Corporate Finance

Brazilian Government Resuming Airports Privatizations

Propelled by the success of the latest auctions for airports in Brazil, the federal government has abandoned the idea of making Infraero - the state-owned company that manages airports in the national territory - go public through IPO.

Propelled by the success of the latest auctions for airports in Brazil, the federal government has abandoned the idea of making Infraero - the state-owned company that manages airports in the national territory - go public through IPO.


On June 8th, Infraero announced a new plan, which consists of conceding the rights to manage several national airports to private entities. The process will divide the territory in six regional blocks and privatize all the blocks, as opposed to selling concessions of individual airports.

 

The Brazilian National Bank of Social and Economic Development (BNDES) is believed to be the financial institution that will create the model for the deal, but there are still questions concerning the time required to finish all the administrative processes and make new auctions by the end of 2018.

 

One of the questions that is still up for debate is the future of approximately ten thousand employees of Infraero nationwide. One of the possibilities is to mandate that, whoever they are , the winning company will have to maintain the same staff until 2020. In the previous concessions, the victors did not need to follow any rules regarding the retention of workforce from the old management.

 

 Reception to the plan:

The idea of privatizing  several airports in Brazil, however, faces opposition. The Ministry of Transport opposes the idea.  On the other hand, the Civil House, the Ministry of Planning and the Program of Investments of Partnerships (PPI) have declared themselves favorable to the privatizations.

 

A meeting was held in Brasilia, to discuss the auctions and most  government officials approved the idea of privatizing six blocks, as opposed to individual airports. Each block would have a “premium” airport, with a larger structure. The airports studied with a view to becoming premiums were Congonhas (SP), Santos Dumont (RJ), Curitiba (PR), Recife (PE), Manaus (AM) and Belém (PA).

 

Previous privatizations:

On March 16th, four Brazilian airports had their concessions sold to foreign entities, Fraport AG, Zurich Airport and Vinci SA, in an auction for a total value over $350 million dollars.

 

Read more at http://www.leadersleague.com/en/news/four-concessions-for-brazilian-airports-sold-in-auction

 

C.S.

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