ECONOMY

AIA ’06 profit stable

Athens International Airport (AIA) expects to post unchanged profits this year ahead of its planned privatization, while the possible closure of flag carrier Olympic Airlines could weigh on earnings, the deputy chief executive of AIA said. The airport, one of Greece’s most successful infrastructure projects, is a centerpiece of the government’s 2007 privatization agenda aimed at cutting public debt. The government wants to sell its 55 percent stake, raising an estimated 1.6 billion euros ($2 billion). German construction group Hochtief, which built the five year-old airport, holds 40 percent and engineering giant ABB owns 5 percent. «We expect passenger traffic growth of one to two percent in 2006,» Yiannis Paraschis, AIA deputy chief executive, said in an interview with Reuters on Friday. «With profits at the same levels as last year.» In 2005, AIA reported a 4.5 percent rise in passengers to 14.2 million and posted a 31 percent rise in pretax profit to 61.8 million euros. Although details of the privatization have not been made public, the government is expected to list its shares of AIA on the Athens bourse through an initial public offering (IPO) next year. «The company is a very successful venture and we are ready to enter the stock market anytime the shareholders want us to,» Paraschis said, without giving details of the planned IPO timetable. But Paraschis acknowledged that the troubles of state-owned Olympic Airlines are a concern, because the company accounts for 40 percent of AIA’s annual passenger traffic and about 22 percent of the company’s revenue. Under pressure from the European Union to pay back hundreds of millions of euros in illegal subsidies, the government has said debt-ridden Olympic will keep flying until October, while a leaner successor to the company is created. «We hope the government will succeed in creating a successor to Olympic,» said Paraschis. «But obviously it is something that worries us and we would like it (Olympic’s closure) to be avoided.» In 2005, the airport posted a marginal 0.5 percent increase in turnover to 331.4 million euros and a 2.8 percent decline in operating expenses to 208.3 million euros. Much of the reduction in operating expenses came from the early repayment of 45 million euros in subordinated debt, which increased overall profitability by 8.5 million euros. Paraschis said that the company is now seeking to restructure its 1.1 billion euro debt and refinance it at lower interest rates. The vast majority of AIA’s debt, over 900 million euros, is owed to the European Investment Bank. «We will shortly enter discussions with existing lenders to restructure our debt,» Paraschis said.