Just under a year ago, in NOV19, CargoForwarder Global had the honor of being present at the grand opening ceremony of Budapest Airport’s new Cargo City, and the sky-rocketing growth and development over the past 5 years has been more than impressive. The airport has kept up a strong and positive media presence even during these difficult pandemic months, yet word is now out that ownership should perhaps become Hungarian again. “Orbán Allies Seek to Grab Control Over Budapest Airport” reads the title of an article published by Bloomberg on 09OCT20.
Since July 2015, Budapest Airport Zrt. is co-owned by AviAlliance, Malton – a subsidiary of the Singapore-based GIC Special Investments, and a Canadian pension fund.
When asked for comment, Gerhard Schröder, AviAlliance’s Managing Director, told CargoForwarder Global: “We are aware of the Bloomberg article. As a glance into the past shows, this is not the first attempt by the Orbán government to re-nationalize parts of the airport or the airport as a whole” and emphatically rejected the notion of any sale: “We are not interested in a sale and with our strong shareholders from Canada and Singapore, we have enough financial backing to get through the current crisis without selling any assets.”
He underlined the long-term focus, looking past the current crisis: “Our airport policy is geared towards long-term commitments. The contracts (regarding Budapest) are laid out in such a way as to give us, as private owners of the airport, sufficient protection.”
What’s the latest story?
The Bloomberg article points to information from “two people familiar with the preliminary discussions” regarding “an unsolicited offer for the international hub” that was recently submitted by Daniel Jellinek on behalf of a Hungarian consortium which includes Mol Nyrt. (“a partially state-owned refiner” run by a close Orbán ally and recently favored by the government) and Indotek (a real-estate development company owned by Daniel Jellinek, that has recently done business with Orbán’s family), and cites a statement from him confirming the information: “Indotek Group is conducting business negotiations with mostly market investors, primarily Hungarian and in a smaller part from the U.S., to purchase Budapest Airport as part of a consortium.”
“Even if there is only a 1% chance, we'll attempt to take it back...”
Though there is no clear information on “Orbán’s exact role in the process,” and despite Jellinek stating “The consortium organized by Indotek Group is made up of professionals who in no way have connection to politics,” it is no secret that Orbán wants the privatization reversed. When Budapest Airport was initially privatized back in December 2005, with a 75%-share going to British BAA International Ltd, Orbán, then in the opposition party, was completely against the sale, vowing to reverse the decision at the earliest opportunity, and was quoted at the time as saying “Even if there is only a 1% chance, we'll attempt to take it back...”
While Bloomberg states that the government and Mol Nyrt had declined to comment on the offer, it points out that it would not be the first airport owned by the government, if the sale should go through: “The government has already ventured into the airport industry this year, when it acquired a 90% stake of the airport near Sarmellek that caters to mostly German and Russian tourists coming to the nearby spa town of Heviz.”
Not the first failure
It would also not be the first failed endeavor. Just last summer, Hungary Today reported on an unsuccessful purchase attempt by the government, citing Cabinet Minister, Antal Rogán as saying “Unfortunately, we attempted in vain, and it didn’t work out.” Rogán talked consistently of “unacceptable conditions” at the airport, and echoed Orbán’s view, “the privatization was a mistake, it has had a negative effect on Hungary and tourism, as no major development has since been done to the airport.” An interesting standpoint given WIZZ’s ongoing expansions, and the airport investments that were already underway at the time regarding the Cargo City and plans to start construction of the new passenger terminal. The article points out that rumors had been circling for about a year already, citing G7 which had revealed in MAR19, “that well-known Orbán-ally businessman Lőrinc Mészáros might target the purchase,” yet suggesting that the rapidly growing value of the airport had possibly already put it out of price-range.
Probably simply another futile attempt
Though the pandemic has not left Budapest Airport unaffected, with forecasts of a 90% drop in passenger traffic by the end of 2020 compared to previous year, it continues to build on its cargo strength and its value has again grown significantly since the last failed purchase attempt. It currently stands at around EUR 331 million. Those looking for a pandemic sale price will likely be sorely disappointed.
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