History has shown us that privatising an airport can be a long and complex process that often contains more twists and turns than a Dan Brown novel.
When the airports being privatised are the two biggest in Spain – Madrid Barajas and Barcelona-El Prat – the scope is certainly there for a few changes to the plot.
And with the deals set to be followed by the sale of a 49% stake in state-owned Aena Aeropuertos – currently the world’s biggest airport operator with 47 gateways in Spain and a further 28 overseas, which between them handle around 250mppa – there is nothing straightforward about the planned restructuring of the country’s airport system.
Indeed, if Dan Brown (the author of The Da Vinci Code) was planning to write a book about it, he would positively be licking his lips at the scenario-changing potential of this unfolding story.
He would, however, have been disappointed by events to date, as Spain’s blueprint for the transformation of its airport system appears to have gone remarkably smoothly.
To briefly recall the first few chapters: the government has formed a new holding company (Aena Aeropuertos) in preparation for the potential early 2012 privatisation of Madrid-Barajas and Barcelona-El Prat – 20-year concessions are effectively for up for grabs in both cases –and the subsequent sale of a 49% stake in the state-owned airport operator.
In a bid to ensure that it gets the best price for its ‘prize assets’, Aena has appointed the Royal Bank of Scotland (RBS), KMPG and AT Kernay to advise and co-ordinate the sales.
No timescale has yet been set for the disposal of the 49% stake in Aena Aeropuertos (minus Madrid-Barajas or Barcelona-El Prat), although it has been suggested that this could take place between 2012-2014.
Some experts put the value of Aena Aeropuertos as high as €30 billion based on Madrid Barajas and Barcelona-El Prat fetching around €4 billion and €1.6 billion respectively.
Global airport operators Aéroports de Paris (ADP), Fraport, Ferrovial, GMR Infrastructure Limited and Changi Airports International (CAI) are among a host of big name investors represented in seven consortiums bidding to win the Madrid or Barcelona concessions.
Additionally, a consortium comprising Grupo San José, Cedicor SA and Global Miróbriga is bidding only for Madrid-Barajas and an Abertis Airports-led group, which also includes Borealis and Ibervías, is only interested in Barcelona-El Prat.
Aena Aeropuertos CEO, Juan Ignacio Lema, believes that the interest in both gateways is testimony to their appeal and “the huge investment that Aena has made in its airport system over the last decade”.
“We have invested more than €17 billion in modernising our airport infrastructure and, as a result of this process, have a modern and competitive airport network,” enthuses Lema.
“In fact, I would go as far to say that very little further investment is required to ensure that we have the capacity to meet expected traffic growth, while offering a high level of service to our customers, for at least the next 20 years.”
As an example of the “good job” Aena has done in terms of capacity enhancing infrastructure improvements, Lema cites the fact that Barajas – which handled 50 million passengers in 2010 – is capable of handling up to 70mppa and El Prat more than 55mppa, nearly double the 30 million that used the gateway last year.
So if Spain’s airport system is in such good shape, why does the government want to break it up?
Lema says: “From the operational point of view, we are very efficient and our operating costs per passenger are among the lowest in Europe. However, in the commercial field we are far behind our competitors, and one of reasons for this was our old legal structure as a public business entity, which gave us little commercial flexibility.
“However, this changed with the formation of Aena Aeropuertos on June 8, as we are now a commercial business with greater flexibility to manage and improve our non-aeronautical related revenues.
“The new management model also includes the possibility to incorporate private partners to the capital of Aena Aeropuertos. Thus, we will be able to compete on the same terms as our main competitors and incorporate the best management practices of the private sector to help us improve.
“Awarding concessions to manage Madrid-Barajas and Barcelona-El Prat will allow greater competition between the two major airports in the network and improve our economic and financial efficiency.
“I can assure you that the changes are not only necessary, but essential to ensure the future of this company.”
The only non-Aena operated airports in Spain today are the privately built and operated gateways of Ciudad Real Central (formerly Don Quijote and South Madrid; Lleida-Alguaire (Catalonia; and Castellón-Costa Azahar Airport, although the latter has yet to receive any traffic despite opening on March 25.
They will shortly be joined by the new €250 million Murcia Regional International Airport, which is currently being completed in Corvera (See Project Watch article on page 79).
Aena Aeropuertos’ CEO admits to being “particularly satisfied” by the quality of the bidders interested in the Barajas and El Prat concessions, which he claims shows the attractiveness of the gateways to both domestic and international investors.
Lema refuses to get drawn on possible valuations for either airport though, other than to comment that the eventual sale prices will reflect the “value of the business to the future concessionaires”.
He does, however, want to reassure the Spanish people that Aena Aeropuertos will not short-change them when in comes to the concession fees for the nation’s prized airport assets.
“One of the premises of this operation is the defence of the public interest,” states Lema. “Citizens can be assured that we will not grant the management of these two magnificent airports at any price.
“What would I say to those that believe that Spain is wrong to sell off its airport assets? I would say we are doing the right thing. Indeed, what we are doing now was done by our main competitors years ago. We are merely catching up with them.”
Aena Aeropuertos will retain a 9.95% stake in the new operating companies of Madrid-Barajas and Barcelona-El Prat to ensure that it continues to have an influence at both gateways.
When it comes to the sale of the 49% stake in Aena Aeropuertos, Lema believes that there will be a lot of interest due to the fact that highly successful gateways such as Palma de Mallorca, Alicante, Malaga, Seville and Valencia will remain 100% owned and operated by the company.
“Aena Aeropuertos is a profitable company with a promising future and a tremendous potential for improvement, both in the aeronautical aspects and commercial revenues,” he says.
“We are a global, modern and dynamic company with extensive experience in airport management both inside and outside of Spain.”
In terms of how the 49% stake in Aena Aeropuertos will be sold, Lema says: “Basically, we are working on the hypothesis of selling shares to one or more institutional investors and then holding an initial public offering (IPO) to dispose of any remaining stock.
“All investors are welcome, particularly ones which have a strong financial profile and those that already have experience in airport management.”
He certainly believes that the new shareholders will have no complaints about how the company is run now, or its ambitions for the future.
“We believe that we are heading in the right direction and that having new investors on board will allow us to carry on the good work we have been doing in the last few years and go from strength to strength.
“New investors, for example, wouldn’t affect our commitment to maintaining the highest levels of safety and security, improving efficiency and productivity, achieving environmental sustainability and continuing with the development of infrastructures and services.”
Having talked a lot about potential investors in Aena, Lema is quick to point out that the Spanish airport operator has international investment plans of its own.
“Aena Aeropuertos is constantly searching for good opportunities abroad,” he says. “We already participate in the management of 28 airports outside of Spain and have just signed a contract to advise the management of the airport in Luanda, Angola.”
In addition to completing the implementation and development of its new business model, Lema lists achieving environmental sustainability as one of the key challenges facing Aena Aeropuertos in the months and years ahead.
He comments: “Airports are fundamental to the development and economic growth of a city, region and country, but it is vital that they don’t lose sight of the fact that we must be compatible with and respectful of the environment.”
Aena’s determination to be an environmental leader has led to it reviewing a number of new technologies and procedures under the umbrella of its ‘Green Airport’ project, in a bid to reduce its noise levels, become more energy efficient and, ultimately, carbon neutral.
Lean and green – no wonder investors are queuing up to buy into Aena and Spain’s airport system.