Fraport AG confirmed conclusion of a Letter of Intent (LOI) with Celanese/Ticona. Under this LOI, Celanese/Ticona will close its chemical plant at Kelsterbach by the middle of 2011, remove aeronautical obstacles within one…
Fraport AG confirmed conclusion of a Letter of Intent (LOI) with Celanese/Ticona. Under this LOI, Celanese/Ticona will close its chemical plant at Kelsterbach by the middle of 2011, remove aeronautical obstacles within one month thereafter, and transfer the entire site to Fraport by 2015. The land required for Frankfurt Airport’s new landing runway will be transferred to Fraport immediately after signing a contract agreement. As compensation, Fraport will pay €650 million to Celanese/Ticona.
Negotiations for the final contracts, based on this LOI, will take place within the next few months. These final contracts will be presented to Fraport’s annual general meeting (AGM). A new job-creation company, to be established by Fraport with participation of the State of Hesse, will take over the employees of Celanese/Ticona.
Fraport executive board chairman Dr. Wilhelm Bender views the intended agreement as a “rationality pact.” For Fraport, the most important aspect is the “expeditious expansion of Frankfurt Airport” and “securing a positive economic future for the Frankfurt/Rhine-Main region. The point is to terminate the previous and public disputes about airport expansion, because of “our responsibility for the community and the people.”
For Bender, it is also a matter of securing FRA’s future competitiveness. “In the interest of our customers as well as Fraport AG we want to ensure a secure timeframe. We have to be able to implement the new northwest landing runway in 2011,” said Bender.
Fraport AG’s executive board chairman Dr. Wilhelm Bender views the intended agreement with Celanese/Ticona as removing the “biggest obstacle to airport expansion and, at the same time, increasing planning and investment security.”
“Cooperation will benefit all parties involved, both companies as well as the region and its people. After long and often difficult negotiations we have reached a pragmatic solution for the sake of the higher goal. There are neither winners nor losers with this solution. Expansion of Frankfurt Airport (FRA) – on which Germany’s future competitiveness in commercial aviation depends – is viewed by both partners as an important goal for our community.”
Bender explained that the realistic expectation for the new northwest landing runway to go into operation in 2011 was tied to this “rationality pact.” “In the interest of our customers as well as Fraport AG we want to ensure a secure timeframe,” said Fraport’s CEO. Maintaining the timeframe for expansion is of decisive importance for FRA, which suffers capacity bottlenecks and can no longer meet the demand for slots. “Time is money. Every day that the vibrant global aviation market passes us by is a lost day for the company and its employees – and also for the nation, the region and its people,” Bender said.
He explained that Fraport’s executive board had “faced the alternative of either reaching an amicable optimal solution with Ticona or of accepting the risk of considerable delays in opening the landing runway, along with all of the economic and strategic consequences.” The agreement prevents considerable delays; it creates “more legal certainty and is easier for Fraport to take responsibility for and is, ultimately, cheaper than the risk of disputes dragging on over many years.”
It must be taken into account that the air transport market is growing by four percent annually and that an extended dry spell will impair Frankfurt Airport’s competitiveness. A significant delay in airport expansion will result in a traffic shift and thus will have unforeseeable consequences for the traffic volume at FRA in the long term. In this connection, Bender referred to the latest press statement from Lufthansa chairman Mayrhuber who has called for rapid construction of the runway and said “that without the fourth runway, FRA runs the danger of eventually being overtaken by Munich Airport as Europe’s best transfer hub.”
Bender stated that the airlines need clear planning perspectives at FRA. In this respect, the Ticona agreement provides considerably greater security. The northwest landing runway is expected to go into operation in 2011. The first construction phase of the planned Terminal 3, which accounts for 60 percent of the total project, will be completed by 2014.
Bender called the €650 million to be paid as compensation for relocating the Celanese/Ticona plant a “demanding challenge” for his company. However, he said that it was justified on the basis of internal and external expert business opinions. Against this background, the negotiated result is justifiable.
The total cost of removing the obstacles, not to mention the time problems expected, would have amounted to about €200 million, explained Bender. Moreover, the land to be taken over from Celanese/Ticona has been assessed at approximately €60 million and directly abuts the Monchhof real estate site, which Fraport is currently marketing.
In closing, Bender said that the “time window” for FRA’s expansion schedule is “very calculable and realistic.” The zoning decision by Hesse’s economics minister has been announced for the end of 2007. Following legal proceedings and two years of construction, the new landing runway can now be expected to open in 2011. This creates “a very positive perspective” for Germany’s largest airport.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
