Airport-Holding MFAG: Stormy Times Ahead

The East German Airport Holding MFAG, consisting of Leipzig/Halle (LEJ) and Dresden (DRS), is undergoing major changes. Johannes Jaehn has been appointed new boss of the holding, while the long-time managing director Markus Kopp was downgraded to head of marketing and sales. Additionally, Dieter Koehler has been named chief representative of the holding organization. Meanwhile, market observers are increasingly asking themselves, what is the idea behind MFAG Holding.

Johannes Jaehn (center) flanked by Markus Kopp (left) and Dieter Koehler  /  pictures courtesy MFAG
Johannes Jaehn (center) flanked by Markus Kopp (left) and Dieter Koehler / pictures courtesy MFAG

´The impression is deceiving: The picture taken right after the MFAG supervisory board’s decision to reshuffle the management, shows Markus Kopp smiling. Quite astonishing taking into consideration that he just lost his job as sole chairman of both East German airports. Insiders say, Herr Kopp is second fiddle from now on, since he has to report to his new boss Johannes Jaehn. The former hardware store manager, who is a newcomer to aviation, is now sitting in the driver’s seat in Leipzig/Halle and Dresden, both of which belong to East Germany’s airport holding organization MFAG. 

 

Something must have gone wrong
The official reason for the planned long beforehand and now complete management transformation: Kopp should be released from secondary issues freeing him up to concentrate on sales and marketing to acquire new customers in order to up the airport’s traffic numbers. This in particular since Kopp was a former Lufthansa manager, raising expectations that he would attract additional LH flights and services of the airline’s affiliates to both DRS and LEJ; a hope that was proved wrong.
What sounds like a promotion in MFAG’s official announcement is in reality a cover story, and of a rather scruffy character, camouflaging the real reasons that led to this decision.
What had gone wrong in the past that caused Kopp’s demotion?
A lot ! – people close to the case report.
Under his supervision LEJ grew into Germany’s number two airport in cargo processing volume, surpassed only by big Frankfurt-Main. This accomplishment was continuously hailed as a success, month after month, arguments used by Kopp and his MFAG team to prove that the airport was right on track.

Express goes up, everything else levels off
However, taking a closer look at the figures it becomes clear that the only segment that developed, in the right direction, were express shipments provided by one client, acquired by Kopp’s predecessors Volkmar Stein and Eric Malitzke: DHL of Deutsche Post. In contrast the classic cargo biz leveled off over the years as did the number of travelers flying to and from LEJ. Lately, the numbers have even contracted, after the U.S. military stopped transporting their troops going to or coming from the Middle East, Afghanistan and other hot spots through Leipzig/Halle. The troops were counted as transit passengers, greatly increasing the number of travelers at LEJ for a certain period of time. That game is over now with no prospects in sight.   

Aerial image of Leipzig/Halle
Aerial image of Leipzig/Halle

Useless but costly alliances
Secondly, Koop became a kind of world champion in signing collaborative agreements with other airports. The list is long, comprising of Zhengzhou, Shanghai Pudong, Shenzhen, Kansai, Johannesburg, Cincinnati and Memphis. Critics have been asking, for some time, what benefits these lobbying activities produced for LEJ or DRS. The answer is devastating! Not a single new carrier was motivated to connect the Saxon airports with any one of those gateways. Instead, delegations kept on visiting each other, exchanging their views, without any real value resulting from the company’s money being spent on these occasions.
When asked, in confidence, some of Saxony’s politicians also charged that Kopp is responsible for scaring away a number of capable next-generation managers, mainly LEJ’s former MD Eric Malitzke and Dresden Chief Michael Hupe. Malitzke switched over to Amazon where he holds a leading position and Hupe has taken the helm at Nuremberg Airport. 

Is MFAG redundant?
Aviation experts together with a growing number of market analysts are meanwhile questioning the holding structure. Which synergies did MFAG produce, what are the real benefits of this bloated and expensive administration, they ask, not seeing any. The procurement of material is not enough to justify this construct.

Light at the end of the tunnel
Be that as it may, the government of Saxony obviously felt that the time was right to change MFAG’s management structure, bringing in new people with new ideas to run the company. Their main task is to improve the holding’s financial situation by getting both airports out of the red.
The company has been navigated, by politicians, into this rather gloomy situation going on 20 years now. Shortly after the reunification of Germany the Saxon government expected passenger numbers, at both Leipzig/Halle and Dresden, to continuously increase. Based on this optimistic view new passenger terminals were built, very modern and very futuristic, but way too large for the true demand, as seen in the years following. Hence, MFAG must shoulder the financial burden of some costly infrastructural errors of the past, today. But there is a light at the end of the tunnel, states MFAG speaker Uwe Schuhart. “The depreciation ends soon for one of Leipzig/Halle’s two runways, thus improving our finances substantially.” According to Uwe, operationally LEJ has been in the black for quite some time.

Heiner Siegmund / Michael Taweel

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