"Fraport seeks to add to airport portfolio"

Monday, May 21, 2012

Fraport seeks to add to airport portfolio
By Andrew Parker
United Kingdom - The Financial Times


The operator of Frankfurt airport, Europe’s third largest hub, is scouting
for deals in emerging markets as it prepares to push ahead with a big
expansion of its home base.
 
Matthias Zieschang, finance director of Fraport, told the Financial Times
that the group was interested in running airports in developing countries in
Africa, Asia and Latin America.
 
He also held out the prospect that Frankfurt airport – the main hub of
Lufthansa, the German flag carrier – would increase its annual passenger
numbers from 56m last year to 80m after the opening of a planned third
terminal in 2016.
 
However, he cautioned against the airport’s adding to the fourth runway that
opened last year amidst strong objections from local residents.
 
Instead, Mr Zieschang said Fraport was interested in expanding its portfolio
of international airports, which were providing the company with a source of
revenue growth. “We are willing – and our clear strategic intention is – to
add airports to our portfolio,” he added.
 
As well as Frankfurt, its most important asset, Fraport has controlling
stakes in airports in Bulgaria, Peru and Turkey.
 
It also has minority stakes in Chinese, Indian and Russian airports, where
Fraport operates the assets.
 
Fraport was part of a consortium that in February bid unsuccessfully for São
Paulo international airport, one of Latin America’s main gateways, which was
privatised by the Brazilian government.
 
The consortium submitted a bid of R$13.8bn for a 20-year concession to run
the airport, but was trumped by another offer worth R$16.2bn, or five times
the minimum sought by the Brazilian government.
 
Mr Zieschang said Fraport remained interested in Brazil – citing possible
privatisations of airports at Belo Horizonte, Manaus and Rio de Janeiro –
and he also highlighted opportunities in Africa and China.
 
Some analysts have highlighted the risk that Fraport’s international
projects could fail. 

Mr Zieschang admitted Fraport’s first overseas investment, in Manila
airport, had been a “disaster” because the asset was expropriated by the
Philippines government in 2001. Fraport is seeking compensation.
 
Mr Zieschang said Fraport would consider buying airports in developed
countries, but said the prices tended to be high because of competition from
financial investors.
 
He cited a deal unveiled last month under which Edinburgh airport will be
sold for £807m, or 17 times its 2011 earnings, to Global Infrastructure
Partners, an investment fund.
 
Mr Zieschang sought to draw a line under years of protests against
Frankfurt’s fourth runway by saying he believed it would be the last
expansion phase.
 
He went on to say Fraport would accept a court ruling last month that there
could be no night flights at Frankfurt, even though it was damaging for both
the group and Lufthansa.

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