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Airport Concessions Lima / Peru an Example for Brazil?

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  1. Airport Concessions Lima / Peruan Example for Brazil? • PPP Americas, 12 May 2010 • Felix von Berg, Fraport AG

  2. Content  Lima airportconcessionandthePeruvian model forairportconcessions  ImplicationsforBrazil PPP Americas 11-13 May 2010, FraportPresentation

  3. Content  Lima airport concession and the Peru-vian model for airport concessions  ImplicationsforBrazil PPP Americas 11-13 May 2010, FraportPresentation

  4. Fraport – managing 13 Airports worldwide under various legal forms St Peters- burg Amsterdam Hanover Hannover Hahn Wien Varna & Varna Burgas Burgas Athen Antalya Antalya Xi ‘an FRANKFURT FRANKFURT Xi‘an Shanghai Orlando Kairo Delhi * Cairo Delhi Hong Kong Riyadh Jeddah Dakar Senegal* Lima Lima Lima Fraport Fraport MajorityMinority Ownership of airport Concessions Management Contract PPP Americas 11-13 May 2010, FraportPresentation

  5. Jorge Chavez International Airport (JCIA) Key Facts • Traffic 2009 • 8,786m passengers • 232,374 tons of cargo • 104,965 air traffic movements • Non-stop destinations • National: 16 • International: 29 • Jorge Chavez Int, Airport • Runway: 3,507,5 m • 84,570 m² passenger terminals • 304,881 m² of apron • 63 commercial shops run by 34 different companies • 19 passenger loading bridges PPP Americas 11-13 May 2010, FraportPresentation

  6. Concessionoutline • Typlical “build, operate and transfer” concession with full air & landside opera-tion of airport (w/o air traffic control) by concessionaire (Lima Airport Partners) • Concession start 2001, duration 30 years + 10 year extention option • Take-over of existing staff, but not of bureaucratic structures – quasi start-up • Investments • during concession > US$ 1bn • Up-to-date > US$ 266m • Mainly rigid requirements for expansion - not demand based investment criteria • Service Level IATA B as main quality parameter PPP Americas 11-13 May 2010, FraportPresentation

  7. RiskMitigation / Sharing • Concession fee: %-age of revenues • CPI–X tariff regulation • Tax stability agreement for investors • Solid bankability • with usual assignments possible, step-in rights for banks and certain guarantees for debt providers by Peruvian state • Initial financing by OPIC and German KfW • 2007: Refinancing of LAP with bond issue • achieved IG-rating before Peru did • Won Euromoney’s and International Financial Law Review’s “Deal of the year“ Latin America / Americas PPP Americas 11-13 May 2010, FraportPresentation

  8. 2009 tariffs* in real termsbelow 2001 Successful concession (I/III) PAX Concession • PAX development • Before concession • PAX CAGR (3%) = • Ø-GDP growth (2,5%) • After concession: PAX • CAGR 10% versus • 5% Ø-GDP growth 10 m CAGR: 10% CAGR: 3% 5 m 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 CAPEX (US$) 75 m • Investments • Before concession • minimal investments • After concession • focussed investments to • increase capacity, quality • and retail revenues 50 m averageyearlyinvest: ~ US$ 30m 25 m averageyearlyinvest: ~ US$ 6 Mio 1994 1995 1996 1997 1998 1999*** 2000*** 2001 2002 2003 2004 2005 2006 2007 2008 2009 Contributiontothepublicsector** (US$) • Net effect for public • sector • contribution in year 1 • already • ~ 1,5 x EBITDA and • ~ 2 x EBITDA ,/, Capex • of best year prior to • privatization 100 m 75 m averagecontributionp,a,: ~ US$ 65 Mio 50 m 25 m averagecontributionp,a,: ~ US$ 11 Mio 1994** 1995 1996 1997 1998 1999*** 2000*** 2001 2002 2003 2004 2005 2006 2007 2008 2009 * Weightedaverage ** Calculatedbeforeprivatizationas pro forma EBITDA ,/, Capex, after privatizationas total concessionfeestopublicsector + taxes, ***No pro forma dataavailabe, PPP Americas 11-13 May 2010, FraportPresentation

  9. From taking over the airport in 2001.........Successful concession (II/III) substation retailarea substation apron LAP concession May 2009

