Outlook report

Economic and industry-specific conditions

In calendar year 2018, the pace of global economic growth is set to remain virtually intact. Current forecasts range from 3.1 percent (World Bank, Global Economic Prospects, January 2018) to 3.9 percent (International Monetary Fund, World Economic Outlook, January 2018), slightly above the projections for 2017.

The economies of the leading industrial nations will probably grow at a similar rate to 2017, although a slightly lower growth rate is anticipated in Japan in particular. Since the commodities prices stabilized in 2017, the economic output in developing and emerging markets should continue to rise. Following an average increase in economic output in these countries of 4.7 percent in 2017, a growth rate of 4.9 percent is anticipated for 2018. For the members of this group that have suffered crises in recent years, namely Brazil and Russia, positive economic growth is expected to continue following the recovery in 2017.

Since the OPEC states agreed to limit oil production in the second half of 2016, the oil price increased and therefore fluctuated between USD 45 and 67 per barrel during 2017. It is assumed that the crude oil price will stagnate at about USD 58 per barrel in 2018.

Forecast economic growth in selected destinations worldwide

In %

Chart: Forecast economic growth in selected destinations worldwide
GDP growth in 2017 and 2018
Source: IMF, World Economic Outlook, January 2018

For the eurozone, growth of 2.2 percent is expected in 2018. This increase in economic output is based on the continued strength of private consumption, the positive investment dynamic, and increasing exports. The relatively strong global economy and the falling unemployment rates throughout the eurozone are also bolstering this development. However, the growth in the eurozone is still clouded with a certain degree of uncertainty because the outcome of the Brexit negotiations is still unclear. Even so, the uncertainties regarding 2018 are expected to be relatively low because the formal exit of the United Kingdom is not due until March 2019.

Forecast economic growth in selected destinations throughout Europe

In %

Chart: Forecast economic growth in selected destinations throughout Europe
GDP growth in 2017 and 2018
Source: IMF, World Economic Outlook, January 2018

The increase in economic output in the Federal Republic of Germany will, at 2.3 percent, be somewhat lower in 2018 than in the previous year. Nevertheless, the fundamental growth dynamic is unchanged. The early indicators for economic growth in the Federal Republic are currently reaching an extremely high level. For example, the ifo Business Climate Index stands at 117.2 and the ZEW Economic Sentiment Index at 17.4 points.

The upturn in the Federal Republic stems from a broad base and should therefore also continue in 2018. Private consumption (2018: 1.8 percent) will make a crucial contribution to growth as in the previous years. This is also indicated by the GfK Consumer Climate Index which is remaining constant at a high level. It currently stands at 10.8 points. Given the current strong increase in construction investments, growth will probably reach a slightly lower level in 2018 than in the previous year (2018: 2.6 percent). The investments in plant and equipment (2018: 5.1 percent) and exports (2018: 4.5 percent) are expected to gather pace considerably.

The general conditions in Bavaria and the region around the airport mean that further strong growth in transportation demand can be expected at Munich Airport. According to the results of the regionalized population projection by the Bavarian State Office for Statistics, the number of people living in Bavaria, especially around Munich, will grow in the period up to 2035. The population of Upper Bavaria will rise by 11.5 percent. The Prognos Future Atlas also shows optimum future opportunities for the regions mentioned. Driven by growing prosperity and an increasing population, the trend in the volume from Munich Airport’s core catchment area was positive in the last two years in particular. This trend is expected to continue in future.

The global aviation market will continue to grow. The Airports Council International (ACI) assumes an average annual growth rate in the global passenger volume of 6.5 percent for the year 2018. The Asia/Pacific market provides the largest contribution to growth, followed by the European market. The annual average growth rate for airfreight for the same period stands at 7.6 percent worldwide. An annual growth of 2.3 percent is forecast for aircraft movements. Again, the majority of the growth will be attributed to the regions of Europe and Asia/Pacific.

The German Airports Association (ADV) is also optimistic about the future. With expected passenger growth of 4.2 percent, an increase in flight movements of 1.0 percent, and an increase in transported freight of 5.1 percent, 2018 looks like another successful fiscal year for German commercial airports.

