Elections and interest rates could cool auction of 15 airports

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The auction of 15 airports in the country, including Congonhas, in São Paulo, should attract the interest of the private sector in August, but the unstable economy and political uncertainty on the eve of the elections could cool the dispute, analysts say.

In other words, the event tends to be attended by large groups, and it is likely that all terminals will be traded.

However, macroeconomic difficulties, combined with doubts about the country’s political direction, may contain the bids that must be offered by concessions.

Higher interest rates, which make company investments more expensive, and the impacts of the pandemic on the airport sector are challenges on the radar.

The auction, scheduled for August 18, at B3, in São Paulo, marks the seventh round of airport concessions. The 15 terminals are divided into three blocks.

“Airport auctions are becoming increasingly scarce”, says Fernando Villela, coordinator of the Airport Infrastructure Regulation Committee at FGV Direito Rio.

“Of course, all this [quadro de incertezas] has an impact, but not on the investor’s interest, perhaps on the grant value [quantia a ser paga pela concessão].”

Daniel Engel, partner in the infrastructure area at Veirano Advogados, follows the same line.

“I can’t imagine a deserted bid. Maybe the premium levels [diferença ante o lance mínimo] are not as surprising as in previous auctions. You will have competition, but maybe with less aggressive bids”, he analyzes.

The expected term for the contracts is 30 years. The estimate of investments in the 15 terminals reaches R$ 7.3 billion, says the Ministry of Infrastructure.

“Will the auction be successful? If we establish as a criterion for success that some group will bid [fazer proposta] in each block, I think it will be”, says economist Claudio Frischtak, from Inter.B Consultoria.

“If it was pre-pandemic, there would be no doubt that there would be a lot of competition. The concessions are long-term, but there is a lot of uncertainty. The cost of capital has increased. It is more difficult to finance a project today.”

Congonhas is the crown jewel

Congonhas is the crown jewel of the seventh round. The São Paulo airport leads the SP/MS/PA/MG Block, which has ten other terminals.

Three are in Mato Grosso do Sul (Campo Grande, Corumbá and Ponta Porã), four in Pará (Santarém, Marabá, Parauapebas and Altamira) and three in Minas Gerais (Uberlândia, Uberaba and Montes Claros).

According to the Ministry of Infrastructure, the forecast for investments in the block is R$ 5.9 billion. The initial grant —minimum bid to be offered in the auction— is R$740.1 million.

Congonhas is by far the busiest airport in dispute, but it is still trying to recover from the effects of the pandemic.

In 2019, pre-coronavirus period, the São Paulo terminal received almost 22.3 million paid passengers, between departures and arrivals, according to Anac (National Civil Aviation Agency).

In 2021, the number was 9.4 million. That is, it was 57.6% below the year before the pandemic.

The expectation of aeronauts (professionals on board aircraft) and airlines is that the concession will bring investments in infrastructure, with a focus on increasing flight safety.

“Airports that have already been granted have received improvements. The one in Porto Alegre increased the length of the runway. In the one in Guarulhos, they expanded the part of internal security, improving inspections”, says Henrique Hacklaender, president of the SNA (National Union of Aeronauts).

“Much of the Infraero system is not profitable. There is an airport that has no demand. A private operator will have to fight to transform the airport into something sustainable”, says Eduardo Sanovicz, president of Abear (Brazilian Association of Airlines).

The second largest terminal in the SP/MS/PA/MG block, in terms of number of passengers, is Campo Grande.

In 2019, the terminal totaled almost 1.5 million. Last year, the number of passengers was around 1 million, 31.2% lower.

In the view of analysts, the block’s strategy is to unite the so-called fillet with the bone. In other words, the design joined an airport coveted by the private sector, which is Congonhas, with less crowded terminals and which, if they were auctioned alone, might not generate investor appetite.

On the other hand, one of the points that draw attention is that the 11 assets in the lot are spread across states in three regions.

“It makes perfect sense to join the fillet to the bone. The question is which bone you join to the fillet. Joining very dispersed actives can be questionable”, says Frischtak, from Inter.B.

Two more blocks in the auction

Another block in dispute in the seventh round is Norte II. Formed by the terminals of Belém (PA) and Macapá (AP), the lot has R$ 875 million in planned investments, according to the Ministry of Infrastructure. The initial grant amount is R$56.9 million.

According to data from Anac, the airport in Belém is the busiest in the North region. In 2019, before the pandemic, there were 3.5 million passengers between departures and arrivals. In 2021, the number was 24.2% lower, at 2.7 million.

“Belém is the most attractive asset of the block, with tourism potential. The design with Macapá is not wrong. It is possible”, analyzes Frischtak.

The block named General Aviation completes the seventh round. The lot brings together two airports aimed at executive aviation: Campo de Marte, in São Paulo, and Jacarepaguá, in Rio de Janeiro.

The minimum bid for the two assets is R$141.4 million. The investment forecast is R$ 560 million, says the Ministry of Infrastructure.

Presence of major operators is expected

Sources who follow the matter expect national operators and foreign groups that already operate in Brazil to participate in the seventh round.

Among the companies listed for the event are CCR, Spain’s Aena, France’s Vinci Airports, Germany’s Fraport and Switzerland’s Zurich Airport.

In the case of Campo de Marte and Jacarepaguá, real estate investors even signaled interest in the concession. Both terminals have an area with potential for new construction and real estate exploration.

Asked about the possible participation in the seventh round, the CCR Group reported that “it is always attentive to business opportunities”.

“And they are analyzed according to their risk matrix, assumptions of capital discipline, legal certainty and value creation for shareholders and investors”, he added.

Aena Brasil said it “is analyzing the deal”. “Participation is possible, but it will depend on the completion of this work.”

Fraport and Vinci Airports reported that they do not comment on speculation or possible trade moves. Zurich Airport did not respond.

Impact on Infraero

Initially, Santos Dumont airport, in downtown Rio, would also be auctioned in the seventh round. However, after criticism from local leaders to the design of the operation, the terminal was withdrawn from the auction.

If Congonhas is transferred to the private sector, Santos Dumont will remain as the great asset still in the hands of Infraero.

The government talks about granting the Rio airport in 2023, together with the re-bidding of Galeão, also located in the state capital, but analysts consider the deadline tight.

Infraero’s future, by the way, still raises doubts. “Once the transfer of airport assets from the Union to the private sector is completed, Infraero will have its role gradually reformulated,” the Ministry of Infrastructure told Sheet.

The state-owned company said it employs 971 employees at the 15 airports in the auction scheduled for August. Most are in Congonhas: 389.

Sina (National Union of Airport Workers), which represents workers from Infraero and private concessionaires, sees the federal government’s “despair” in holding the seventh round at this time.

The entity defends a broader discussion of aspects related to a possible increase in traffic from Congonhas.

“For the president of Sina, Francisco Lemos, this airport works as an extremely fair piece in the complex mechanism of the city and any change in this piece should go through a broader discussion with Alesp, City Council, State Public Ministry and entities directly linked to the operation. from the airport, such as residents’ associations and the union itself”, says the entity.

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