Frankfurt abroad

No sooner did debt-ridden Greece announce plans to divest state-owned companies to raise fresh capital than Frankfurt airport operator Fraport voiced interest in Athens International Airport.

"Should Greece decide to privatize its airports, we - as one of the world's largest airport operators - would certainly look at (this opportunity)," Fraport CEO Stefan Schulte said in an interview with the German business newspaper Handelsblatt. "But before we can say more, we need to know the conditions."

And those could emerge soon as Greek officials hastily craft a divestment strategy to generate cash.

Growing for-sale list

In addition to a tough new savings plan, the Greek government this week approved a quick sale of its stakes in the Hellenic Postbank, two port operators, one waterworks and the OTE telephone company. Numerous other utilities and businesses, including the Athens airport, are also on its for-sale list.

The Greek government owns 55 percent of Athens airport, while German construction company Hochtief, which operates the airport, has a 40 percent minority stake.

One issue that could cloud the sale of the airport is the change of ownership at Hochtief, which is being taken over by Spanish rival ACS. It is unclear what the Spanish company plans to do with Hochtief's international holdings.

In general, Schulte said Fraport seeks opportunities wherever it can have "an influence on management" and use its expertise.

And the airport operator has plenty of know-how to offer, according to spokesman Robert Payne.

"We do ground handling for airlines, handle ramp controls, operate the world's largest baggage operations and have extensive training programs," he told Deutsche Welle. "We do everything, from A to Z."

Fraport has stakes in or management contracts with airports in 13 cities, including Cairo, Delhi and Lima, in addition to Frankfurt.

"We're not an investment company but an airport operator," Payne added. "In some airports we have majority stakes, in some minority stakes, and in others management contracts where we work side by side with airport operators. Our involvement depends on the conditions and on whether the deal fits into our model, and also on factors like the return on investment and the level of risk."

Buyer's market

In Europe, Fraport is also looking at a number of airports.

"It's become a buyer's market as many European countries are now looking at privatization because of their financial situation," Payne said.

In South America, Brazil is high on the operator's priority list.

"The country needs to improve and expand its major airports not only because of the upcoming World Cup soccer tournament but also because of its rapid economic growth," he noted.

Fraport hopes to use the Lima airport as a reference. The airport has seen the number of passengers grow from 4 million to 10 million since the German airport operator has taken a majority stake.

"The aviation industry, including airport operations, is driven by growth," said Peter Morris, chief economist at Ascend, a London-based aviation consultancy. "To be successful in this sector, you need to achieve economies of scale and build up critical mass, and that is exactly what Fraport is doing."

At the same time, Fraport is learning from other airports, further enhancing its pool of expertise, he added.

But there are risks, Morris observed.

"You need to be careful not to spread your resources too thinly," he warned. "If you have a certain pool of talent and spread it around the world, you could have problems."

Author: John Blau
Editor: Cyrus Farivar