Forecast course of business

The Executive Board of Munich Airport has positive expectations of traffic volumes in 2018. The number of passengers should increase again by circa 3 percent and therefore reach around 46 million. The aircraft movements are expected to reach roughly the same level as 2017.

It is assumed that it will be possible to compensate to a large extent for the connections lost by the insolvencies of Air Berlin and Niki in 2018 through other airlines. The Executive Board therefore anticipates a neutral development in traffic figures as customer demand will persist and will largely be covered by other airlines. It is assumed that the negative effects from the insolvencies of Air Berlin and Niki will essentially be more than compensated for by 2019, meaning that the medium-term development of Munich Airport should not be impaired.

The reason for the growth in passenger volume is not only the registration of new connections, but also a sustained growth in transfer passengers and the increasing utilization of the seats available. The majority of the growth is contributed by the Lufthansa Group – partly due to the new stationing of several Airbus A380-type wide-bodied aircraft and the additions to the still young Eurowings fleet.

In addition to the forecast positive trend in traffic, the increase in air traffic charges of 2.6 percent implemented on January 1, 2018 in accordance with the master agreement on charges will lead to a rise in Aviation revenue.

Due to the Air Berlin insolvency, it is assumed that the revenue from ground handling services will decline as it is currently expected that the airlines that take over the Air Berlin business will process their ground handling services with service providers from outside the Group.

The forecast growth in passengers for 2018 will also have a positive impact as a rule on non-aviation sales revenue.

With regard to the retail trade, Munich Airport expects additional positive effects from concept changes, conversion measures, and new openings, as well as the traffic-related sales growth. The airport is therefore forecasting an extremely positive performance in this area.

The revenue from the Catering and Hotel division are expected to be slightly above the level of 2017. It will be possible to compensate for reduced demand from major hotel customers and declines caused by conversion work through increased sales arising from the passenger growth.

With regard to revenue from rental and leasing, it is assumed that it will be possible to compensate almost entirely for the loss of proceeds due to the Air Berlin insolvency with positive effects from the passenger growth and the rental of previously vacant premises.

The passenger growth in 2018 is partly due to higher transfer passenger figures and a growing low-cost segment. The Parking division only benefits to a limited extent from both of these effects, so the growth in this division will be relatively moderate.

The revenue from advertising is growing. The persistently challenging market environment in Terminal 1 is being countered by generating additional revenue with new digital advertising spaces and higher sponsorship income. The performance is more positive in Terminal 2.

Other revenue is also developing well. Increasing consulting revenue and the expansion of lounge activities in Terminal 1 are particularly worth mentioning.

Overall, Munich Airport anticipates a moderate increase in revenue of about 2 percent.

The trend toward higher cost of materials due to the increasing need to refurbish, convert, and optimize existing real estate will continue in fiscal year 2018. Munich Airport will also press ahead with its projects to develop real estate. Based on the traffic growth, the cost of materials in the Non-Aviation division will increase in line with revenue. On the other hand, the expenses for subcontractors for ground handling services at Berlin-Tegel – caused by the insolvency of Air Berlin – will fall considerably.

The Executive Board expects a further slight increase in personnel expenses as a consequence of increases in the collective pay rates. The workforce will essentially remain at the same level as in 2017.

The other expenses will increase in 2018, partly due to higher audit, consulting, and project services and increased expenses for advertising and public relations. Various other measures or unpredictable factors are anticipated, in some cases arising from the loss of the Air Berlin business.

In contrast, it is expected that depreciation and amortization will fall in 2018, which should help to improve the overall result. This is due to the fact that a series of fixed assets will be omitted from the depreciation over the whole year for the first time after a 25-year period of use.

A deterioration in the financial results is expected on balance. On the one hand, the interest expenses for loans to shareholders will increase because the Executive Board anticipates a hike in the underlying base rate as a result of further general increases in the market interest rates. On the other hand, Munich Airport assumes that the other financial result (profits/losses from financial instruments) will fall. In contrast, Munich Airport anticipates a reduction in the interest expenses based on the valuation of financial liabilities resulting from interests in partnerships.

