Obstacles remain in transfer of 14 regional airports’ management to Fraport-led consortium

Naftemporiki — A final agreement between all three sides involved in the concession for 14 regional airports around Greece — the Greek state, the German-Greek consortium that won an international tender, and lenders — remains pending, after three consecutive postponements to finalize a deal.

An unofficial deadline of March 15 emerged last month for the Fraport-led consortium to assume the management of the 14 airports, with a relevant government minister stating publicly that a postponement of the official handover of a few weeks – from late February to mid March — was requested by the consortium.

According to reports, Fraport executives met with privatization fund officials and Alpha Bank representatives in London last month in order to resolve issues revolving around collateral guarantees for necessary financing to conclude the agreement.

A privatization fund (TAIPED or HRADF) official maintained recently that there is no issue of the state acting as an underwriter for loans eyed by the consortium, saying that whatever borrowing sought by Fraport will involve its own backing and guarantees.  

A lesser obstacle to emerge on the path to the transfer is  a disagreement over who will cover the cost of health services that must operate at the 14 airports. According to reports, the health ministry has demanded that costs be covered by the new management, whereas the consortium insists that the Greek state continue to cover health care services at airports, as it currently does.

The credit line for the consortium’s financing needs is provided by  the European Investment Bank (EIB), the European Bank for Restructuring and Development, the International Finance Corp., a subsidiary of the World Bank, the Black Sea Trade & Development Bank (BST&DB) and Athens-based commercial lender Alpha, a systemic bank. However, the borrowing goal by Fraport Greece of 900 million euros has not yet been reached, according to a report.

The transfer of the management of the 14 regional airports,  a landmark privatization in Greece, was mandated by the third bailout agreement with Greece’s creditors.