Details emerge on Madrid, Barcelona airport concessions

Spain’s airports operator will tender both airports for a period of 15 years, extendable for a further five years. Revenues will come from the exploitation of airport infrastructure, regulated tariffs and commercial activities.

Spain’s airports operator has launched a consultation period to gather input for the concession of Madrid and Barcelona’s airports, due to be officially tendered in July, revealing more details on the privatisations in the process.

According to a document released by the airports operator, Aena Aeropuertos, Madrid’s Barajas and Barcelona’s El Prat airports will be transferred to two special purpose vehicles (SPV) fully owned by Aena. The airports operator will then sell “a large majority stake” in the two SPVs to the private sector, while keeping a minority stake in the two vehicles.  Juan Ignacio Lema, the head of Aena, had previously told reporters that Aena was aiming to keep a stake of around 20 percent in both vehicles.

Aena said it would tender both airports to the private sector for a period of 15 years, extendable for a further five years. It added the airport concessions were primarily a brownfield play, since both “airports have just completed significant investments to expand their infrastructure, ensuring the capacity to handle passenger volume until 2025-2030,” Aena said in a statement.

The private partner will be remunerated from revenues derived from exploiting airport infrastructure, including income from commercial businesses and real estate development, as well as regulated tariffs. Aena explained tariffs shall be adjusted using a “single-till model, i.e, it includes a portion of the revenues generated by commercial activities in order to subsidise aviation fees.” Tariffs can be increased if the private partner exceeds certain target service levels, but can also be decreased if the concessionaire is underperforming.

In addition to paying Aena an upfront fee for the acquisition of the airport stakes, the concessionaires will also be obliged to pay an annual fee, “defined as the maximum between a fixed fee and a percentage of total revenues,” Aena said. The concessionaire will also assume demand, construction, service availability and land expropriation risks related to the concession, Aena added.

Aena recently appointed Royal Bank of Scotland to assist it with the tenders for Madrid and Barcelona airports as well as the privatisation of up to 49 percent of its capital. The government calls Aena the “world’s largest airports operator”, managing 47 airports across Spain and holding stakes in 27 airports throughout the world.

The government says Aena has assets worth more than €16.4 billion and debt of €13.4 billion. It added the airports operator will be in a position to start cutting debt next year, thanks to an increase in traffic, cost-cutting measures and higher revenues. In the first five months of the year, Aena’s airports carried more than 75 million passengers, an 8.5 percent increase compared with the same period in 2010. Freight traffic has also grown by 3.7 percent during the same time period.

The part-privatisation of Aena and the tenders for the Madrid and Barcelona airports are part of the Spanish government’s plans of raising over €14 billion to help cut debt at a time when Spain has been under severe pressure from the international money markets. The sale of a 30 percent stake in the country’s publicly owned lottery, worth an estimated €5 billion, is also part of its divestment strategy.