In total, the Executive Board expects a change in EBT for the Group ranging from -4.0 through -10.0 percent.

Forecast financial and non-financial key performance indicators

  2017 2018
  Actual Forecast
      from to
      % %
EBT in T€ 229,240 Decrease -4.0 -10.0
CO2 reductions in tonnes 14,367 Increase 22.1 27.1
Passenger Experience Index 78.53 Increase 0.0 0.5

The PCA systems installed at Munich Airport will gradually be phased into normal operation. This will lead to significant reductions in CO2. Additional efficiency measures are designed to reduce energy consumption, especially for lighting, air conditioning, in IT, and in buildings and facilities.

In 2018, Munich Airport will further intensify the continuous improvement measures with regard to passenger satisfaction by strengthening and expanding the Passenger Experience Management. For example, it is planned to overhaul the service training concept and to further strengthen the service and hospitality training. In order to improve passenger satisfaction, the modernization of the toilets in the non-public area of all modules in Terminal 1 and the toilet renovations in Terminal 2 will be completed in 2018. A new lining system with integrated, automatic boarding-card checks should ensure a more convenient lining procedure for passengers on the one hand and, on the other hand, a better utilization of space and an overall improvement in the process.

With regard to the net assets and financial position, the Executive Board expects a positive free cash flow for 2018 despite the high planned outflow for investments in major projects for the expansion of the airport – even though the absolute level will decrease compared to 2017. Examples of these planned major projects are the new construction of an office building and the ground management at AirSite West, the partial renewal of the district heating network, the infrastructural reorganization in the southern development belt, and the S-Bahn railway tunnel for the «Erdinger Ringschluss» project.

On the assets side of the consolidated balance sheet, the planned investments will exceed ongoing depreciation and lead to an increase in non-current assets. Thanks to the extensive presumed retention of net income for 2018, equity will increase on the equity and liabilities side of the balance. It is planned to reduce liabilities through further repayments of the loans. A contrary development and therefore an increase in liabilities will arise due to an increase in investment activities.

Risks and opportunities report

Risk management system

The Executive Board of FMG and all subsidiaries and affiliated companies is responsible for the early detection and prevention of risks that jeopardize the continuity of Munich Airport and the investments. Group Management has overall responsibility for an effective risk management system and lays the essential foundation for it by communicating and defining corporate strategy and targets. It formulates specifications for the risk management process and the organizational structure of the risk management system.

The aim of the risk management system is to identify events and developments that may have a negative impact on the achievement of strategic and operational targets in good time and develop suitable countermeasures. It takes account of all aspects of entrepreneurial activity – economic as well as environmental and social.

The risk management guideline specifies the general principles of risk management in the Group as well as the tasks and responsibilities of the function holders involved in risk management. The guideline is based on the internationally recognized «COSO ERM» (Committee of Sponsoring Organisations of the Treadway Commission – Enterprise Risk Management) framework model.

The Risk Management Committee acts as an additional supporting management, control, and supervisory body within the risk management system. As the highest ranking risk management body, it is directly subordinate to the Executive Board and consists of the Chief Financial and Infrastructure Officer, the heads of the Aviation, Commercial Activities, and Real Estate divisions, the heads of the Legal Affairs, Committees, Compliance and Environment, Corporate Development, Group Controlling and Corporate Investment Management, Group Security, and Corporate Communications corporate divisions, and the risk manager. The head of Compliance is involved in the Risk Management Committee as a guest. The task of the Risk Management Committee is to analyze the risks from a Group perspective and to monitor the effectiveness of countermeasures. It provides support with the development of the risk management system as well as risk identification, assessment, and control. The Risk Management Committee meets quarterly and agrees the risk report, which is subsequently presented to the Executive Board and the shareholders.

The risk management process comprises the following steps. A coordination and communication platform has been established to provide system support for this process.

