FWAG released sound Q1 results, in line with our estimates. While top-line was driven by solid passenger growth, bottom-line benefitted from a positive financial result and grew disproportionately. In detail:

Upbeat winter travel grew top-line: Against last year's muted outlook, Q1 passengers numbers rose by 14% on group level (VIE: +11% yoy) thanks to a higher number of flights (+9% of movements). On top of that, the increase in airport charges (c. 41% of sales) of up to 9.7%, effective as of Jan'24, lead to overall sales growth of 17% yoy to € 210m (eNuW: € 211m).

Proportionate EBITDA growth: Material costs declined by 15% yoy thanks to (1) an increased contribution from FWAG's own PV power production, (2) a mild winter and (3) lower energy prices, which decreased the expenses for de-icing liquids and energy. On the other hand, collective labour agreements and the increase in headcount pushed personnel expenses to € 89m, up 18% yoy, while other OPEX grew by 30% yoy. In sum, EBITDA expanded by 19% yoy to € 80m (eNuW: € 79m)

Disproportionate expansion of net income: With constant D&A (+3% yoy) and unchanged tax rate (26%) as well as a strong improvement of the financial result (€ 3.8m vs. -0.9m in Q1'23), net income grew disproportionately to sales by a staggering 49% yoy to € 37m (eNuW: € 36m).

Guidance increased: Due to the sound results, FWAG slightly raised its FY guidance to  > € 1bn sales (old: c. € 980m), > € 400m EBITDA (old: > € 390m) and net profit before minorities of  > € 220m (old: > € 210m) which is now in line with our estimates.

Solid cash generation: During Q1, FWAG generated a FCF of € 31m, despite a hefty increase in CAPEX (€ 38m, + 138% yoy) due the current southern expansion of Terminal 3. Consequently, net cash stands at € 393m, up 9% yoy (€ 449m excl. lease liabilities). Going forward, neither the upcoming dividend payment (€ 111m in Q2), nor the current CAPEX cycle should decrease net cash.

Bright outlook at cruising altitude: Current summer booking numbers are on the same level as the record of 2019, implying an overall passenger growth of 6% for this year, in line with our estimates.

Nonetheless, the solid operating performance seems reflected in the current valuation. Therefore, FWAG remains a HOLD with an unchanged PT of € 58.00, based on DCF.