Orban would take back the airport at double the cost, they estimate it could pay for itself in 15 years
The purchase price is HUF 1,600 billion, but it is not clear whether the full amount will be borne by the taxpayers.
Companies interested in the aviation business suffered unprecedented losses in the first year of the Covid epidemic.
- For example, Wizz Air Hungary Zrt., Accustomed to an annual profit of HUF 80-90 billion, made a loss of HUF 263 billion in the business year ended in March.
- in Europe 1.7 billion passengers have disappeared In 2020,
- The passenger traffic of Budapest Airport Zrt., which operates Ferihegy Airport, shrank to a quarter, from 16.2 million to 3.86 million people.
- The company a year earlier had a record profit of nearly HUF 40 billion, minus HUF 40 billion by 2020, and had to support its operations with a loan.
Under these circumstances, the Hungarian government has set out to take back Budapest Airport and, as official announcements show, will not expand the plan, with or without private investors, but will buy the airport later this year.
At all costs, at least
This is the amount of Hungary that can receive the amount of support it receives from Brussels in one year for developments and catching up.
The current owners of the airport, which was privatized in 2005, are the German airport operator AviAlliance (55.4 per cent), the Maltese investment fund Malton (23.33) and the Caisse de dépot et placement du Québec Canadian pension fund (21.23) – after hearing the offer of 3 billion euros, they still turned away from the business, but these days Viktor Orban the prime minister, whose heart is to take back the airport, already knew that the purchase could be completed at any moment.
Even if private investors refused to buy, because the state is ready to buy Budapest Airport alone.
Potential investors, as in the first attack, are now the national oil company Mol Nyrt. And Indotek Zrt. Daniel Jellinek central company. The participants in the takeover bid all signed a strict confidentiality statement, so it is hopeless to speak to the members of the consortium, but even to the consultants assisting the transaction. However, you know that there is no question of private investors backing out of the deal, it is not clear to what extent they would take it in because they have not yet “developed internal ratios,” an expert looking at the case told our paper.
It was certain from the first moment that the Hungarian state wanted to acquire a majority stake, ie at least 51 percent, but it is not excluded that it would buy more than that. So the situation is that there is a quote, but it is
Beyond the percentages, the co-owners have to agree on how much minority, ie what rights they will get in return for their investment, how much say they will have in the affairs of the airport operator. The motivation and expectations of the state and private investors are very different. For the latter, the expected return is crucial, in other words, for the airport to bring in money in the foreseeable future. While the state takes precedence over strategic issues such as the development of quality tourism, transit traffic expands the travel population to Budapest or the Visegrád, Transylvanian and Balkan destinations, and encourages the establishment of direct flights to regions where the government does business. . intends to strengthen. There can be no agreement, given that the simple reason for the repurchase is cited by the government as the unsustainability of the current owners as an investment only they look at the airport.
The € 4.44 billion takeover bid is the first cut-off, especially when we indicate that in 2005, when Budapest Airport was privatized, the UK BAA paid € 1.9 billion for the shares and the 75-year asset management rights. The latter was supported by HUF 1.47 billion, HUF 389.5 billion at the then exchange rate, and the total privatization proceeds were HUF 464.5 billion. According to contemporary reports, this was the most expensive airport purchase in the world at the time, Budapest Airport sold for 29 times EBITDA (earnings before interest, taxes, depreciation and amortization), and similar transactions were made at 13-16 times the price. The buyer’s financial risk-taking was considered high by credit rating agencies, even though it was one of the mammoths in the business that operated London Heathrow, among others.
However, according to experts, the current bid cannot be compared with the situation in 2005. At that time, low-cost airlines had just begun to pick up, annual passenger traffic was at 8.5 million, an increase of 25-30 per cent was seen just before privatization, and traffic was expected to double by 2011, another matter is that this did not happen due to the global economic crisis. . Now the base is much higher, in the last “year of peace” before the coronavirus epidemic, more than 16 million passengers turned up in Ferihegy in 2019, and there is talk of a multiplier of 15-17 times less than 29 times the 2005 multiplier applied in 2005. Deutsche Bank put the goodwill between 4.2 and 4.7 billion euros, so the Hungarian offer is in the middle of this. The purchase price also includes the takeover of the roughly EUR 1.4 billion loan, which is included as a liability in Budapest Airport’s balance sheet, and largely the loan taken out in 2005 for the privatization purchase price.
According to them, in the decade and a half since privatization, the airport has far outperformed its purchase price. True, the trust agreement is for 75 years, so it would be another sixty years to straighten the balance. Hungarian bidders are now expecting air traffic to return to pre-Covid levels by 2023, and according to our information, after a rapid rise, with more than 20 million passengers in five years, and thus
According to experts, it is a very ambitious plan, considering that a lot of development and investment will be needed, for example, a new terminal will have to be spent to serve more traffic, but also a permanent parking lot, hotels and truck development.