Identification and communication of risks

All divisional managers and Chief Executive Officers of subsidiaries and affiliated companies are responsible for the identification and assessment of risks. The coordination, administration, documentation, and forwarding of all risk-related information is carried out by the respective risk manager in the respective divisions. The risk manager checks the divisions’ risk reports for plausibility and compliance with the Group-wide standards for risk assessment. He or she combines the divisions’ individual reports in a risk report, taking account of materiality for the Group, and reports quarterly to the Executive Board and shareholders. Risks that jeopardize the Group’s existence that have been identified for the first time must also be reported to the Executive Board on an ad-hoc basis.

As a basis for dealing with risks responsibly, each individual employee is involved in managing risks throughout the company. Each employee is responsible for eliminating risks in his area and reporting indications of existing risks to his manager without delay.

Assessment of risks

Systematic risk assessment allows the company to determine the extent to which individual risks jeopardize the fulfillment of Munich Airport’s corporate goals and strategies and which risks may possibly threaten its existence. The factors «expected loss» and «likelihood/frequency of occurrence» are presented in a two-dimensional risk matrix for this purpose. The expected loss describes the impact on profits that can be expected if the loss event occurs. The likelihood of occurrence specifies the level of probability that the loss event will occur. In the case of events that recur over time, the company works with the frequency with which they occur. The assessment first takes place without measures to limit risk being considered (for gross risks, see the section «Risks»). Subsequently, the risks are assessed after risk-minimizing measures are initiated or implemented (for net risks, see the section «Risks»).

Dealing with risk

Starting from the risk analysis, appropriate countermeasures for dealing with risk are specified in line with corporate strategy and economic aspects. The strategies for managing risk include: controlling, insuring, minimizing, eliminating and passing on. The risk officers have the task of specifying and implementing countermeasures to manage risks in the respective affected division.

Risk monitoring

The risk manager monitors the effectiveness of risk management continuously. Risks are also monitored separately by Internal Audit.

Compliance management system

Compliance covers compliance with all airport-related laws, specifications and regulations, national and international rules and standards as well as in-house rules and guidelines. Munich Airport has established a Group-wide compliance management system, which encompasses all organizational provisions ensuring compliance with the aforementioned rules.

The Compliance department submits reports on the current status of the compliance management system to the Executive Board on a regular basis and to the Supervisory Board on an annual basis.

Compliance risks are also communicated as part of the risk reporting to the Executive Board and shareholders if internal thresholds are exceeded. Regular dialog takes place between Risk Management and Compliance.

Identifying and minimizing compliance risks

The Compliance department prepares the compliance risk analysis with input from the divisions and combines it with the subsidiaries’ compliance risk analyses every year.

Compliance risks are assessed in the same way as in the risk management process. Once the compliance risk analysis has been carried out, the Executive Board is notified of the results in a report.

The annual Compliance report to the Supervisory Board of FMG also includes the results of the compliance risk report. If there is an elevated loss potential and concomitant high probability of occurrence despite all the countermeasures taken, a detailed description is provided in the report.

In respect of 2017, there were no elevated compliance risks after the countermeasures taken were considered.

Preventing corruption

The compliance guidelines and the guidelines covering gifts and invitations support managers and employees in ensuring legally compliant and ethical behavior at the workplace. They are published on the Intranet and are therefore available to all employees. The guidelines also reference other guidelines with which employees must comply, thus for example ensuring compliance with public procurement law with regard to procurement and contracting processes, data protection, and information security. These ensure that processes and procedures are transparent and traceable, both internally and externally. In contracting and tendering procedures, Munich Airport requires bidders to submit a declaration of commitment stating that they will undertake everything necessary to preclude corruption. Compliance failures are liable to sanctions, such as exclusion from the contracting process.

The position of anti-corruption officer is exercised by the head of the Compliance department. There were no confirmed cases of corruption in 2017.

Communication and training

A key task of the Compliance department is to train and advise employees and managers in compliance matters as a preventative measure to stop compliance breaches from occurring.

Group compliance regularly provides training and publishes information to ensure that all employees and managers are familiar with the guidelines and any updates or amendments to them. Every year they must provide their signature to confirm that they have read the compliance documentation.

