Privatising The Spanish Airports

The partial privatisation of the national airports agency, Aena, is a matter which should be of interest to us all and so not just to the millions of tourists who pass through Son Sant Joan each year. It is a privatisation which, where Palma airport is concerned, could be positive or not so positive. Son Sant Joan is the most profitable Spanish airport. Shareholders like profits and they like to see them grow and to see their dividends also grow.

It is now more accurate to talk about Enaire rather than Aena. Since July this publicly owned company has been in charge of the country's civil airports; it currently owns all the Aena shares, for which offers have been received from the private sector for an initial 21%. The remaining 28% which comprise the partial privatisation (49% of shares) are due to be offered next month. Three "core" shareholders have now been confirmed. They are Banca March, Ferrovial, which is involved with the management of several British airports, and the London-based Children's Investment Fund (TCI).

The response to the offer of this 21% shareholding was, at best, not what the government had hoped for. It would seem that the three shareholders were the only applicants. The remaining 28%, thrown open to wider public subscription, may create greater interest, but there are concerns that the lacklustre start to the privatisation process might be repeated.

A problem for Enaire/Aena is that there are so many airports which aren't profitable, and they include Madrid. There are 49 airports in all and only around a fifth of them make a profit, in addition to which there is debt which many of them have. Palma is exceptional in this regard as it carries no debt. Barcelona, on the other hand, has a similar profit level but a massive debt.

The privatisation has not been met with total approval. The CCOO union is against it, as is PSOE, which is supposedly going to attempt to paralyse the sale in Congress (quite how is not clear). The opposition is all about guarantees of jobs, but there should also be a further concern, which is what investment might be forthcoming as a consequence of privatisation. Is the sale simply a way for the government to improve its accounts? But this question aside, Palma, because of its already high performance, might benefit further. As things stand, it already in a sense gets back much of its profit through the state budget allocation. The worry might be all those airports which are a drain and which demand a diversion of investment, though this assumes that they don't get closed, and it has been argued - justifiably - that Spain has way too many airports.

One airport which is a drain is Menorca's. It runs at a substantial loss - nearly 10 million euros in 2012. It would never be closed because, unlike some airports on the mainland, it is essential both for tourists and residents. But its tourism does perhaps help to explain why it does make a loss. Menorca receives half the number of tourists that Ibiza (together with Formentera) does. Ibiza airport makes a profit, not a huge one but it is profit nonetheless and its debt is small. Menorca's isn't. Over 150 million euros in 2012. Something needs to be done about its performance, and despite crowing in the Balearics that a Mallorcan bank, March, is a shareholder and that a leading Mallorcan hotelier, Simón Barceló, is a non-executive director on the new board will mean a defence of Balearic interests, it has to be accepted that shareholders don't deal with altruism, they deal with returns on investment. Barceló's involvement is arguably the more important - as a non-exec, he would doubtless do the defending - but then both he and March are part of a much bigger business, one with all those other airports that make a loss. The Spanish Government, as majority shareholder, would find itself under fire if it were to appear that the Balearics were being favoured at the expense of smallish regional airports on the mainland. This said, the government has stated in the past that airport closure is not on the cards. Well, that remains to be seen, as indeed does the success or not of the whole share offer.