European Airports to Bid for $2 Billion Rio Hub Before World CupRichard Weiss
Fraport AG, the operator of the Frankfurt hub, is competing against airports in Munich, Zurich, Paris and Amsterdam this month to run airports in Brazil, hosts of the soccer World Cup next year.
Bids to run Rio de Janeiro’s Galeao airport and Minas Gerais’ Confins must be submitted to the Brazilian government by Nov. 18, with the highest bidders invited to an auction on Nov. 22. The minimum bid for Rio will be 4.65 billion reais ($2 billion), while for Confins it is 1.56 billion reais, the Brazilian authorities said in May.
“There will be a tough competition with a lot of very reputable companies,” Fraport Chief Executive Officer Stefan Schulte said yesterday. “We believe we have a very good consortium and a very competitive offer.”
Fraport’s Brazilian foray marks the fourth attempt in less than two years for the company to meaningfully expand it’s international operations, which have shown faster profit growth than its home hub in Frankfurt. Fraport on May 3 was outbid by a group of Turkish builders to operate Istanbul’s new airport, and in December the company lost out to Vinci SA for state-owned airport operator ANA-Aeroportos de Portugal.
In February 2012, Fraport was outbid to licenses for Guarulhos airport, Latin America’s busiest, and two others in Brasilia and Campinas by Argentina’s Corporacion America, Paris-based Egis Avia and Johannesburg-based Airports Co. South Africa. Brazil meanwhile tightened the rules, meaning some previous winners don’t qualify for the new licenses because they lack experience required.
Sonja Zoechling, a spokeswoman for Zurich, confirmed it had teamed up with Munich’s airport operator and CCR SA, which manages highways in Brazil, to hand in a bid. Schiphol’s operators are teaming up with AdP and two companies from Brazil to bid for Rio’s Galealo airport, spokeswoman Kathelijne Vermeulen said.
Zurich also participated last year in Brazil’s auction, Zoechling said, as did the operators of Heathrow and Changi. Changi Airport International teamed up with Odebrecht TransPort Participações S.A., a Brazilian company operating urban train systems and highways, spokeswoman See Ngee Muoy said, adding its bid has “a good chance of winning.”
Stakes in international hubs are a way for Fraport, which is partnering again with Ecorodovias Infraestrutura e Logistica SA, to accelerate profit growth. While Frankfurt may see the number of passengers rise to 70 million by 2020, possibly rivalling Paris’ Charles de Gaulle for the No. 2 spot in Europe, the hub’s expansion is limited by a night curfew and noise restrictions.
Dubai airport, which operates around the clock, plans to raise capacity to eventually handle 160 million passengers per year, while a new Istanbul hub may accommodate 150 million people.
“We are very successful with our international activities, which we’d like to extend,” Fraport’s Schulte said. “Brazil is a very attractive hotspot for aviation in the next years. At those two airports, there is a lot of opportunity to have even better processes, to have additional income and revenues and to grow network traffic.”
Brazil’s state-run airport management company Infraero will keep a 49 percent stake in the consortium, the government said earlier.
The minimum bid for the Sao Paulo international airport in Guarulhos, which was auctioned in Feburary, 2012, had been 3.4 billion reais, while the winning bid was almost five times higher at 16.2 billion reais. The competition, which included Viracopos and Brasilia airports, lured 22 bids from 11 groups for total proceeds of 24.5 billion reais.