Bumpy Takeoff Greek Airport Deal Takes Nosedive

The Greek government agreed to a concession allowing Germany’s Fraport to run 14 regional airports, but there are already doubts over whether the deal will go ahead.
Airport on the Greek island of Lesbos.

The joy only lasted a short time. The Greek government had hardly awarded the 40-year operating concession for 14 regional airports before the deal was coming under fierce scrutiny. According to Greek media reports, there is disagreement over the details of the privatization, and the Greek government is even threatening to re-tender the concession.

The situation is complicated. The Greek newspaper Kathimerini reports that the succesful consortium, led by Frankfurt-based airport operator Fraport, is demanding further “guarantees” from the Greek government due to political insecurities in the country.

Fraport reportedly also has difficulties in raising financing for the project. The consortium wants to make a payment of €1.2 billion ($1.32 billion) by the completion of the contract for the concession.

The situation is presented somewhat differently from the Fraport side. Insiders report that the rumor of financing problems is pure nonsense. The contract has not been finalized, which is why the financing has not yet been pinned down.

The two sides are reluctant to trust each other

“We are still in talks. And in these talks we will react flexibly to any adjustments that arise during the course of the negotiations,” said Fraport.

The Greek government is of course under huge pressure to sign the deal quickly, because the revenues from the sale are factored into its latest bailout package, signed off by the German parliament earlier this week.

Video: Landing at LGKR airport, Corfu.

But the two sides are reluctant to trust each other: A similar deal had been struck in November 2014 but put on ice by the then newly elected prime minister Alexis Tsipras.

Mr. Tsipras’s Syriza party still has misgivings about privatization projects but under pressure from the international lenders, Mr. Tsipras had to commit himself in July to implement this and other privatization projects that had already been initiated.

That does not make the negotiations any simpler. The awarding of the concession was reportedly part of the third bailout agreement that Greece reached at the E.U. summit on July 12, according to official sources. If the consortium aims to renegotiate the arrangement, the government sources said, it could not be limited to the parts about Fraport, but would affect several other privatizations and concessions, which would again have to be put out to tender.

 

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Gerd Höhler is a Handelsblatt correspondent based in Athens. Jens Koenen is based in Frankfurt and covers the aviation and space industry. To contact the authors: [email protected] and [email protected]