Topic: Yesterday, FWAG released better-than-expected Feb'24 traffic results showing that air travel demand remains unbroken.

Last month, Group passengers rose by a strong 18% yoy to 2.38m passengers (eNuW: 2.21m). While Vienna grew strongly by 17% yoy to 1.88m passengers (eNuW: 1.75m), strong growth was also maintained at Malta (+25% yoy). This strong growth is partly attributable to the additional leap day on Feb 29 (i.e. additional 0.08m passengers for Feb'24; +14%  yoy excl. the leap day), but the general trend of growing air travel remains fully intact, also witnessed by the peer group. (see p. 2 for details)

Unbroken demand meets growing supply: With inflation easing down in Austria (4.3% in Feb'24; lowest figure since Dec'21) and nominal wage increases of 7.6% in FY'24e (Source: Statista), the subsequent increase in disposable income should lead to unbroken demand for leisure travel, especially in the upcoming summer. Moreover, the post-COVID recovery of physical meetings, conventions & exhibitions is ongoing, thus leading to increased demand for business travel, particularly in Vienna (Europe's #2 for conventions, 237 international companies' HQs & international organizations such as OPEC, UN, OSCE, etc.). As a result, the airlines receive increased bookings and respond by increasing supply, but also by continously increasing aircraft utilization (i.e., seat-load-factor).

Rising airport charges: On top of the continuous growth of passengers, FWAG can rely on the statutory increase of airport charges  by 9.7% yoy, effective as of Jan'24. Hence, we estimate Q1'24e passenger and aircraft fees to increase by 20% yoy to € 85m, making up c. 42% of Group sales.

Strong Q1'24e ahead: The above-mentioned effects should lead to a strong first quarter. We expect sales of € 210m (+17% yoy) with an EBITDA of € 86m (41% EBITDA margin, +3.9pp yoy), based on Q1'24e group passengers of 7.51m (eNuW; +13% yoy). Further down the road, Q2 & Q3'24e's top line should come in even stronger, as the current summer flight plan as well as airline booking data indicate an even better summer than last year.

Against this backdrop, we stick to our HOLD recommendation but raise our PT of € 58.00 (old: € 57.00, based on DCF), as the company's stellar operations are well reflected in its current valuation.