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Fraport scores double win in Brazilian airports privatization

Porto Alegre's Salgado Filho International Airport.

Concessions for Fortaleza and Porto Alegre airports will run for 25 to 30 years.

FRANKFURT, GERMANY – During Brazil's third round of airport privatizations decided at a public auction in Sao Paulo, Fraport AG scored a double win by placing the top bids of 1,505.75 million Reais (about 446.81 million euros) for Fortaleza Airport and 382.01million Reais (about 113.36 million euros) for Porto Alegre Airport. As a result, Fraport emerged victorious against strong international competition vying for the two Brazilian airports currently operated by Brazil's state-owned Infraero. Along with the concession price, Fraport will pay a fixed fee amounting to five-percent of the airport's annual revenue. The concession will run for 30 years at Fortaleza and for 25 years at Porto Alegre. Currently holding a 100 percent stake, Fraport will be the sole owner and participant of these concessions. Thus, the concessions and future results will be fully consolidated at the Fraport Group level.

Following the takeover of the concessions, Fraport AG expects an additional accumulated EBITDA at the Group level resulting from the two airports of around 350 million euros during the first five years and an accumulated negative contribution to the Group result ranging from the mid to high double-digit million euros. Due to the takeover of the concessions and the mandatory capital expenditure, Fraport AG expects an increase in Group net debt by up to around 700 million euros in the first five years.

Elated by the auction results, Fraport AG executive board chairman Dr. Stefan Schulte said: "We are excited to start working at Fortaleza and Porto Alegre airports soon. Using our extensive expertise, we are committed to further developing both airports markedly for the benefit of the Brazil. For our airline and passenger customers, we will quickly implement improved processes and services as well as attractive Food & Beverage offerings."

Fortaleza's Pinto Martins International Airport (FOR) is strategically located in the federal state of Ceara in the northeastern-most part of Brazil, which juts deep into the Atlantic Ocean. With over four million inhabitants, the Fortaleza metropolitan region ranks sixth in the country. FOR received 5.7 million passengers in 2016, making it the country's twelve busiest airport. From 2005 to 2016, Fortaleza Airport registered 6.8 percent compound annual growth (CARG). The 5.3 square-kilometer airport site comprises one runway and one passenger terminal.

Porto Alegre's Salgado Filho International Airport (POA) serves as the gateway to Brazil's southern-most federal state of Rio Grande do Sul, which has a population of over 10 million people.  POA welcomed 7.6 million passengers in 2016, making it Brazil's 9th largest airport by passenger traffic. From 2005 to 2016, the airport's compound annual growth averaged 7.3 percent. Comprising a total of 3.8 square kilometers, the airport has one runway and two passenger terminals: Via the Aeromovel people-mover, air travelers can shuttle to the nearby Alegre Metro Airport Station for trains to downtown Porto Alegre and other cities of the 4.3 million urban region – Brazil's fifth most populated and its richest metropolis.

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Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.

She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.

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