German Fraport asks Greece to respect agreement on regional airports.

The finance director of Fraport, Matthias Zieschang , expressed his optimism that the new Greek government will respect the 1.2 billion euro agreement regarding 14 regional airports in Greece.

Zieschang said that Fraport expects to close the deal with Athens, as planned, in October 2015. The agreement provides that the company will manage 14 regional airports along with the Greek energy firm Kopelouzos.

“There is a clear timeline with the goal that we close in October this year,” Zieschang told German financial paper Boersen-Zeitung adding that: “We expect that we will conclude this contract.”

“Final details of the Greek airport contract have yet to be concluded,” he said, noting that Fraport expects to hold at least a two-thirds stake.

Fraport, the German airport operator, and Greece’s Kopelouzos energy group (who also has a 5% stake in Athens airport) have bid €1.2bn for a 40 year  concession to run 14 regional Greek airports .

The Greek privatisation agency, formed by the previous government and now abolished, named the German-Greek consortium as the preferred bidder to acquire a 40-year operating lease and ‘invest €330m over the next four years in upgrading airports on popular tourist islands including Kefalonia, Mykonos, Santorini and Rhodes.

Chania international and Thessaloniki International which between them make profits of over €24 million a year, were also included in the deal as a financial inducement.

The purchase price of €1.2bn is due at the time of closing, which is anticipated to be in autumn 2015. In total, the 14 airports served 19.1m passengers last year. Some €1.4bn in investment is envisaged over the 40 year duration of the concession, which, according to the local press,  is going to be raised by a €14 surcharge from each departing passenger – estimated to generate an additional revenue of €133 million a year (leaving a tidy profit for the consortium).

There has been strong local opposition to the sale in both Chania and Thessaloniki, where the airports have recently received 110 and 250 million euro of EU funds respectively, to invest in the upgrade of the airports. The new Syriza government has promised to review the sale, which looks like a bad deal for both the Greek state and the travelling public. The EU competition commission is also likely to block the sale of Chania and Thessaloniki airports, because of the EU development grant involved, which might be seen a subsidy.