Corporación América Airports emerges from pandemic with sights on Africa

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 shake-up and eyeing an expansion into Africa.

Corporación América 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 Martín Eurnekian.

The company restructured or issued new debt in various markets while extending concessions in Argentina and Uruguay until 2038 and 2053 respectively. Corporación América 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. Corporación América 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 Corporación América 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 US$7.99, with a market capitalisation of US$1.3 billion. Shares rose as much as 2.04 percent on Wednesday, the most in four weeks.

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, the Middle East 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 Inc 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 travelling abroad. The company — which sets airport fees in hard currency for foreign travel and in pesos for local travel — is waiting for a government agency to set a date for next year’s review of peso-denominated domestic fees.

“We went though the worst crisis in the history of aviation, but what’s happening in Argentina is a small crisis compared to being closed for two years due to Covid,” he said.

Aeropuertos Argentina 2000, the local unit, restructured its dollar-denominated debt in 2020 and 2021 and re-financed itself with dollar-linked debt sales in the local market, a way to effectively take on dollarised debt at a zero percent interest rate. The company is looking for other opportunities to improve its debt profile and may issue an ESG-linked bond further down the line.

Those local debt sales, along with bank facilities, allowed the company to secure around US$270 million in financing, according to S&P Global, which raised the company’s credit rating in September to B, from CCC+.

Vertiports

A long-awaited new terminal at the Buenos Aires international airport, Ezeiza, will be inaugurated in the first quarter of 2023, after an accident in 2019 and the pandemic slowed progress, he said.

The company is taking several steps to prepare for the growing potential of electric aircraft. Last month, it signed an agreement with Skyports Infrastructure, an air mobility infrastructure provider, to assess the possibility of deploying infrastructure for vertiports used by electric aircraft known as eVTOLs. In June, it signed another deal to assess the regulatory environment for such infrastructure in European airports.

“We already have a design for vertiports and we’re working with the whole ecosystem so it can actually work,” Eurnekian said. “If things continue as they are, we may see the first eVTOLs around the world in 2025 and 2026, and in Latin America between 2026 and 2027.”