Airport operator emerges from pandemic with sights on Africa

Bloomberg

After emerging from arguably the worst crisis in the history of the airline industry, one of the world’s largest airport operators is starting to see the benefits of a major shakeup and eyeing an expansion into Africa.
Corporacion America Airports, a Luxembourg-based company which operates 53 airports in six countries, is bidding for new concessions outside of its core markets after a series of measures to shore up finances and operations during lockdowns to safeguard investor confidence, according to Chief Executive Officer Martin Eurnekian.
The company restructured or issued new debt in various markets while extending concessions in Argentina and Uruguay until 2038 and 2053 respectively. Corporacion America also decided to pull out of Peru, handing control to a local partner for five airports in the south of the country and gave up its concession on its airport in Natal, Brazil.
“That crisis was an enormous stress and a test of resilience,” Eurnekian, 44, said in an interview at the company’s headquarters in Buenos Aires.
“We made a lot of decisions about where we were going to focus our efforts, and where we weren’t.”
Now, it’s looking to Africa as a region to build its next pipeline of airports. Corporacion America was designated by the Nigerian government as a “preferred bidder” for the concessions of two airports in Abuja and Kano.
The company is awaiting the final decision and is looking to build an Africa business unit that would ideally operate in several countries on the continent, Eurnekian said.
“The kind of growth we can capture there is in line with our story as a company and our risk profile,” he said. The unique security challenges there “are part of what we’re going to have to manage, but we’re primarily thinking of growth capacity and generating real value.”
The airport operator is part of the Corporacion America International holding founded by Eurnekian’s uncle, billionaire Eduardo Eurnekian. The holding also controls energy company Cia General de Combustibles, and has interests in infrastructure, technology, agriculture and wineries.
Nearly two years after global lockdowns led airports to shut down overnight, investors pushed shares to near the highest in four years in late November. They’ve pared since then to trade at about $7.99, with a market capitalisation of $1.3 billion.
The company beat analyst estimates in the third quarter and bonds issued by the company’s Argentina subsidiary, Aeropuertos Argentina 2000, have climbed around 10 cents since early November to trade at 83 cents on the dollar, the highest in nearly eight months.
The company doesn’t rule out further expansions in Europe or Asia, if the right opportunity presents itself.
An expansion into Africa “is going to be something that has to be very carefully managed and could come with a raft of other problems, including regulatory challenges,” said Stephen Trent, an airlines analyst at Citigroup in New York. “But it would seem that the company is probably prioritising potential returns over country risk.”
In Argentina, the company’s largest market with 35 airport concessions, the pandemic added to tough operating conditions including inflation nearing triple digits and capital controls aimed at dissuading citizens from traveling abroad.