In 2017, some 61 managers of the Munich Airport Group took part in the three-hour training module on compliance as part of the Leadership Excellence Program. In addition to the legal fundamentals and the responsibilities of managers, this also covers Munich Airport Group’s specific guidelines on compliance and the prevention of corruption. A total of 497 people have received training since the module started at the end of 2013. Participation in compliance training is documented.

The Executive Board and Supervisory Board deal with compliance issues at regular intervals.

Electronic whistle-blower system

Through an electronic whistle-blower system, the Business Keeper Monitoring System (BKMS®), Group employees, business partners, and customers can report behavior potentially damaging to our organization. People inside the Group and outside can also contact the Compliance department by other means of communication (telephone, e-mail, face-to-face discussions) if they wish to draw attention to compliance infringements and need advice. Tender documents inform potential bidders of the possibility of using the BKMS® should compliance infringements be suspected.

Data protection

Munich Airport’s data protection officer is also assigned organizationally to the Compliance department but conducts his job independently and reports directly to the Executive Board. Initial training courses provided to new employees and apprentices, along with periodic onward training for employees in data privacy law, have helped raise awareness of statutory data protection requirements. Specialized, individual advice is also available in instances where people are unsure how to comply properly with data protection regulations.

There were no known instances of complaints regarding breaches of customer privacy and losses of customer data.


Risks that could have a material influence on the business activity or on the net assets, financial position and results as well as the reputation of Munich Airport are explained below. The risks are presented in each case before (overview of gross risks) and after taking appropriate countermeasures into account (overview of net risks).

The risk assessment relates to the economic impact in the assessment period quoted. As of December 31, 2017, the following material gross risks were identified for Munich Airport:

Overview of gross risks

Chart: Overview of gross risks

Risks resulting from force majeure

Risk Description and analysis Countermeasure(s)
Natural disasters A breach of the Isar dams near Freising caused by heavy rain could lead to the terminals being flooded. Gradual upgrading of the Isar dams by the water authority. They have already been partially renovated. Insurance to cover earthquakes, storms, hail and flooding has been arranged.
Attack on air traffic The risk of terrorist attacks on air traffic remains high. In addition to bodily injury and property damage, this would result, at least temporarily, in a decrease in the number of aircraft movements and passengers. In order to prevent a terrorist attack, the Group Security division takes all the necessary strategic, operative, and technical/organizational measures: Provision of adequate and well-trained personnel resources as well as construction measures to guarantee modern and approved security technology and infrastructure, monitoring the quality of service through sustainable quality measures, and constant dialog with the responsible security authorities. Bodily injury and property damage as well as interruptions of operations are insured.
Terror at the airport Acts of terror on the airport campus can result in bodily injury and property damage. A further consequence of such events would be, at least temporarily, a decrease in the number of aircraft movements and passengers. In order to prevent a terrorist attack, the Group Security division takes all the necessary strategic, operative, and technical/organizational measures: Provision of adequate and well-trained personnel resources as well as construction measures to guarantee modern and approved security technology and infrastructure, monitoring the quality of service through sustainable quality measures, and constant dialog with the responsible security authorities. Bodily injury and property damage as well as interruptions of operations are insured.
Fulfillment of security tasks The airline companies are responsible for security tasks in transferred areas. In these areas, airline companies fulfill the same task as airport operators but are not subject to the same supervisory authority. For Munich Airport, there is a risk that inspections will reveal defects in transferred areas and the airport as a whole will lose its security status as a result. Defective controls could lead to property damage and bodily injury as well as reputational damage. At present, a Group company owned by Munich Airport is tasked with performing operational security tasks in the transferred areas.
Market slump from epidemics/illness Epidemic/sickness outbreaks can result in market downturns with reduced aircraft movements and passenger numbers. Due to a relatively high fixed cost ratio, Munich Airport’s ability to react to market downturns is limited.
Large fire In the event of damage to or destruction of terminals or infrastructure systems caused by a large fire, property damage and bodily injury, as well as long-term interruptions of operations are to be expected. In order to minimize the risk of a major fire, Munich Airport takes all the necessary preventive and defensive measures and maintains its own Airport Rescue and Firefighting service. The risk of a major fire is also minimized by fire insurance cover (cover for property damage and interruptions of operations) and employer’s liability insurance (liability claims of third parties). Following assessment of the countermeasures, the net risk is deemed to lie below the risk tolerance limit.
Aviation accidents Aviation accidents or damage to aircraft can result in bodily injury and property damage as well as interruptions of operations and consequential damage. To minimize the risk, Munich Airport maintains an Airport Rescue and Firefighting service, a medical service, and a counseling team. The risk of aviation accidents is minimized through liability insurance and fully comprehensive insurance. Following assessment of the countermeasures, the net risk is deemed to lie below the risk tolerance limit.

