Budapest Airport faces new ownership structure

The airport investor, AviAlliance, has been managing Budapest Airport (BUD) since 2007. Now, after a long tug-of-war, a change of ownership is imminent. The Hungarian state-run investor, Corvinus International, is to take over 51% of the shares, 29% go to a Qatari state investor, and the French Vinci Group will own the remaining 20%. According to the Hungarian government, the transaction is expected to be completed by 29FEB24, at the latest.

However, it is currently unclear whether this schedule will be adhered to. During Q4 of 2023, the Hungarian Minister of Economy, Márton Nagy, announced that the change of ownership would be completed by the end of DEC23. Obviously then as now, unresolved financing issues were the reason for the delay. This was indirectly confirmed by Mr. Nagy who spoke of “very complex negotiations,” since his government intends to achieve “a competitive, market-based price.”  

According to local sources, the Hungarian government’s offer to the potential buyers is said to be around 4 billion euros. The Orban administration and its financial arm, Corvinus International, will have to shoulder slightly more than half of this sum for the intended acquisition of the majority share of 51%.

Financial gap needs to be closed
Two state-owned insurance companies were sold so as to raise the necessary funds despite empty government coffers. However, according to insiders, this deal could raise a maximum of 480 million euros. In order to close the financial gap, the Hungarian government intends to issue Eurobonds. In addition, it has applied for a French loan, local sources report. Hence, despite growing budget deficits, the Orban cabinet seems to have decided to nationalize the airport, regardless of the cost.

Brussels finally consented the change in shareholder structure
Following lengthy discussions, the EU Commission gave the green light for the intended change of ownership in DEC23. The Brussels policy makers argue that the deal would not infringe the block’s competition rules. It mainly concerns the airport management, not traffic issues.

Orban has long been trying to bring the airport back under national control. Now he is apparently very close to achieving this goal. Why this is so important to him can probably only be explained by reasons of prestige. Despite it being profitable, calling the airport a cash cow would be an exaggeration because the ongoing modernization and expansion require a high level of funds.

BUD’s Cargo City is the airport’s flagship
Under the management of the Avi Alliance and thanks to high investments, BUD has developed into a thriving hub for freight and passenger traffic, located right at the crossroads of Eastern and Western Europe. In particular, the 32,000 m² BUD Cargo City and adjacent apron, inaugurated in 2020, have proved to be a driver of cargo throughput. Since then, the expansion of the ground infrastructure continues unabated.

Since its opening in 2019, BUD Cargo City has developed into a magnet for air freight in Central Europe – photos: courtesy BUD Cargo.

It remains to be seen whether BUD will continue on its successful path once the government steers its fate, or if strategical and organizational changes will be implemented. 

State coffers are empty
The question is based on concerns, because local sources suspect that the Orban government is likely to channel the surpluses generated by the airport primarily into projects that promise political advantages. This is all the more likely since the state coffers are yawningly empty. At the end of 2022, Hungary had accumulated a deficit or 121.4 billion euros. This corresponds to 76% of gross domestic product. Per capita, this means that every Hungarian is statistically 31,200 euros in debt. However, it might comfort the Magyars that Greeks, Italians, and Spaniards are having to shoulder higher debts.

Passenger traffic recovers, cargo sets a new record
2023 was one of the most successful years in the history of Budapest Airport. Passenger traffic exceeded expectations, reaching 14.7 million travelers – a 91% recovery from pre-pandemic levels. And cargo volumes went through the roof, surpassing 200,000 tons.

These figures raise the question as to why the Avi Alliance has apparently agreed to sell the airport, as it is losing a cash-generating investment. The alleged price of around 4 billion euros is certainly an argument. On the other hand, Budapest promises long-term profits. This is an aspect that is of particular interest to the Canadian Avi Alliance shareholder, Public Sector Pension Investment Board (PSP Investments). Its policy is to provide long-term financial security for the pension entitlements of its members by investing in potentially profitable enterprises.

When asked by CargoForwarder Global to comment on these issues, the Dusseldorf-based management of AviAlliance did not respond.

In addition to Budapest, the airport manager also holds stakes in the airports of Athens, Dusseldorf, Hamburg, and San Juan, Puerto Rico. Except for Budapest Ferenc Liszt International, it is not known if any ownership changes are imminent at any of these other airports.

Çelebi grows its handling capacity
Ground handling agent Çelebi Aviation has just added 3,500 square meters to its existing 12.300 m2 of warehouse space in BUD’s Cargo City. “This strategic infrastructure development not only strengthens our cargo handling capacities, but also demonstrates our commitment to excellence in the aviation logistics industry,” reads a press release.

“Together we are strong!” – Çelebi and BUD Cargo managers celebrate the enlargement of the agent’s existing warehouse.

Çelebi, together with Budapest Airport, share a vision of aligning infrastructure with the market demands. Given the recent boost in air cargo volumes, which indicates the sector’s dynamic expansion, the agent speaks of a changing landscape enabling opportunities to capture additional business and redefine its capabilities. The Hungarian subsidiary of Turkey-headquartered Çelebi Aviation regards BUD as a vital logistics hub in the geographical interface between Western and Eastern Europe, nurturing further growth in the air freight business.

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