at other discretionaries. Therefore, the company expects passengers of approx. 42m (eNuW: 42.3m, +2% yoy) on group level for 2025. Thereof, the majority is expected at its core asset VIE with c. 32m passengers (eNuW: 32.2m, + 1.5% yoy) and the rest (c. 10m) at MAL (eNuW: 9.3m, +4% yoy) and KSC (eNuW: 0.8m, +6% yoy). Cosequently, sales should grow proportionate to passengers, as the company guides for sales of approx. € 1.08bn (eNuW: € 1.08bn), whereas EBITDA is seen at approx. € 440m (eNuW: € 439m), implying a slight margin decline by 0.7pp yoy (eNuW) as the collective labour agreement will likely increase personnel expenses more than sales. On the other hand, net income is guided for approx. € 230m (eNuW: € 231m) at a constant margin (eNuW: -0.1pp yoy), thanks to a positive financial result. CAPEX is expected at € 300m (eNuW old: € 210m, new: € 310m) whereof € 120m is dedicated for the south expansion of terminal 3 and the remaining € 180m should be mostly cyclical maintenance CAPEX at VIE and MAL (eNuW) which we anticipated much lower. Mind you, no additional funds are needed, as FWAG generates more than sufficient operating cash flow (eNuW: € 373m) to finance the current CAPEX cycle without endagering the dividend.

December traffic results slightly ahead of expectation: For Dec'24, we expected 2.93m passengers on group level (VIE: 2.28m, MAL 0.61m, KSC 0.04), however FWAG reported 3.01m passengers (VIE: 2.38m, MAL: 0.59m, KSC: 0.04m). Our 100k underestimation stems from a better than expected holiday travel season at VIE, which saw a growth of 9% yoy (eNuW: +4% yoy). This finished off a very succesful 2024 with a new record of 41.41m passengers (VIE: 31.72, MAL: 8.96m, KSC: 0.74m), which surpassed the pre-COVID levels of 2019 by 5%.

The final decision regarding the 3rd runway project is expected to come no later than FY'26e (see update from 9th October 2024), which should serve as a pivotal moment for the company's future and thus a share price catalyst. Until then, we reiterate our HOLD recommendation with unchanged PT of € 60.00 as FWAG’s shares are currently fairly valued (upside only 13%), in our view.