Market risks

Risk Description and analysis Countermeasure(s)
Loss of/adverse impact on hub If Deutsche Lufthansa amends its strategy of operating the Airport as a hub, this would result in dramatic falls in the number of passengers and aircraft movements. Munich Airport’s collaboration with DLH is based on joint investments and long-term cooperation agreements.
Airlines’ economic difficulties The European air traffic industry is in a difficult competitive situation. The airlines operating from Munich Airport are also affected by this. Steady acquisitions of new customers should be able to compensate for any decreases in existing customers.
Due to the strong demand for German domestic and tourist traffic, it is reasonable to assume that competitors will fill any emerging gaps at extremely short notice. It is planned to respond rapidly to any current developments through continuous market observation and close relations with decision-makers at various airlines.
Economic cycle As a consequence of a weak economy, the growth parameters assumed in the planning process cannot be achieved, which has an adverse impact on profits.
During more significant economic crises, a collapse in loan finance markets may occur.
The exit of the United Kingdom from the European Union (EU) could have a negative economic impact and needs to be observed carefully.
Reducing expenses through cost monitoring, if necessary reducing staff numbers in a socially responsible manner plus a short-term cut in the investment budget in non-critical divisions aim to mitigate the consequences of economic slowdowns.
There are revolving credit lines to ensure the company is solvent.

Operating risks

Risk Description and analysis Countermeasure(s)
EASA certification If the European Aviation Safety Agency (EASA) Certificate is not renewed, then Munich Airport could lose its operating license.
The certification procedure was completed successfully on December 6, 2017 with the formal award of the EASA Certificate. This means that the operating permit of the passenger airport in Munich was secured again as from January 2018. This risk will therefore be omitted from the risk reporting as from January 1, 2018.
IT failure Damage to the IT system can result from fire, water ingress, or sabotage. Failure of IT for traffic operations with the corresponding interruptions of operations would be the consequence.
There is an increasing, abstract risk potential in the area of cybercrime, which needs to be observed and assessed continuously.
Critical corporate IT systems are fully redundant with systems located in physically separate locations. Property damage and interruptions of operations are insured.
To defend against a cyber attack at Munich Airport, a central information security management system was set up in 2004 that specifies and monitors the strategic, technical, and organizational measures for combating cyber attacks. The risk is also minimized with an insurance policy. Following assessment of the countermeasures, the net risk is deemed to lie below the risk tolerance limit.
Water damage Water damage caused by a break in the main drinking water or fire extinguishing water pipelines could lead to the failure of infrastructure systems important for air traffic. Remotely controlled emergency shut-off equipment and additional protective devices in the pipeline connections limit the possible damage. Property damage and interruptions of operations are insured. Following assessment of the countermeasures, the net risk is deemed to lie below the risk tolerance limit.
Expansion of EU security requirements The European regulations on aviation security require the rules governing checks on persons and luggage at airports to be extended in phases. The resultant conversion measures cause costs. Depending on the design, the conversion work causes the loss of leasable space. Munich Airport is introducing optimization measures to minimize the loss of space.
Failure to pass an EU safety inspection The EU’s aviation authorities are conducting safety inspections at airports. If an inspection results in a high number of complaints, Munich Airport will lose its security status. The consequences would be a heightening of the safety regulations, considerable obstruction with operational processes, competitive disadvantages and a loss of image. Munich Airport conducts thorough and strict quality controls to manage the quality of all safety aspects at the airport.
After passing an inspection at the end of 2016 and following requirement-oriented process optimization and employee qualification, the likelihood of occurrence for the net risk is deemed to be extremely low.
Utilities and waste disposal facilities The inadequate availability of substances necessary for operating activities, such as electricity, heat, cooling energy, drinking and extinguishing water, waste water, and waste, may result in property damage and interruptions of operations. The service and maintenance programs, network redundancies, and storage reduce the risk of gaps in supply. Property damage and interruptions of operations are insured. Following assessment of the countermeasures, the net risk is deemed to lie below the risk tolerance limit.
Reorganization of ground handling The success of the reorganization of the former Ground Handling business unit could be put at risk by the following uncertain events and circumstances: sustained declines in traffic at existing customers, handling losses due to the cession of partial fleets to airlines that do not belong to the customer portfolio, aggressive price policy of competitors, and an increasing decline in prices at Munich Airport. A new contract was concluded at the end of 2016 in the negotiations concerning the extension of a long-term contract with an important customer of AeroGround. As a result, it was possible to extend associated collective restructuring agreements.
Continuous monitoring and reporting on the reorganization progress and/or path. In the event of a loss of ground handling, the capacities and related costs are reduced.
Personnel procurement/recruitment Personnel procurement is proving to be increasingly difficult in the various career groups. The causes for this include the strained labor market in the region, the high costs for accommodation, the increasing age of the workforce, as well as the high level of fluctuation in the area of ground handling services. A working group was set up to counteract these issues. Its objective is to develop a Group-wide, coordinated procedure and target group-specific HR marketing and procurement concepts.
Further suitable measures are the intensification of training activities, the promotion of marketing at universities, and appearances at trade fairs and job exchanges.
Projects were also initiated to create affordable housing for Group employees.
Following assessment of the countermeasures, the net risk is deemed to lie below the risk tolerance limit.

