Spain Airport Sale Plan Faces Resistance From Regions

Future investors in Spain’s state-owned airport operator Aena Aeropuertos SA may find themselves in the middle of tensions with the country’s regions as local leaders seek a say in management.

Balearic Islands President Jose Ramon Bauza said yesterday his government wants to jointly run airports including Palma de Mallorca. His Canary Islands counterpart, Paulino Rivero, said he’ll ask the central government to hand over control of the airports operating in the archipelago. Catalonia’s Economy Minister Andreu Mas-Colell said coordinated management of Barcelona and Madrid airports would break competition rules.

Prime Minister Mariano Rajoy is going ahead with the sale of 49 percent of Aena, which runs 46 Spanish airports and two heliports, at a time when Catalonia, the country’s largest regional economy, is challenging the central government with a planned Nov. 9 referendum on independence. Aena rivals Aeroports de Paris SA and Fraport AG have full control of Paris’s Charles de Gaulle and Frankfurt airport respectively.

“Shareholders could be skeptical to potentially being subject to a double minority, not only to the central government, but also to the local governments in important airports such as Barcelona or Palma de Mallorca,” Robert Crimes, a London-based analyst at Insight Investment Research LLP, said by phone.

The government expects to sell 21 percent of Aena to a group of core investors before placing 28 percent in a public share sale in November, Public Works Minister Ana Pastor said at a June 13 press conference.

Regional Demands

Co-management is “the best way to manage an airport,” the Efe newswire cited Bauza as saying in Palma yesterday. Rivero said he will start negotiations with the central government for the transfer of the airports, according to Efe.

Barcelona’s El Prat airport “should have separate management,” Catalonia’s Mas-Colell said in a statement.

Even though Aena has cut its debt-to-earnings ratio by about half over the past five years, it still exceeds 10 billion euros ($13.5 billion), Aena Chairman Jose Manuel Vargas told Onda Cero radio yesterday.

“It’s not possible, given the company’s financial structure and commitments to creditors, to split or break up the Spanish network of airports” Vargas said. “It would immediately require paying back the funds used to build the airports.”

Barcelona’s El Prat saw profit reach 168.3 million euros in 2013, making it the biggest contributor to Aena Aeropuertos, followed by Palma de Mallorca with 97.6 million euros, according to the company’s website. Madrid’s Barajas-Adolfo Suarez airport contributed 84.7 million euros and Gran Canaria airport 81.4 million euros.

Spain is restarting the privatization of its airports as investors turn to equity markets after the yields available in the bond market fell to their lowest level since the euro was created.

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