Business 10 July 2024, 9:44am

Hungary to build third terminal at Budapest Airport - EcoMin

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Hungary will build a third terminal for the Liszt Ferenc International Airport, Economy Minister Márton Nagy told a press conference held with French co-investor Vinci Airports on Tuesday. The airport's road and rail links to the capital will also be developed, as they target to handle 25 million passengers annually by 2040, he added. At the event, they also discussed the purchase price, the financing of the acquisition, what will happen to the special tax on airlines and who is responsible for the recent rampant flight delays and cancellations.

About the financing of the transaction

Márton Nagy recalled that the contract to acquire Budapest Airport was signed on 6 June.

The purchase price waas 3.1 billion euros, backed by a €1.44 billion credit, which has been extended.

For the financing, state-owned Corvinus Zrt. used in equal parts budget funds, Exim loans and money collected from the sale of non-strategic interests from the Hungarian state.

The Hungarian state paid €2.48 billion for an 80% stake, with the ownership share determined on a pro rata basis.

In the transaction, the Hungarian state acted as a market investor, with the help of advisors, a market transaction was carried out, said Márton Nagy.

The purchase price negotiated is in line with market standards, the minister said, adding that the airport was bought at 16.5x EBITDA.

The Hungarian state does not operate the airport, it leaves it to the experts, it is present as a financial and strategic investor, but it sets the development directions in the business plan. Vinci is the operator because they know how to do it, the Hungarian state doesn't, the co-investor operates more than 70 airports in 14 countries.

Development plans

Regarding the vision for the airport's future, Márton Nagy said that passenger traffic is projected to reach nearly 20 million by 2030 and 25 million by 2040, which is the target, but this is a conservative estimate. The airport is the gateway to the country, it contributes to Hungarian tourism, which boosts the economy, and in addition to tourism, there is also great potential to increase cargo traffic, he said.

This will require the development of the airport, the construction of Terminal 3, the creation of service facilities and new commercial units.

The infrastructure outside the airport is also important, and it is the government's responsibility to develop the infrastructure leading to the airport, including the expressway, the railway, and even hotels, car parks and related developments. Planning for the necessary funding has already started.

Nicolas Notebaert, CEO of Vinci, said that the summer is strong, with traffic at Budapest airport exceeding 2019 levels. He added that Vinci is taking a long-term view, with a concession that runs until 2080. They are also investing in capacity expansion and energy efficiency.

Terminal 2 will be expanded first, followed by Terminal 3 by 2032.

In the long term, Terminal 1 is not a good solution because of the quality of the building, he said. (The opening ceremony of Terminal 1 was held on 7 May 1950, but the traffic building was not fully completed until 1957. From above, the building resembles a huge aeroplane.)

240710ferihegy — The layout of Terminal 1 of Ferihegy Airport (Source: Új Építészet (New Architecture))

Special taxes on airlines, flight delays

In response to a question, Márton Nagy, reacting to yesterday's announcements on the special tax, said that taxes on airlines will be phased out, and will disappear from 1 January 2025.

Referring to the rampant flight delays, Márton Nagy said that the congestion in the airspace is due to high altitude transits. En route charges in Hungary are low, so many people choose it, while the war and tourism have generated a level of airspace use that was a surprise. (Note that Hungarian airspace has seen more traffic and almost daily regulations due to the unavailability of Ukraine airspace.)

This is an air traffic management issue, not an airport issue. The expansion of Hungarocontrol will not happen overnight. There will be serious steps, Hungarocontrol will be handed over on 1 August, significant changes will have to be made, and the use of airspace does not have to be so cheap, said Márton Nagy.

As to the possibility of a third owner in Budapest Airport, Márton Nagy said that negotiations are underway with the Qatari state investment fund and that they will decide together with Vinci. Even if the Qatari fund gets involved, its stake could be less than 10%.