Brazil to auction licenses to operate 12 regional airports

Brazilian President Jair Bolsonaro ‘s administration on Friday will auction licenses to operate 12 regional airports, a process aimed at generating some 3.5 billion reais ($921 million) in investment.

The auction will take place at the Sao Paulo Stock Exchange, with the 30-year licenses to be awarded to the companies or consortiums that submit the highest bids, according to the National Civil Aviation Agency (Anac).

The 12 airports to be auctioned to the private sector handle nearly 20 million passengers per year and account for 9.5 percent of domestic air traffic.

For the purposes of the auction, they have been grouped into three blocks: northeastern, southeastern and central-western.

The government has set a minimum bid price amounting to 219 million reais in cash across all three blocks, but it expects to raise a total of 2.1 billion reais over the three-decade lifespan of the licenses.

Besides those costs, the winning bidders must commit to investing in airport modernization and improvements. Across all three blocks, that amount is expected to come to 3.5 billion reais.

The first block, which is by far the largest and expected to be hotly contested, consists of airports serving the cities of Recife (Pernambuco state), Maceio (Alagoas), Aracaju (Sergipe), Juazeiro do Norte (Ceara), Joao Pessoa and Campina Grande (Paraiba).

The minimum bid price for that block is 171 million reais in cash, with an additional investment commitment of 2.16 billion reais.

The government has set a minimum bid of 47 million reais and is requiring investment of 592 million reais for the southeastern block, which is composed of airports serving the cities of Vitoria (Espirito Santo state) and Macae (Rio de Janeiro).

Lastly, for the four airports that make up the central-western block - Cuiaba, Sinop, Rondonopolis and Alta Floresta, all located in the state of Mato Grosso - the winning company or consortium will have to submit a bid of at least 800,000 reais and pledge to invest roughly 771 million reais.

Although Bolsonaro’s administration has not announced the names of the companies taking part in the auction, press reports indicate they will include German airport operator Fraport, France’s Vinci Airports and ADP, Switzerland’s Flughafen Zurich and Spain’s Aena.

Plans to sell licenses to these 12 regional airports were announced last year by then-President Michel Temer’s administration, who launched an ambitious privatization and concession plan after taking office in 2016.

But more than 50 proposed projects were inherited by the rightist Bolsonaro, who took office on Jan. 1 with a pledge to carry out a wave of privatizations to shrink the public sector and reduce a large budget deficit.