Irish Airport Operator Bids To Rebuild Cyprus Airports

by Lorys Charalambous, Tax-News.com, Cyprus

24 January 2002

Irish state-owned group Aer Rianta is a member of a consortium bidding for a contract to reconstruct and operate Larnaca and Paphos airports, the island's two international arrival points. The consortium, known as Hermes, includes Vancouver Airport Services and Nice Chamber of Commerce, in addition to a number of Cypriot firms.

Competing bids have been requested from four other groups: the Alterra Consortium, backed by the airport operators in Singapore and Manchester; the Cyprus Gateway Airports group, backed by Austrian interests; Project Pegasus; and Fraport AG, which operates Frankfurt Airport.

The Cypriot government wants the strategic partner it chooses to invest up to EUR347 million in the airports, but Aer Rianta is unlikely to pay equity for its stake - the State company's practice in such international diversifications is to provide developmental and management expertise to complement financial investors. In addition, curbs on the company's capital expansion plans set by the aviation regulator, Mr Bill Prasifka, suggest it will not have excess capital for a large financial bid.

Aer Rianta already has significant operations outside Ireland. The company's international division owns 48.25% of Birmingham Airport, half of Dusseldorf Airport, and 7.2% of the airport in Hamburg. It also operates duty-free shops in 20 airports in states such as Russia, Canada and Qatar.

While such operations contributed to a post-tax profit of EUR14.2 million last year in its international division, Aer Rianta has shied away from further expansion. It decided against bidding for Sydney Airport last year and withdrew from a competition in 2000 to run Turin Airport in northern Italy.

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