Spanish Airports Sale Said to Lure Heathrow-Owner Ferrovial, Investor GIP

Madrid airport, put up for sale by the debt-laden Spanish government, is attracting interest from Abertis Infraestructuras SA (ABE), Global Infrastructure Partners and Ferrovial SA (FER), the owner of London’s Heathrow hub, five people with knowledge of the auction said.

Spain plans to push ahead with the 5.3 billion-euro ($7.6 billion) disposal of Madrid and Barcelona airports even with the volatility in the world’s financial markets and a general election little over three months away, according to state-owned Aena Aeropuertos SA, which currently runs both hubs.

Interested parties have until Sept. 5 to prove that they have at least 3 billion euros in assets and experience running an airport that handled 25 million people or more in 2010. Aena says offers should then be received by the end of October, with the contracts awarded sometime in November.

Madrid and Barcelona have tremendous potential for growth,” Juan Ignacio Lema Devesa, Aena’s CEO, said in an interview this week. “They’re among the few airports in Europe which have the capacity to handle more traffic without extra investment. Between the two, traffic could practically double.”

Spanish builder Ferrovial, which bought Heathrow owner BAA Ltd. for 10 billion pounds ($16 billion) in 2006, Barcelona- based rival Abertis, which has interests in 29 airports and runs London Luton and Stockholm Skavsta through its Tbi unit, and investment fund GIP, the owner of London Gatwick since 2009, are among several parties assessing bids, according to the people who declined to be identified because the process is private.

Agenda Squeeze

Abertis is studying a bid for both concessions while awaiting more detail on the pricing regime and other terms before coming up with a definitive evaluation, said a spokeswoman who declined to be named, citing company policy.

Ferrovial and GIP declined to comment when contacted by Bloomberg, beyond saying that they are examining the tenders. Royal Bank of Scotland Group Plc (RBS) is managing the sale.

Spain, grappling with the euro-region’s biggest budget deficit after Greece and Ireland, equal to 9.2 percent of gross domestic product, is selling two concessions of 20 years, which may be extended for a further five years. The government is also seeking buyers for a 49 percent stake in Aena Aeropuertos, though the Nov. 20 election could be an obstacle to quick sales.

“The agenda for the bidding process has become really squeezed,” said Pablo Ortiz de Juan, an analyst at research firm Interdin Bolsa in Madrid. “It’s unlikely a foreign company will bid for the airports alone, especially considering the political and electoral uncertainty surrounding the contracts.”

Room to Grow

The charges to be imposed on airlines once the airports have been sold have yet to be fixed, so that bidders can’t currently make long-term revenue predictions, the analyst said. Still, investors need security and measures shouldn’t be rushed through only to be modified under a new government, he said.

Madrid Barajas airport last year attracted 49.8 million passengers, an increase of 2.8 percent, making it Europe’s fourth-busiest hub and the No. 12 worldwide, according to data from industry group Airport Councils International.

The home hub of Iberia, Spain’s biggest airline, added a fourth terminal and two new runways in 2006, doubling the total and giving it the capacity to handle 120 flights an hour and 70 million people annually, said Lema of Aena Aeropuertos, which operates 47 Spanish airports and 28 more overseas, attracting about 200 million people a year.

Realistic Prices

Barcelona El Prat ranked as the 10th-busiest European airport in 2010, with 29.2 million passengers. A revamped Terminal 1 opened in 2009 and a further satellite will be added next year, giving a capacity of 55 million people, Lema said.

The upgrades may help the government achieve its target prices of at least 3.7 billion euros for Madrid and 1.6 billion euros for Barcelona, said Germa Bel, a professor at Barcelona University’s School of Economics who specializes in public- sector reform, infrastructure and transportation.

“No further important investment will be required in the coming years,” Bel said.

GIP, set up by Credit Suisse Group AG (CSGN) and General Electric Co. (GE), paid 1.51 million pounds for Gatwick, Britain’s second- biggest hub with 31.4 million passengers. Ferrovial’s BAA sold the world’s busiest single-runway airport under pressure from regulators and has since been ordered to sell London Stansted.

Abertis runs eight international airports including Florida’s Orlando Sanford through Tbi, which also has contracts at five other sites including Raleigh-Durham and Atlanta, the world’s busiest hub.

Madrid-based Ferrovial’s airport holdings include BAA’s six U.K. bases plus Cerro Moreno at Antofagasta in Chile.

Hochtief Auction

Manchester Airports Group, which lost out to GIP in the Gatwick sale, isn’t able to bid for the Spanish concessions since it’s owned by local councils and barred from holding foreign assets, spokesman John Greenway said.

In addition to BAA’s Stansted base and a Scottish terminal, which it may also be required to dispose of, assets for sale in Europe right now include the airports unit of German builder Hochtief AG, itself a unit of Spanish building group Actividades de Construccion & Servicios SA, whose hubs include Sydney, Athens, Dusseldorf, Hamburg, Budapest and Tirana.

China’s HNA Group, controlled by the Hainan provincial government and the largest shareholder in Hainan Airlines Co., plans to bid for the Hochtief holdings, it said Aug. 8.

To contact the reporters on this story: Steven Rothwell in London at srothwell@bloomberg.net; Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Craig Stirling at cstirling1@bloomberg.net

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