Legal risks

Risk Description and analysis Countermeasure(s)
Third take-off and landing runway In the event of the third runway project being finally shelved or postponed for a significant period of time, all existing planning and land acquisition costs must be checked in respect of their recoverability and depreciated if necessary.
There could be a significant loss of corporate value unless capacity is expanded through the construction of the third take-off and landing runway.
The development project will require further examination and the further procedure will need to be decided.
The legal ruling in favor of Munich Airport dated February 19, 2014 was an important milestone in limiting the legal risks for project implementation.
Munich Airport is also making a case to politicians for the expansion.
The well-founded work to persuade people of the merits of the third take-off and landing runway is continuing.
Products used for de-icing There is a suspicion that the formates in the products currently used for de-icing paved areas and runways accelerate the oxidation of aircraft brakes. There are discussions about banning these formate de-icing products at the SAE (Society of Automobile Engineers) international standardization committee. As an alternative, there are currently only glycol-based de-icers on the market, and they are not approved for use at Munich Airport by the Ministry of the Environment. If they are banned, Munich Airport would have to invest substantial sums in waste water systems to comply with the requirements of water management legislation. The German passenger airports are working together with the ADV (German Airports Association) and the BDL (German Aviation Association) to fight against the ban on formate de-icers. The aim is to continue applying pressure on the SAE through the ACI (Airports Council International) Europe. In discussions with the Bavarian water management authority, ACI Europe, and the responsible SAE working group, it was demonstrated that the smallest possible amount of de-icers is used to minimize the impact on the environment. It is planned to involve manufacturers of the de-icers in resolving the problem in future.

In addition to the risks shown in the risk matrix, there was a risk of quality losses in the previous year in the personnel and goods checks and in alarm tracking due to personnel shortages (CAP staff shortages). Thanks to a successful increase in personnel and the deployment of a renowned security company as a subcontractor, this risk fell below the risk tolerance limit as at December 31, 2017.

Financial risks

Risk Description and analysis Countermeasure(s)
Currency risks Currency risks arise insofar as planned sales in foreign currencies are not balanced by any corresponding expenses or outgoings in the same currency. Munich Airport hedges currency risks using currency forwards.
Credit and credit rating risks Credit and credit rating risks primarily arise from short-term deposits as well as trade receivables. In general, deposits are only made with German banks with deposit protection.
The management of credit rating risks includes the constant monitoring of debtors’ creditworthiness, overdue invoices, and a stringent debt collections management. Dependent on the credit rating, certain services are only performed against prepayment or provision of collateral in the form of guarantees.
Interest rate risks Interest rate risks essentially arise from floating-rate financial liabilities. Munich Airport counters interest-rate risks using interest payer swaps.

