Corp. America Plans $300 Million Uruguay Airport Investment

(Bloomberg) -- Airport operator Corporacion America Airports SA is boosting its bet on Uruguay after receiving a 20-year extension on a key international airport there while beefing up its presence in the South American country with some smaller airfields. 

Its Uruguay subsidiary, Puerta del Sur SA, extended the concession of the airport serving the capital, Montevideo, until 2053, and added six domestic airports to the agreement. The company plans to invest to upgrade the infrastructure of the local airports, which until now had been losing money, to global standards, said Martin Eurnekian, chief executive officer of Corporacion America Airports. 

“The covid crisis was tough for our sector,” Eurnekian said in a phone interview. “We managed to not just adjust and adapt during this time, but also to bring proactive proposals to governments and keep investing in infrastructure. It’s a win-win.”

The move comes almost a year after the company negotiated a 10-year extension on the concession it holds on airports in Argentina through its unit Aeropuertos Argentina 2000 SA. While it was hard-hit by global airport closures due to the pandemic, shares for the parent company have recovered from their levels of February 2020, the early stages of the spread of the coronavirus to the region. Its shares fell 3.3% to $5.96 per share at 11:12 a.m. in New York. 

As part of the Uruguay infrastructure push, the company plans to spend $300 million on the projects over the 30-year concession, starting with a $67 million investment, two-thirds of which must be invested by December 2023. That investment is mostly funded, thanks to a tender by ACI Airport Sudamerica SA, the parent company of Puerta del Sur in which it raised $53 million in new funds in addition to extending bond maturities.

The company will look to develop traffic in the local airports, and sees the biggest short-term commercial opportunities in the two airports furthest from the capital city, Rivera and Salto, said Puerta del Sur CEO Diego Arrosa. It’s in talks with carriers to boost connectivity, particularly for the airports in the north. It’s also looking into policies that would allow it to accommodate hybrid electric aircraft at its airports, which are more efficient and less expensive. 

The vast majority of Uruguay’s air travel passes through the international airports serving Montevideo and the Atlantic beach resort of Punta del Este. Passenger traffic through both airports in 2019 totaled 2.14 million people, according to local data. 

The company also has the concession of the Punta del Este airport through a separate agreement and does not yet have updates on changes to that concession, Eurnekian said. He declined to comment on concession extensions elsewhere. 

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