With Vinci Airports’ transaction to take a 25-year management and operations contract on Belgrade Nikola Tesla Airport in Serbia formalised in February 2019 attention returned to the tender for the 35-year concession on Bulgaria’s Sofia Airport, which was extended for the fourth time until 04 April 2019. The contract concession is valued at an estimated EUR3.9 billion. It is widely anticipated that Manchester Airports Group (MAG) will pursue this transaction to its conclusion though MAG claimed it did not ask for the extension.
Bulgaria’s Parliament recently passed a bill of amendments to the country’s concessions act, which is expected to result in a wider field of bidders in this particular tender. The bill clarifies matters concerning joint liability, dispute settlement and the grounds for voiding a concession contract in large scale investment in public infrastructure. That is an interesting development because a number of Eastern European airport sales and concession procedures have been withdrawn in the past, often for political reasons.
In France the first regional airport privatisation, at Toulouse, is on the rocks as Paris’ Administrative Court of Appeal recommended the cancellation of the partial privatisation of Toulouse Blagnac Airport, which dates from 2015. The Court alleged there was a “substantial procedural violation” in the procedure of choosing a new shareholder. A decision is expected to be made on 22-Mar-2019.
CASIL Europe, a joint venture of Friedmann Pacific (Hong Kong) and Shandong High-Speed Rail, is expected to sell its 49.99% stake due to the government’s decision to retain its 10.01% stake and has received offers from several French companies for purchase of the stake. Candidates include, inter alia, Vinci Airports with Predica and Caisse des Dépôts, Ardian/Mirova and Eiffage. Offers were anticipated by 15 March 2019.
Meanwhile, the privatisation of Groupe ADP, which operates the capital’s airports, has hit a sticky patch, with Républicains Senate president Bruno Retailleau publicly opposing it on the grounds that privatising a monopoly means unduly providing financial income to the private sector. However, the Senate did vote to remove article 44 of the government’s business reform package relating to the privatisation of Groupe ADP by 246 votes to 78.
The French government, as part of its PACTE Bill on growth and economic transformation, intends to divest its (50.6%) stake in Groupe ADP. However, there is a catch. The asset sale will be accompanied by measures permitting the state to recover all previously held airport infrastructure and assets represented in its controlling stake after a 70-year period.
The La République en Marche opines that “if the airport wants to improve further, significant investments must be made and the French state, in debt as it is, isn’t capable of doing so”. En Marche argued while ADP’s share price has increase 3.5 times since 2006, the group must operate in an increasingly competitive market to remain viable.
Vinci Airports, which is already a small shareholder (8%) in Groupe ADP, can again be expected to bid.
Vinci Airports is also involved in the UK, where, at the end of December 2018, it signed an agreement to become the majority shareholder of London Gatwick Airport. The transaction is expected to be completed in 1H2019.
In Greece, the Parliament is expected to ratify the extension of the Athens International Airport S.A. concession to run that airport by 20 years. The new contract includes EUR2.9 billion in investments to be made by the concessionaire over the extended concession period out to 2046. Also in Greece, GMR Airports Limited and the Greek TERNA Group signed an agreement for the design, construction, financing, operation and maintenance of the New Heraklion Airport. Phase 1 construction will run for five years with an overall concession period of 35 years.
Montenegro wishes to complete a concession contract on the Podgorica (capital city) and Tivat airports and is seeking considerable investment in them as part of the deal.
In Russia, Moscow Sheremetyevo Airport commenced a public discussion on the draft of the Federal Air Transport Agency (Rosaviatsiya) order on the provision of the Directorate of the Moscow Transportation Hub, with rights in relation to the concession for the airport. In December 2018, Rosaviatsiya signed a 49- year, RUB61 billion (EUR886 million) concession agreement covering new construction and renovation of aviation infrastructure at Moscow Sheremetyevo Airport.
Airports of Regions proposed to acquire shares in Yekaterinburg Koltsovo Airport, Russia’s sixth busiest with six million passengers in 2018, and in which it already holds an 88.03% stake. A decision will be reached by April 2019.
The Ukraine government, via its Minister of Infrastructure, said it is preparing for the signing of concession agreements for Kiev Boryspil International Airport – one of two airports serving the capital – and Lviv Danylo Halytskyi International Airport, as well as some regional airports. Concession agreements will cover one state and several communal airports.