Covid-19: France scraps ADP privatisation as virus takes toll

The bill to privatise the French airport operator is unlikely to return even in the event of an economic turnaround.

The French government has cancelled plans for the privatisation of Groupe ADP this year amid the fallout from the coronavirus outbreak.

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The owner and operator of the three main Paris airports – Charles de Gaulle, Orly and Le Bourget – as well as some hubs in Africa and the Middle East, was set to be privatised by the French government this year, in what would have been a landmark move by President Emmanuel Macron.

However, last month the Ministry of Economy said market conditions were not favourable for such a move and that it would not take place in the near- to medium-term as the government battles with the fallout of the virus.

Jean-Luc Champy, a partner with law firm White & Case in Paris and specialising in transport, told Infrastructure Investor that in addition to its other priorities, the valuation ADP would command in the market today would be far removed from what the government originally envisaged.

Groupe ADP, formerly known as Aéroports de Paris, is due to report earnings later this month but in an update to the market in March, it said: “Groupe ADP considers that it will not be possible to reach the 2020 EBITDA targets if the observed trend on the first 14 days of March should continue and should it amplify.” Groupe ADP recorded an EBITDA of €1.8 billion in 2019, a 5.5 percent year-on-year increase.

Speaking in reference to all industries, Bruno Le Maire, the economy minister, said last week that the government’s focus is on potentially increasing stakes in companies, rather than privatisations.

“We are prepared to support all industrial companies that could be in difficulty,” he stated. “It can go through equity participation, it can go through a capital increase, it can go through as well, if necessary, nationalisations. Of course they will have to be temporary, the state has no vocation to run enterprises instead of private entrepreneurs in the long term, but if, over a well-defined period, the state has to raise capital or become a major shareholder in order to protect these companies and allow them to recover, we will do so.”

However, Champy added that even if the economy recovers in the near future, the move to privatise ADP is unlikely to return, with France set to head to the polls in 2022.

“It is politically difficult to do such a move so close to an election,” he said.

The privatisation, which would have seen the state sell its 50.6 percent stake in Groupe ADP, had been met with opposition, including an initiative to hold a referendum on the government’s plans. Last May, France’s Constitutional Council ruled in favour of a referendum being held, but the next hurdle – gathering roughly 4.5 million signatures – remained an obstacle, with only about 1 million signatures collected.

Local players such as VINCI, which already holds an 8 percent stake, had expressed an interest, while Ardian told Infrastructure Investor in April last year that it was interested in owning less than 30 percent.