Britain's BAA signs contract to purchase majority stake in Hungarian airport

Britain's BAA group has signed a contract with Hungary's privatization agency APV to buy a majority stake in Budapest's Ferihegy Airport, local media reported Monday.

BAA signed the deal on Sunday with APV for the purchase of a 75 percent minus one stake in Ferihegy.

Along with the stake, BAA, the world's largest airport operator, received a 75-year license to operate and develop the airfield.

For the deal, BAA put in the highest bid of 464.54 billion forints (2.21 billion dollars) and will transfer the money by Friday.

"It's the biggest privatization in Hungary's history and it's the biggest acquisition in BAA's history too," said BAA Chief Executive Officer Mike Clasper at the signing ceremony in Budapest.

BAA said there were good prospects for the airport to become Central Europe's main hub.

In September, the company cut its forecasts for passenger-traffic growth in Britain this year to 3 percent from 3.5 percent.

It is seeking to benefit from passenger traffic in Eastern Europe, which is growing faster than in its home market.

Last year, the number of travelers using Budapest Ferihegy International Airport surged 29 percent after the European Union (EU) expanded in May 2004.

"Hungary is right for us," Clasper said. "We are looking to attract a lot of business here, and we can be more competitive than Vienna or Prague."

The company, which will cut airline fees to make the airport more competitive, said it expected to raise the number of passengers using the Hungarian hub to 20 million annually in 2020, from an estimated 7.5 million this year. It also plans to spend 313 million dollars on Ferihegy's development.

Chris Woodruff, BAA's international operations director, was appointed to run the airport.

"My aim will be to make Budapest the No. 1 airport in the region," Woodruff said. "Much of this will be driven by the continued growth of low-cost carriers. We know we can improve the shopping and parking and catering and advertising at the airport."

BAA runs seven airports in Britain, including London's Heathrow, Gatwick and Stansted. It also operates Indianapolis International Airport in the United States and Naples International Airport in Italy.

Budapest Airport, the company that runs Ferihegy, said its traffic is the fastest-growing in Europe and the number of passengers handled, which doubled from 1993 to 2003, will double again by 2008.

Passenger numbers in Budapest climbed 27 percent in the first 10 months of this year, three times as fast as the European average, according to the Hungarian company.

On Dec. 8, Hungary selected BAA for exclusive negotiations, beating bids by Fraport and Hochtief of Germany.

The Hungarian government, which is legally bound to keep at least 25 percent of the airport, will not seek to change that law in the "next few months," Finance Minister Janos Veres said on Sunday.

As Hungary joined the EU and is developing its national economy, Budapest is also expected to become a new hub connecting Europe and Asia.

Hainan Airlines (HNA), China's fourth largest carrier in which Hungarian-born financier George Soros holds a 14.8 percent stake, has launched three weekly flights from Beijing to Budapest since the summer of 2004.

Under a code-sharing agreement, Hungary's state-run Malev Airlines rented a certain number of seats on board.

This was the first continental regular flight for HNA as well as the first direct route linking China and Eastern Europe.

"This route goes well and the passenger numbers constantly go up. We can say that our cooperation with Malev is successful," Liang Pubin, the general manager at the Budapest office of HNA told Xinhua.

Source: Xinhua