By Tamas Csonka in Budapest
Hungary and its partner, France's Vinci, have acquired Budapest airport in a deal worth €4.3bn, finally achieving Prime Minister Viktor Orban's dream of returning the country's main airport to state ownership.
The Hungarian state has acquired an 80% stake through state-owned Corvinus International Investment, the National Economy Ministry said on June 6. Vinci will hold the remaining 20% stake.
Hungary and Vinci will pay €3.1bn to the institutional investor owners and have agreed to take over €1.2bn in loans. The sellers were AviAlliance, which held 55.44% of the shares, Malton, a subsidiary of Singapore's GIC Special Investments, which controlled 23.33%, while Canada's Caisse de depot et placement du Quebec held the remaining 21.23%.
Hungary is partnering with a professional investor, as Vinci operates world-class airports at more than 70 locations across continents, the Ministry of National Economy said, adding that the business plan by the new owners will be revealed next month.
Government officials have talked about eventually drawing in Qatari investors for the project. Marton Nagy has recently said that Hungary’s stakes could be reduced to 51% with the involvement of the Qatar Investment Authority (QIA). At Thursday’s announcement, the government did not specify its plans regarding the possible sale of some 29% of the shares to a third investor.
To finance the deal the cash-strapped state had raised over €700mn from the recent sale of assets, including stakes in Erste Bank Hungary, Yettel Magyarorszag and the local businesses of Vienna Insurance Group. The rest of the purchase price was covered by a development loan from Magyar Eximbank and the budget.
The government and its French investment partner, which will operate the airport, will work together to make Liszt Ferenc International a world-class airport, the ministry said. Through its tourism and cargo activities, the airport will further strengthen Hungary's role as a meeting point for capital and cutting-edge technology from East and West, it added.
Since radical rightwing Prime Minister Viktor Orban first swept to power in 2010, his government has boosted Hungarian ownership in energy, banking, telecoms and the media. It has been planning to buy the airport for years.
Hungary’s largest international airport was acquired by BAA Internacional Ltd at the end of 2005 for HUF465bn, or €1.85bn at the time (HUF/€ rate of 246.6) and a year later sold to a consortium led by Germany’s Hochtief (now AviAlliance), which operates several airport hubs in Europe for around the same price, €1.9bn.
After sweeping to power in 2010, the Orban government sold the remaining a 25%-plus-one-vote stake in the airport operator company to Hochtief for just HUF37bn, or just €132mn at 2011 rates to raise cash, claiming that minority ownership did not ensure a meaningful role in strategic operation.
In October 2020, a Hungarian consortium signalled interest in buying the airport. The sale procedure has advanced to a due diligence stage and the Hungarian consortium reportedly offered €4.4bn for the airport, but the project was unexpectedly put on ice in December 2021, when French President Emmanuel Macron travelled to Budapest for a summit of V4 countries. At that time, the prime minister said the buyback would be postponed until after the 2022 spring elections.
Budapest Airport was the fastest-growing hub in the region before the pandemic, posting double-digit traffic growth that reached a record 16.2mn in 2019.Traffic rose 20% to 14.7mn last year, or 91% of the pre-pandemic record.
COVID-19 and the collapse of international tourism also hit the airport hard, leading to huge losses. The company reversed to profitable operation in 2022 posting a net profit of €76.6mn, which fell to €74mn last year, of which €43mn was paid to shareholders.
Hungary is also taking over the airport's cargo business, which reported record traffic last year. This aligns with the government’s strategy to make Hungary a regional logistic hub for Chinese goods.
