Aer Rianta International has paid £35 million for its share of a 50 per cent shareholding in Dusseldorf Airport. The deal represents the biggest single investment by the state airport operator to date. Industry sources said last night that Aer Rianta is also considering buying into London's Luton airport. The company, which built up international expertise managing airports is understood to be anxious to become a stakeholder in airports overseas to counteract income lost from the proposed removal of duty-free within the EU.
Aer Rianta confirmed that it and its partner, German building contractor group Hochtief, had successfully negotiated the purchase of 50 per cent of Dusseldorf Airport. It is understood the total purchase price was £135 million. Aer Rianta declined to disclose its share of the price, but industry sources said it was slightly in excess of £35 million.
Dusseldorf is Germany's second largest airport, with an annual throughput of 15 million passengers. It will continue to be owned 50 per cent by the City of Dusseldorf.
It is understood that Aer Rianta will fund its share of the deal mainly through retained profits. "It will have little impact on borrowings," an Aer Rianta spokesman said.
Aer Rianta was advised on the German deal by Investment Bank of Ireland Corporate Finance, while Hochtief was advised by Goldman Sachs.
The Aer Rianta spokesman said the joint venture partners had already prepared a business plan for the airport and they felt it had good growth potential.
Other sources said last night that the airport needs substantial reconstruction due to fire damage last year. Hochtief, a well-known construction group, is also based nearby.
Aer Rianta already owns 40 per cent of Birmingham Airport with its joint venture partner NatWest Partners.
The Aer Rianta spokesman said the deal was the group's first significant direct involvement in an airport on mainland Europe. "We are looking forward to working closely with our German colleagues in the years ahead," he said.
For Aer Rianta, the successful purchase represents something of a coup. The consortium was informed some weeks ago that the preferred bidder was another grouping, which included AGI, a large US airports' operator, and Harpen, a German company. However, the Aer Rianta consortium was later invited back in again. Industry sources said last night that Aer Rianta was also looking at an involvement in Luton airport and Berlin airport, although the latter was described by some as "a long shot". The Minister for Public Enterprise, Ms O'Rourke, welcomed the announcement last night. "This new business opportunity for the company will complement the company's core business and add to its income base, so strengthening its position in the European airport sector in the years ahead," she said. Ms O'Rourke said credit was due to the consortium for succeeding in its bid in the face of international competition.
Aer Rianta reported an increase in pre-tax profits of £42.4 million, an increase of 13 per cent in 1996, compared to 1995. One-third of group sales of £231 million came from duty-free. Conscious of its reliance on duty free which may be abolished, the company has been seeking other investments to offset its possible loss.
Last year it joined an Australian joint venture which was bidding to take part in the Austrian government's airport privatisation programme. However, it did not purchase any, describing the asking prices as too high.
The company is tipped as the first state company to be privatised. It is currently seeking tenders for consultants to examine a strategic alliance for the company. Aer Rianta is also seeking a new chief executive to replace Mr Derek Keogh who is leaving at the end of the year. It is understood that interviews for the post will take place next week.
