Fraport AG Frankfurt Airport Services Worldwide (Fraport AG) has agreed to sell 10% of its current 35.5% shareholding in Pulkovo Airport, St Petersburg to the Qatar Investment Authority (QIA).

The international airports’ arm of Frankfurt Airport says it expects to complete the process of releasing the 10% share in the Thalita Trading Ltd holding company (which controls Pulkovo Airport) later this year. The transaction is expected to generate profit between €30m to €40m ($33.5m to $44.7m).

30-YEAR CONCESSION

Thalita is the parent company of Northern Capital Gateway LLC consortium, which holds the 30-year operational concession at Pulkovo Airport in St. Petersburg, Russia.

The Nuance walk-through duty free store at St Petersburg Pulkovo International Airport in Russia.

QIA: BUILDING GLOBAL AIRPORT STAKES

Fraport says the agreed transaction should positively impact the group’s profitability for the 2016 business year and the shareholding reduction ‘will not affect Fraport’s role as airport operator in the consortium’.

Meanwhile, the Qatar Investment Authority (QIA) also plans to acquire more shares in this business from other consortium partners to build its total stake to 24.99% in the Thalita holding company.

Commenting on the development yesterday, Fraport AG Executive Board Chairman Dr. Stefan Schulte said: “Pulkovo Airport has developed well since the operating concession started. In selling part of our stake, we are realizing value enhancement while maintaining our role in the consortium.

A Dufry-owned Nuance fine watch outlet at Pulkovo Airport.

“Furthermore, this agreement with the renowned global financier Qatar Investment Authority will broaden the shareholder base of our consortium and strengthen Pulkovo Airport to meet the challenges and opportunities of the future.

“Despite the current difficulties in Russia, we continue to regard this as an attractive market.”

PULKOVO RETAIL SPEND UNDER PRESSURE

Since the Northern Capital Gateway consortium started operations, passenger traffic at LED has risen from 8.4m to 13-5m between 2010 and 2015.

However, the airport company is clearly under pressure as the rouble has fallen alongside passenger demand for some key overseas destinations normally accessed from Pulkovo, such as Turkey in particular.

Total passenger traffic fell by 30.5% to 7.3m passengers at Antalya Airport alone in the first six months of 2016, while ‘total passenger numbers declined by 6.5% to 5.9m at St Petersburg (Pulkovo) over the same period. Retail spending has also fallen at Pulkovo.

A Turkish Airlines Airbus A321 departs Pulkovo in better times before the ban on Russians visiting Turkey back in 2014. This ban has since been lifted, following an apology from the Turkish President Recep Tayyip Erdogan for the shooting down of a Russian fighter. However, Russian tourists (and many other nationalities) still remain cautious about visiting Turkey following last month’s attempted coup. [Photo credit: Anna Zvereva].

High spending Russian passengers/shoppers travelling to Turkey have traditionally been a key contributor to Pulkovo’s non-aeronautical revenues in the past.

FAST CASH GENERATION…

Meanwhile, it has also been reported by Reuters that another Pulkovo Airport partner – the Copelouzos Group – is also selling shares. While unconfirmed by TRBusiness at present, if this is confirmed then this would take the Qatar Investment Authority’s Pulkovo Airport shareholding to 24.9%.

Copelouzos is Fraport’s Greek partner in the 40-year concession to operate, manage, develop and maintain 14 airports in Greece.