Spanish airports privatisation in limbo

Bidders interested in Madrid’s and Barcelona’s airports now have three more months to present their offers. By the time they lodge them, though, Spain will probably have elected a new conservative government opposed to the airport privatisations in their current form.

The Spanish government has caved in to political and private sector pressure and postponed the privatisation of 90 percent of Madrid’s Barajas and Barcelona’s El Prat airports until after the November 20 general elections.

Aena, the country’s airports operator, announced in a statement yesterday that it will seek to extend the bidding deadline for interested consortia by three months – from October 31, 2011 to January 31, 2012. The airports operator says the extension is justified because the seven consortia interested in bidding for the airports told Aena that they were having difficulty in raising finance to back their offers.

The Spanish government is said to be looking to net an upfront payment of €5.3 billion for the two airports – €3.7 billion for Barajas and €1.6 billion for El Prat. Additionally, the authorities are targeting an annual payment from the private partner equal to 20 percent of each airport’s revenues, or a minimum of €150 million annually for Barajas and €80 million a year for El Prat.

What is not referred to in the statement – but is likely to have played a part in Aena’s decision – is the strong political opposition to the privatisations, in their current form, expressed by Spain’s PP conservative party, which looks poised to win in the upcoming general elections.

In an earlier interview with aviation magazine Actualidad Aeroespacial, Andres Ayala, the PP’s shadow transport secretary, said his party is not opposed to privatising Spain’s airports in a different way:

“We will not hesitate when the time comes to award our airport management to the private sector. But we will use a model that is not incompatible and contradictory, as the current model is and which, furthermore, undervalues the assets Aena owns.” 

He continued: “We believe in private management, but in a way that the concessionaire knows what he’s getting. Under the current model, it is intended investors take on a very important country risk without being able to intervene in airport management, which is why investors are demanding a higher premium than they would if they could intervene in airport management.”

Ayala seems to be referring to the second half of the current government’s privatisation plan, which originally called for the sale of 49 percent of Aena – dubbed the “world’s largest airports operator” by the government – to the private sector. He does not address the tender for the privatisation of Barajas and El Prat in the interview. Aena manages 47 airports across Spain and holds stakes in 27 airports all over the world. 

In its statement, Aena indicates that the tender for the sale of Barajas and El Prat will remain unchanged aside from the bidding deadline extension. For a full asset profile, go to Infrastructure Investor Assets.

For a full list of potential bidders and more details on the privatisation process, as outlined by the outgoing Socialist government, please click here