Fraport Greece (73.4 percent owned by the Frankfurt based airport operator Fraport AG and 26.6 percent by Copelouzos Group) today commenced 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 today 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.
Dr. Stefan Schulte, Fraport AG’s executive board chairman explained:
“Since being selected as the winning bidder for the Greek Regional Airports in 2014, we have remained steadfastly committed to this visionary project. We believe in Greece and its potential as one of the greatest travel destinations in the world. The goal of Fraport Greece is to enhance the travel experience for visitors from around the world – by upgrading and expanding facilities and by improving operational processes, shopping and services. Today is a great day for Greece and its people. It is also an important day for us because Fraport Greece is the single largest expansion of our airport portfolio and a milestone in further growing our international business.”
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.
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).
Alexander Zinell, Fraport Greece’s CEO, emphasized:
“Today marks the beginning of a new era for the 14 Greek regional airports. Within only twelve months we have created Fraport Greece, a world-class airport operator with over 500 highly motivated staff eager to move each of the 14 airports forward into the future. We will develop and manage the airports for the benefit of passengers and airlines – for all stakeholders. These mainland and island gateways will act as a catalyst of growth for Greek tourism as well as other industries. Well-managed airports have been proven to serve as dynamic economic engines for their regions. We appreciate the outstanding support received throughout Greece and look forward to the challenges and opportunties ahead.”
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.