(Adds details of auction, policy context)
By Gabriela Mello
SAO PAULO, March 16 Brazil awarded three
European groups on Thursday the rights to operate four airports,
drawing nearly double the minimum bids at an auction that
underscored investors' appetite for a new wave of privatizations
under President Michel Temer.
German airport operator Fraport AG, French group
Vinci SA and Zurich Airport bid a combined 1.46
billion reais ($470 million) for the rights to run airports in
Porto Alegre, Salvador, Fortaleza and Florianopolis.
The companies committed to investing at least 6.61 billion
reais in the airports and to paying the government an additional
2.26 billion reais in operating fees over the next 30 years.
The privatizations will help Temer's government to narrow a
budget deficit that topped 9 percent of gross domestic product
(GDP) last year and to spur the infrastructure investments that
he is counting on to lift Brazil's economy from its worst
recession in more than a century.
"We have won back international credibility," Temer said on
Twitter, celebrating "success in the airport auction."
Brazil has also promised auctions of offshore oil fields,
public utilities, railroads and highways this year.
The airports auctioned on Thursday account for 11.6 percent
of passenger traffic in Brazil, according to civil aviation
Fraport won the rights to operate the Fortaleza and Porto
Alegre airports, with bids of 425 million reais and 291 million
The company said it expected the operations to contribute
350 million euros ($376 million) to the group's earnings before
interest, taxes, depreciation and amortization over the next
Zurich won the operating license for the Florianopolis
airport with a bid of 83 million reais, and Vinci took the
concession for the airport in Salvador - a tourist destination
in Brazil's northeast - for 661 million reais.
"The auction was a resounding success," said Transportation
Minister Mauricio Quintella, highlighting the private investment
without subsidized financing from state development bank BNDES,
which had played a key role in airport privatizations in 2013.
The government had played down the expectation of hefty
premiums at the auction after about two-thirds of the interested
companies backed out of the auction, leaving just three to bid.
Brazilian toll road operator CCR SA, which is
part of the group running Belo Horizonte's international
airport, and Argentina's Corporacion America, which administers
airports in Brasilia and Natal, both criticized the conditions
for the concessions at Thursday's auction.
Domestic air travel in Brazil fell 5.7 percent last year,
the first drop since 2003, as the deep recession and
increasingly expensive fuel imports battered the airline
($1 = 3.11 reais)
($1 = 0.93 euros)
(Reporting by Gabriela Mello; Editing by Daniel Flynn, Chizu
Nomiyama and Bernard Orr)