ACI-NA/World Conference & Exhibition. PPPs: Will it work for your Airport?

Transcription

1 ACI-NA/World Conference & Exhibition PPPs: Will it work for your Airport? Dr. Yiannis Paraschis CEO Athens International Airport & Chairman ACI World September 12 th 2012

2 Forms & level of privatisation may vary Management Contracts (Public retains ownership) Terminals Full Airport Concessions (Public shares ownership time limited) Leases BOT/BOOT/DBOT Privatisations (Public transfers ownership) Trade Sale IPO 2

3 What are governments trying to achieve through PPPs? Reduction/transfer of risks (sometimes at any cost ) Construction risk Traffic & revenue risk Operational risk Access to private financing Improvement of operations, service quality and transparency through private sector expertise Increased competition Economic returns (fees, dividends, indirect economic impact, etc.) 3

4 Airports represent 13% of global transportation PPP projects Total Investment in Transport PPP Projects Globally ( ) Total Value: $151bn Roads 57% Railroads 10% Airports 13% Seaports 20% Source: PWC from World Bank 4

5 Most Privatisations in Europe, very limited in N. America Airport Privatisations Worldwide Middle East: 4 North America: 14 Africa: 26 Freehold Asia Pacific 136 Latin America Concessions Europe Management Contracts 47 Source: ACI 5

6 Private airport investment boomed during last decade Limited number of privatisations until mid-nineties Increased during and took off during Slow-down due to macroeconomic crisis after 2008 Investment in Airport Projects with Private Participation ($, m) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Source: IFC from Private Participation in Infrastructure Database 6

7 The Athens Airport PPP case Hellenic Republic Asset Development Fund 30.00% Greek State 25.00% Ministry of Economy & Finance Ministry of Infrastructure, Transportation & Networks Hochtief Airport 26.67% Hochtief Airport Capital 13.33% Hastings Fund Mngt (Australia) Caisse de dépôt & placement du Québec (Canada) KfW-IPEX Bank (Germany) Copelouzos Family 4.99% , (5+25) year BOT concession contract (ADA) ADA ratified as Law 2338/95, provides for extension A 2.2 billion Euro Project User recovery principle 7

8 Key milestones on the Athens project 1975: Decision of the Greek Government to build a new airport 1978: Selection of Spata as the location of the new airport 1991: Tendering Process under BOOT scheme 1993: Private Consortium under Hochtief declared winner (60/40) 1994: Renegotiation of tender (45/55) 1995: Airport Development Agreement (ADA) 1996: Establishment of Athens International Airport S.A. 1996: Identified Construction Contract 2000: Delivery of ICC project 5 months ahead of schedule 2000: Commencement of operational tests and trials March 2001: Relocation Project from Hellinikon Airport 28 March 2001: AIA commences Operations 9/18/2012 8

9 The contractual model of Athens PPP Greek State 55% 45% Private Consortium Imperium/Grantor Shareholders Shareholder Advisors Regulator Lenders Contractor EIB Commercial Banks Independent Engineers 9

10 With State funding through EU Cohesion Fund at just 7% of total Project cost 60% funded by EIB and Commercial Loans EIB 997m Loans 1,325m Greek State Grant 150m EU Grant 250m ADF 301m Grants 701m Equity 180m Private Shareholder Equity 135m Commercial Loan 328m Private Shareholder Loan 45m 10

11 A clear role of the Airport Company A new airport company created from zero base A commercial, profit-oriented company of the private sector run by a Board of Directors: (4) Private Shareholders, (4) Greek State, (1) Independent, and CEO proposed by the private shareholders, A very wide corporate scope of commercial rights and services, A right to set Airport charges under Dual Till with 15% RoE cap, An option to be listed in the stock exchange Active Infrastructure Manager + Airport Marketing + IT&T Provider 11

12 Demonstrating strong traffic performance until 2008 ΑΙΑ Pax, million European airports CAGR 6.1% ,352 1,232 1,314 1,423 1,435 1, , AIA CAGR 6.9% 2008: Recession starts/high fuel prices AIA -0.4% Europe +0.7% 2009: Europe in recession AIA -1.5% Europe -5.5% 1, : Europe exits recession/gr eek financial crisis AIA -5.0% Europe +3.6% 1, : Greece in deep recession AIA -6.2% Europe +7.3% 1,600 1,400 1,200 1, Europe Pax, million Apr-Dec AIA Traffic Europe Traffic From 2008 onwards, the recession -with different timing vs. Europe- affects AIA traffic Greek financial crisis impacts AIA from

13 , m Income for Greek State 871 mil; three times higher than private shareholders Total ,169.4 m Greek State 871.4m Private Shareholder m Greek State Tax Greek State ADF Greek State Dividends Private Shareholders 13

14 From Infrastructure to Business Community Infrastructure Business Entity Airport Business Community Impact on Economy and Society 2 Runways 24hour operation 21 million passenger capacity Aeronautical 15 million passengers Business 4,9 million visitors Commercial Business 300 Companies Profitability 5,000 Suppliers CSR 15,000 Employees 14

15 An Airport City has been developed.with potential for more Train Station 2003/04 Leroy Merlin IKEA & Electronics Store 2006 Exhibition Centre Factory Outlet Cargo & Catering 2001 Offices ? Solar Park 2011 Airport Hotel 2001 Terminal Retail Area 2001

16 With a wider socio-economic impact A 2009 Study by Athens University of Economic & Business on the impact of Athens Airport on the Greek Economy Airport annually creates 4.89 billion economic added value from direct, indirect, induced and incremental tourism effects Airport creates more than 63,000 jobs on local, regional and national level Airport added value represents 2.14% of Greek GDP Largest engine for economic growth and job creation in Greece 16

17 Lessons learned Set up and tender is a difficult lengthy political process Financing secured but not cheap, construction on time and on budget major upgrade in efficiency, service levels and commercial orientation through new private sector company Despite lower traffic compared to the bid, much higher yield for shareholders due to non-aero profits Airlines like infrastructure and operations but dislike charges No level plain field with other public airports In times of economic downturn political debate over business model 17

18 Private sector involvement seems to improve effectiveness of the airport business, but Tender Glory is not Business Glory Reality will always be different from tender and contractual assumptions Construction-linked PPPs have high upfront risks with long-term implications Single PPPs inevitably lead to sector privatisation, which requires fair sector regulation Balancing the conflicting interests of the public sector (public income vs. user charges and macro vs. micro) is key to long-term success PPPs will always have to be adjusted and renegotiated in their lifetime b 18

19 With sustainable revenue growth and healthy cash position & profitability Revenues m Apr E -50 Dec 2001 Revenues Closing cash PBT PBT & Closing Cash m shareholder dividends 679 million month PBT is based on GAAP PBT is according to IFRS 2009 PBT & Revenues excluding once-off provisions impact of 112 m and 91.5 m respectively 19