As is often the case in ordinary business activities, FMG is facing various legal disputes. They could lead in particular to the payment of compensation for damages or, in the case of construction projects, to changes in the service remuneration. Moreover, further legal disputes may be initiated, or existing ones may be expanded. Apart from the issues that have already been provided for in the balance sheet, FMG does not anticipate any material negative impacts on the net assets, the financial position, and the earnings situation from the other cases that are currently known.

For the gross financial risks listed below, the expected financial liability fell short of the reporting limit as of December 31, 2017. Therefore they were not included in the risk reporting.

After considering countermeasures, the following nets risks remain:

Overview of net risks

Chart: Overview of net risks


The divisions and investments identify, assess, and manage opportunities on a decentralized basis with support from Corporate Development, Group Controlling. and Investment Management.

Below the report shows the developments and events that could lead to a positive deviation from planning. The presentation is based on the risk report with the difference that the horizontal axis shows the occurrence time – that is the time until opportunities are expected to occur – and not the frequency with which they occur. No multiple mentions are made if the influence remains constant over the course of time. However, multiple mentions are made if the economic benefit changes. The economic benefit arises in the short, medium, long, or very long term and it is analyzed periodically.

Overview of opportunities

Chart: Overview of opportunities
Opportunities Description and analysis
Consumption Overcoming the existing geopolitical and economic crises could lead to an increase in the propensity to consume of passengers from regions outside Europe above the planned level.
Economy Global economic growth above planned levels could boost revenues further.
Traffic An increase in air traffic growth above the expected level could increase revenues in all corporate divisions.
Hub development The key partner airline DLH might expand the Munich Airport hub because of a further improvement in its market position, and this would lead to growth in passenger numbers above the planned target.
Digitalization FMG is working on the strategy to adjust the Airport’s business model more closely to the structural change resulting from digitalization. This strategy might give rise to medium- or very long-term growth effects which were not fully taken into account in planning so far.
Off-campus activities The off-campus business of Munich Airport (services and retail) might develop better than expected, with corresponding growth in the consolidated profit.
Real Estate In the long term, activities in the Real Estate business division could be strengthened more than is currently planned, which would lead to revenue in this and possibly other business divisions being increased.
CO2 strategy The continuing increase in efficiency among energy-saving technologies and an associated improvement in the price-performance ratio of low emissions energy generation could lead to the costs of Munich Airport’s new CO2 strategy being lower than expected.
Rail access Better than expected improvements to rail access could lead to an expansion in the passenger catchment area and consequently to increased revenue in all business units.

Overall assessment of the opportunities and risk situation

For Munich Airport as the second largest passenger airport in Germany and one of the largest airports in Europe, it is important to actively exploit any opportunities that arise and to improve its position on the market still further through constant growth. However, it is also a key objective of Munich Airport to recognize risks in good time and to counter them systematically.

Accordingly, the currently anticipated impact of possible events and developments is taken into consideration in business planning every year. The reported opportunities and risks are defined as potential deviations going beyond the forecast corporate result. Munich Airport consolidates and aggregates the risks reported by the corporate divisions and Group companies and reports quarterly to the Executive Board and shareholders. Opportunities are identified and managed with the involvement of the corporate divisions, Corporate Development as well as Group Controlling and Corporate Investment Management.

Taking account of the current business plan, the opportunities and risk situation has scarcely changed year on year. No new risks were identified that might potentially have a critical impact on income.

No risks were foreseeable from the Group-wide risk management system or in the assessment of the Executive Board during the current forecast period, which individually or in their entirety could jeopardize the continued existence of Munich Airport.

Munich Airport points out that various known or unknown risks, uncertainties and other factors may lead to actual events, the financial position, the business development or the performance of the company deviating significantly from the estimates provided here.