Turkish Airports in Talks for State Aid Amid Traffic Slump
(Bloomberg) -- Turkey’s top airports are seeking government support worth hundreds of millions of dollars as the coronavirus crisis shatters demand at some of the world’s biggest terminals, people familiar with the situation said.
Hubs including Istanbul’s new $9 billion facility pressed state airport authority DHMI for rental deferrals, discounts and contract extensions in joint talks, said the people, who asked not to be named as discussions are private.
The negotiations are likely to result in bespoke terms reflecting the different circumstances at each airport, the people said. DHMI declined to comment.
Turkey’s domestic market protected its airports from the level of collapse seen in western Europe last year. Even so, the loss of tourist and transit traffic took a toll. Istanbul’s main hub, opened in 2019, utilized just a quarter of its 90 million-passenger capacity, while Sabiha Gokcen, the city’s second base, run by Malaysia Airports Holdings Bhd, saw a 52% fall. Five airports including Ankara and Izmir managed by Aeroports de Paris had a 70% drop.
Shares of TAV Havalimanlari Holding AS, ADP’s Turkey unit, rose as much as 4.5% on the news in Istanbul on Monday. ADP shares rose as much as 1.2% in Paris.
After the market closed, TAV announced that DHMI had agreed to extend operating periods for two years and delay rent payments due in 2022 to 2024 for five of its airports in Turkey.
The airports all have varying requirements from the talks, the people said.
While four Turkish builders that operate the new Istanbul hub through IGA Havalimani Isletmesi AS must pay an annual fee of 1.1 billion euros ($1.33 billion) under a 25-year lease contract, the company is guaranteed compensation until traffic reaches break-even.
The government may consider deducting the value of the guarantee from the rental fee at the airport, the main base of Turkish Airlines, and offer discount on the balance, according to two of the people.
IGA, Sabiha Gokcen and ADP’s TAV Havalimanlari Holding AS declined to comment.
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