  10. ....to one of the best airports in the regionSuccessful concession (III/III) Skytrax World Airport AwardsTM 1. Place – „Airport oftheyear“ South America 2. Place – „Airport oftheyear“ South America 2. Place – „Airport oftheyear“ South America 1. Place – „Airport oftheyear“ South America 1. Place – „Airport oftheyear“ South America World Travel Awards Winner Leading Airport South America 2009 2005 2006 2008 2009 2010 2009 PPP Americas 11-13 May 2010, FraportPresentation

  11. FundingofPeruvian Airport Sector Nothern Peru Regionals • Not profitable airports • Awarded on basisof least subsidyforoperations • Capexfundedbystate $ Lima airportconcessionfeepayments Dedicated Fund $ $ Southern Peru Regionals (tenderongoing) PPP Americas 11-13 May 2010, FraportPresentation

  12. Content  Lima airport concession and the Peruvian model for airport concessions  ImplicationsforBrazil PPP Americas 11-13 May 2010, FraportPresentation

  13. DraftConcession Program forBrazilian Airport Sector Infraero operating 67 airports with 97% Brazilian commercial traffic self-sustaining airports (17)* • Concession program with [25] years terms, tendered individually or in groups. Concessionaire’s responsibilities • Operation and maintenance with international efficiency and quality standards • Investment obligation to meet growing demand • Concession fee to be paid to the government Remaining 50 airports • Stay with the Infraero / public administration. Funding from • Own operating cash-flow • Concession fee payments from 17 airports * Of the 67 Infraero airport all 18 with PAX > 1m (exlcuding Natal airport) were studied. All but Cuibá airport were identified as economically viable under above mentioned concession regime PPP Americas 11-13 May 2010, FraportPresentation

  14. Ball-park calculation for 17 airports under concession regime (conservative case, in real terns) Year PPP Americas 11-13 May 2010, FraportPresentation

  15. Funding of 67 airports: ball-park comparison - public sector view (conservative case, in real terns) Year one total concession fees > Infraero 2008 operating cash-flow withoutinvestments Infraero / publicsector fundingwithconcessions 2004-2008 Infraeroableto generate Ø cash- flowforinvest- ments ~ R$ 0,4bn Fundingofinvestments 2005-2008 (actual) Concession program can cover thegap 2009-2012 Estimatedrequir. Ø investment ~ 1,4bn Note: 1) ATC and treasury will remain with existing shares of tariffs (67 airports) PPP Americas 11-13 May 2010, FraportPresentation

  16. 176 Million Passengers, 13 Airports, 1 Airport Manager Frankfurt Airport Burgas Airport Varna Airport Thankyou foryourattention! Indira Gandhi International Airport, Delhi Antalya Airport Cairo International Airport Jorge Chávez International Airport, Lima Flughafen Hannover-Langenhagen Aéroport International Blaise Diagne, Dakar King Khalid International Airport, Riyadh King Abdulaziz Internation Airport, Jiddah Xi´anXianyang International Airport Fraport, The Airport Manager Pulkovo International Airport, St, Peterburg PPP Americas 11-13 May 2010, Fraport Presentation

  17. Annex PPP Americas 11-13 May 2010, FraportPresentation

  18. Main assumptions and model considerations of outlined concession model description Award criteria • Award on basis of highest proposed concession fee payment (percentage) • [Consideration of technical proposal &quality of business plan (pass/fail criterion or as additional award criterion) suggested] Demand • Based on 2004-2008 traffic growth and IAC data as well as AGC (/Fraport) analysis based on current air traffic distribution, trends and capacity constraints Tariffs Opex Investments • Current tariff-regime kept in concession model. Concessionaire get’s current Infraero tariff share (“Parcela Infraero” and “Ataero Infraero”). ATC (“Ataero Aeronáutica”) and treasury (“Parcela Tesouro”) retain their share • Infraero’s productivity and efficiency parameters were analyzed and adjusted in accordance with international benchmarks [not very aggressively] • Based on current capacity and demand forecast, investments were modeled to meet IATA service level C [much higher quality standard than currently in place] Concession term • 25 years • [could be adjusted on a case-by-case basis in order to make some concessions more attractive and stimulate stronger tender competition ] PPP Americas 11-13 May 2010, FraportPresentation