Chinese buy Germany's Hahn airport for tourists, freight (updated)

Piraeus Port Authority SA

06/06/2016 14:34

* State owner agrees sale of stake in loss-making airport 
    * Chinese firms buy up overseas infrastructure assets 
    * Hahn's passenger numbers have been falling 
    * New owner to invest in freight operations 
 
 (Recasts, adds comments from Chinese company) 
    By Peter Maushagen 
    FRANKFURT, June 6 (Reuters) - Shanghai Yiqian Trading 
Company is to buy Hahn airport in Germany to secure a base for 
food exports as well as passengers heading to and from Asia, a 
deal highlighting China's increasing appetite for overseas 
infrastructure assets.  
    The planned purchase of an 82.5 percent stake in Hahn from 
federal state owners for a low double-digit million euro amount 
shows China's aim of recreating Silk Road trade links between 
Europe and Asia that have already led to some big-ticket 
transactions.  
    In April, China Everbright Group, a state-backed financial 
firm, bought into Albania's international airport while China 
Cosco Shipping Corporation purchased a 67 percent stake in 
Greece's Piraeus Port  OLPr.AT .  urn:newsml:reuters.com:*:nL3N17U2PR  urn:newsml:reuters.com:*:nL5N17B243 
    China's HNA Group has also been on an aviation acquisition 
spree. Last week it agreed to buy a stake in Virgin Australia 
 VAH.AX , and is in talks for a stake in Air France-KLM 
 AIRF.PA  catering unit Servair to add to its planned purchase 
of Gategroup  GATE.S .  urn:newsml:reuters.com:*:nFWN18R04K  urn:newsml:reuters.com:*:nL4N18R4AS 
    Yu Tao Chou, chairman of Shanghai Yiqian Trading, explaining 
the rationale for the deal, said increased air freight links 
from Germany would help to meet the growing demand in China for 
Western products such as meat, which local producers are 
struggling to keep up with. 
    "When it comes to freight, we expect good business from the 
transportation of food products to Asia," he said.  
    Hahn, a former military base near Frankfurt, has struggled 
to turn a profit but the new owners said on Monday they wanted 
to change that by boosting passenger and freight links with 
Asia. 
    The airport is used mainly by budget airline 
Ryanair  RYA.I , but the Irish carrier has been cutting back on 
services from Hahn at its flies to more primary airports. 
Passenger numbers at Hahn, 120 kilometres (75 miles) from 
Frankfurt, dropped to 2.7 million last year from almost 4 
million 10 years ago. 
    Unlike Frankfurt, Germany's largest airport, Hahn has a 
24-hour permit, making it useful for freight flights. 
    The current majority owner, the federal state of 
Rhineland-Palatinate, will provide around 70 million euros in 
subsidies for the airport over the next decade, the interior 
ministry said. Such subsidies must be approved by the European 
Commission and preliminary talks have already taken place.  
    The new owners will be expected to bear at least 50 percent 
of the investment costs, the ministry also said. 
    Chou said Shanghai Yiqian Trading also planned to buy the 
remaining 17.5 percent stake held by the state of Hesse. 
    Chinese investors have tried before to transform loss-making 
German airports. Luebeck airport was bought in 2014 with the aim 
of attracting medical tourists, but a year later the airport was 
bankrupt. 
    To avoid a similar scenario, Shanghai Yiqian Trading and 
Rhineland-Palatinate enlisted the help of KPMG to review the 
business plans, they said.   
    
 
 (Additional reporting by Ashutosh Pandey; Writing by Victoria 
Bryan; Editing by Jane Merriman) 
 ((victoria.bryan@thomsonreuters.com; +49 30 2888 5169; Reuters 
Messaging: victoria.bryan.thomsonreuters.com@reuters.net 
Twitter:@vl_bryan)) 
 
Keywords: HAHN M&A/CHINA