Past Friday, March 15, marked the conclusion of the 3rd stage of the Brazilian Airport Privatization Program, with opening of the proposals for the concession bid for the administration rights of 12 airports spread throughout three regions of Brazil: the northeastern region (6 airports), the southeastern region (2 airports) and the middle-western region (4 airports), representing a stake of 9.5% of the total domestic airport market, with almost 20 million passengers per year.
With a combined total concession price of approx. BRL 2.4 billion (USD 630 million), which represents a premium close to 1,000% over the initial estimate, this airport administration concession bid is the first to take place under Brazil’s new President Jair Bolsonaro’s administration, and follows the privatization policy he so adamantly voiced during last years’ presidential campaign.
The highest bidders are to administer all airports within each of the three regions, which is also the first time airports were conceded in blocks in Brazil. Winning bids are as follows:
Southeastern block: Zurich Airport, winning bid USD 115 million (USD 102.6 million premium);
Northeastern block: Aena Airport, winning bid USD 500 million (USD 455 million premium);
Middle-western block: Aeroeste consortium, formed by a Brazilian group of companies, winning bid USD 10.5 million (USD 10.3 million premium).
The amount of the premium paid gives hope to a consistent turnover in Brazilian economy, depressed by a strong recession and timid recovery in the last 5 years and shows the enthusiasm and credibility of the foreign investors with the country.
According to the country’s Ministry of Transportation, the new operations shall demand investments estimated of USD 1.10 billion in the next 30 years.
After such a successful bidding process, the Brazilian government is planning to promote another round of concessions of administration rights over 22 airports until September 2020. To this end, the government published on March 18 a general notice inviting experienced individuals and companies to register to research market, viability, engineering, environmental and economic feasibility of the concession to support the government’s plans.
Emerenciano, Baggio e Associados – Attorneys at Law has relevant experience in this market, having assisted past operations of airport concessions in Campinas (Viracopos Airport) and São Paulo (Guarulhos Airport).
