Lima Airport – the jewel in Fraport’s overseas crown?


A recurring theme in CAPA reports recently has been airports that have publicly committed to pressing ahead with infrastructure development irrespective of the present situation. In some cases the reasoning has been that of securing or gaining strategic advantage, in others it has been to do with an environmental agenda.

In the case of Lima Airport Partners – an organisation 80% owned by Fraport – it is neither; merely a statement of the strength of both it and the parent company and of its ability to attract international financial organisations to finance it in the midst of what is a battle for the entire industry to survive and prosper.


  • Lima Airport is pressing ahead with extensive infrastructure expansion and has acquired a multi-bank syndicated loan to do it, secured in ‘a challenging environment’.
  • The airport acts as a hub on many levels, despite a lack of alliance airlines.
  • An early adopter of the ‘national lockdown’, Peru did not stop the virus, but a second peak appears at least to be levelling off.
  • Financially, there are mixed messages coming out of Fraport about its international division, but the one constantly positive factor seems to be Lima Airport Partners.

Four banks syndicated in USD450 million loan

Lima Airport Partners has signed a USD450 million financing agreement for Lima Jorge Chavez International Airport's (LIM) airside expansion. Four international banks, comprising KfW IPEX-Bank, Bank of Nova Scotia, Sumitomo Mitsui Banking Corporation (SMBC), and Banco Bilbao Vizcaya Argentaria (representing four different continents), are providing the loan.

The expansion comprises a new 65 metre ATC tower, a new 3480 metre second runway, 10 kilometres of taxiways, a 250 hectare advanced midfield apron for increased aircraft parking capacity, new emergency services facility, beacons and navigation aids, surveillance systems and other systems.

Construction of the new ATC tower is scheduled to be completed in Jul-2021. Construction of the second runway will start soon, and the runway is scheduled to go into operation by the end of 2022.

Lima Airport's airside development is strategically important, not only for the airport, but also for Peru and South America. LIM serves as a major and popular hub airport for the South American market.

Dr Matthias Zieschang, Fraport AG’s chief financial officer, said, “This transaction is of paramount significance for the development of Lima Airport. Secured in a very challenging environment, this financing agreement sends out a strong and positive signal about Lima Airport Partners and the entire Fraport Group. Furthermore, the transaction underscores the strong interest and demand from capital markets for financing well-managed airports that have a long-term and positive perspective – such as Lima Airport Partners with its major South American hub airport.”

Fraport “to register a positive EBITDA in its international segment”, even this year

Dr Zieschang recently reported that Fraport was expecting to register positive EBITDA in 3Q2020 for its international segment and EBITDA of close to EUR100 million for its international segment in FY2020, despite the effects of the COVID-19 pandemic.

He said, "Abroad, our depth of added value is much lower than in Frankfurt. This means that costs can be reduced even faster and more strongly in the short term".  

Lima is the leading example of Fraport’s strengths in its external market. In a recent CAPA report on Fraport’s 1H2020 financial report it was revealed that with the exception of the Lima subsidiary (Lima Airport Partners, in which Fraport now has a 80% stake), all of Fraport’s international airport subsidiaries had made negative contributions to the group’s financial performance.

That ownership level at Lima, which was increased from 70% in 2019, stands in contrast to Delhi Airport, for example, where it is only 10%, and where in the past Fraport has expressed frustration at the lack of influence it can sometimes bring to bear on events there.

Well positioned to act as a local, regional, and intercontinental hub

Although situated on the Pacific coast, LIM is well positioned to act as a hub between South American countries, between those countries and Central and North America, and intercontinentally both eastbound and westbound.

Location of Lima

Foreign airlines, including LATAM divisions, are the main airlines

While only 20% of capacity at this time is international, almost 90% of seats are provided by foreign airlines.

Passenger traffic growth has been consistent throughout the last decade, with double digit growth achieved in half of the ten years 2010-2019, along with an attendant growth in seat capacity.

Lima Jorge Chavez International Airport: passenger numbers 2010-2020

Second virus wave may have peaked

In the period Jan-2020 to Aug-2020 passenger traffic has dropped by 67%, which, although dramatic, is a better position than some others, and is a marginal improvement on the figure at Fraport’s main Frankfurt Airport (-68.4%).

That position is largely explained by the catastrophic decline in capacity in Mar-2020, which was experienced by so many other airports.

Capacity reduced from 590,000 in the week commencing 16-Mar-2020 to 147,000 the following week, then carried on to a low of just 5,200 in the week commencing 20-Apr-2020, and was then bumping along at that level until then end of June. Since then there has been a partial recovery, with 109,000 seats forecast for the week commencing 21-Sep-2020.

Peru imposed one of the earliest and strictest lockdowns in Latin America to stop the spread of coronavirus – but still saw cases of infection rise rapidly.

Peru has now experienced two peaks of the pandemic, having reached 8,800 cases on the last day of May before it dropped back to a low of 2,500 on 22-Jun-2020, before going above 10,000 for the first time on 16-Aug-2020.

The progression of infection since then has hardly been uniform, with a difference of almost 5,000 new cases between just two days in early September, but the overall trend does now seem to be downwards (there was a similar staccato decline following the first peak).

Virus cases in Peru: daily rate of COVID-19 cases

Leading the aviation recovery at Lima is the umbrella of LATAM, which had almost 56,000 seats on offer in the week commencing 14-Sep-2020 – which is more than all the other airlines currently operating combined, accounting for 68.5% of capacity. That is despite LATAM Airlines Peru, along with other divisions, filing for bankruptcy in May-2020.

Lima Jorge Chavez International Airport: airline market share by seat capacity, week commencing 14-Sep-2020

LATAM also has 65% of offpeak movements and 46% of peak movements at this time.

International seat capacity: 65% attributed to upper and lower South America

Lima’s significance as a hub is evident from this chart, which shows that while exactly 60% of seat capacity is on flights involving ‘upper’ and ‘lower’ South America, both Europe and North America remain well represented.

Lima Jorge Chavez International Airport: international departing seats by region

Chile has the greatest number of seats, followed by Brazil, but then Spain, the USA, and the Netherlands.

Lima Jorge Chavez International Airport: international departing seats by country/territory, week commencing 14-Sep-2020

Alliance representation is very limited

Remarkably though, despite all Lima's other hub credentials, one thing the airport does not have is strong representation from the airline alliances.

SkyTeam has 2.6% of seat capacity and oneworld less than 1%. The Star Alliance has no representation whatsoever.

Contrasted with Frankfurt, where Star Alliance has 70% of capacity and unaligned capacity amounts to only 22%.

Lima Jorge Chavez International Airport: seats by airline alliance, week commencing 14-Sep-2020

But full service carriers have the bulk of seats

Despite that fact, however, more than 72.3% of Lima’s capacity is on full service carriers, with low cost carriers accounting for just 22.6%.

Lima Jorge Chavez International Airport: seats by business model, week commencing 14-Sep-2020

Lima’s financial record is as good as Frankfurt’s

Financially, Lima Airport has achieved a consistent EBITDA margin of 33% to 34.4% over the past three years (2017-2019). That is marginally better than Frankfurt Airport’s EM in the same period.

Foreign operators seem to be acquiring a taste for this part of the world. In neighbouring Ecuador, President Lenín Moreno confirmed in Aug-2020 that Korea Airports Corporation would operate Manta Airport there, and is expected to invest USD182 million in airport infrastructure.

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