Fraport Greece begins 40-year concession at 14 Greek regional airports

Thessaloniki Airport Thessaloniki Airport; Image by Fraport

Greek State receives €1.234 billion upfront payment – Fraport Greece will further invest about €400 million for improving and expanding the airports’ infrastructure by 2021.

Fraport Greece (73.4 percent owned by the Frankfurt based airport operator Fraport AG and 26.6 percent by Copelouzos Group) commenced on April 11 the 40-year concession for managing and developing 14 regional airports on the Greek mainland and popular holiday islands – a mamoth investment for the country’s infrastructure and economically vital tourism sector. Following the operational transfer of the airports, Fraport Greece paid the upfront concession fee of €1.234 billion – the biggest concession fee in Greece’s history – to the state-owned Hellenic Republic Asset Development Fund (HRADF). Along with this upfront fee, an annual fixed concession fee of €22.9 million will be paid to the Greek State, as well as a variable annual fee based on 28.5 percent of Fraport Greece’s yearly operational profit (EBITDA – earnings before interest, tax, depreciation and amortization). Actual ownership of the airports is retained by Greece.

Currently, Fraport generates more than 20 percent of its annual revenue through its portfolio of international airports and subsidiaries, bundled in the company’s External Activities & Services business segment. With the operational transfer of the Greek airports, the Fraport Group will significantly enlarge its international activities, further broaden its worldwide footprint and reduce dependency on the development in single regions or markets.

Mykonos AirportMykonos Airport; Image by Fraport

The 14 Greek regional airports served a total of 25.3 million passengers in 2016, an increase by nine percent year-on-year. Fraport Greece will operate, manage and develop the airports over the next four decades – with responsibility for aviation as well as non-aviation areas. The mainland airports include Aktion (PVK), Kavala (KVA) and Thessaloniki (SKG), Greece’s second largest city. The eleven island airports are located in Kerkyra/Corfu (CFU), Chania/Crete (CHQ), Kefalonia (EFL), Kos (KGS), Mytilene/Lesvos (MJT), Mykonos (JMK), Rhodes (RHO), Samos (KGS), Santorini (JTR), Skiathos (JSI) and Zakynthos (ZTH).

Under the concession agreement, Fraport Greece will be investing about €400 million for improving and expanding the airports’ infrastructure over the next 48 months. Hence, Fraport Greece recently signed an agreement with the Greek-based Intrakat construction and engineering company to refurbish, expand and build new facilities at the 14 airports – including five new passenger terminals. In subsequent years, Fraport Greece will make investments for maintenance and demand-driven capacity expansions.

Approximately €1 billion in long-term financing for the Greek Regional Airports project is being provided by a consortium of leading financial institutions. Some €280.4 million of the total loan will be used to finance construction projects at the 14 airports, while €688 million will be used as part of the upfront concession payment to HRADF. Fraport Greece recently raised its total equity capital to €650 million.

— Fraport