AA2000 plans key investment as concession extended 10 years

Aeropuertos Argentina 2000, the country's largest airport operator, has pledged to invest US$2.5 billion after receiving a 10-year extension for its local airport concession.

The company's concession was extended until 2038 after the Alberto Fernández administration extended a previous agreement, under which the current concession would have ended in 2028. Aeropuertos Argentina 2000, owned by its parent company, Aeropuertos de Corporación América, operates 35 airports in the second-largest economy in South America.

The move comes as the airline industry struggles to recover amid a historic crisis due to the global slowdown in travel caused by the coronavirus pandemic. The International Air Transport Association (IATA) notes that Argentina implemented the second strictest lockdown measures in the region. It estimates that passenger volumes will not return to pre-pandemic levels before 2023 or 2024.

As part of the extension, the company commits to investing US$ 2.5 billion and plans to spend US$ 1.4 billion of that in the first seven years. The company will likely turn to the markets at some point during that period to finance its initial investment, according to Martín Eurnekian, the president of Aeropuertos Argentina 2000.

In a telephone interview, Eurnekian said its sector was the first to close and will be one of the last to reopen. He added that they are taking measures beyond the initial urgency of the pandemic, in order to meet a framework of sustainability in the medium term.

The company is in talks with the government to determine how infrastructure investments will be allocated as priorities have changed as a result of the pandemic, said the operator's chief executive, Daniel Ketchibachian.

It is estimated that air traffic in Argentina will end the year with a 77 percent drop compared to 2019. Around three-quarters of the company's revenues are directly related to passenger traffic, and the rest is related to the activity of cargo, which registered a decrease in volumes, although it remained uninterrupted during the pandemic.