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Privatization of Slovak Airports In June 2005, the Slovak government discussed and approved three major documents in the area of aviation. The first one laid out general directions and principles of Slovakia’s transportation policy through 2015. This policy gives priority to the liberalization of the transportation market, the modernization and further development of infrastructure, and its financing. The second document is a plan for a free-of-charge transfer of state assets of small airport companies to municipalities and regional governments (Higher Territorial Units – VÚC) by the end of this year. This transaction involves airport operating companies Letisko Piestany, a.s., Letiskova spolocnost Zilina, a.s., Letisko Poprad-Tatry, a.s., and Letisko Sliac, a.s.. Only recently, a lively debate was witnessed with regards to the future perspective and financing of the above-mentioned airports. The most interesting and controversial document, however, proved to be the plan to privatize Slovakia’s two largest airports of international status – the Bratislava and Kosice airports. Both airports were part of the Slovak Airports Administration (SSL) until April of last year. On May 1, 2004, they were transformed into joint stock companies, with 100 percent state participation, and set to undergo privatization. Obviously, there is huge business potential at the airports and the areas surrounding them: an entirely new infrastructure, including office buildings, shopping centers, hotels, and entertainment facilities, could be potentially built in these areas. It is already evident that the airports and their surroundings are profiting from the dramatically increasing frequency of passengers. Passenger traffic has increased after Slovakia’s accession to the European Union in May 2004, thanks especially to new routes operated by low-cost airlines (Sky Europe, EasyJet). Bratislava handled only 184,664 passengers ten years ago. In 2004, it was transporting some 900,000 passengers, and between 1.2 million and 1.5 million is forecast for 2005. Although Kosice is much smaller and has a slight disadvantage due to its geographical location, it nonetheless also recorded an all-time high of 231,410 passengers in 2004, compared to just 125,000 in 2000. Recognizing this growth potential, and at the same time realizing the need to find a solvent investor who would provide both airports with the necessary financial injection for modernization, capacity-building and further development, the Ministry of Transport, Telecommunications and Postal Services has come up with a plan for privatization. The draft paper was discussed with an Austrian-British consortium consisting of Meinl Bank AG, SH&E Limited and DLA Weiss-Tessbach Rechtsanwalte GmbH, and released for the public review stage on May 31, 2005. According to the proposal, strategic investors would receive a majority (66 percent) of Bratislava and Kosice airports, while the remaining 34 percent would stay in state hands. But the regional leaders – Bratislava mayor Andrej Durovsky, Bratislava regional governor Lubo Roman, and head of Kosice region Rudolf Bauer – strongly protested the proposed deal, demanding a 15 percent share in the airports. They expressed a wish for the investor to cooperate with regional representatives, because it is they who will decide a zoning plan. A connection is also needed with the airport to serve this area. Such a requirement is not unusual – two-thirds of Bratislava airport is situated in Bratislava, while the City of Vienna has a 20 percent share in the Vienna airport despite, the fact that it is not within city limits. Nevertheless, Transport Minister Pavol Prokopovic insisted that the shares stay with the state, at least during the initial phase of privatization. He claimed that the investor would substantially benefit from having the public interest guaranteed by the central government only, instead of having to deal with three different levels of public administration. Shortly before the crucial cabinet session, the situation escalated and Lubo Roman even threatened that if the Ministry of Transportation ignores its demand regarding a transfer of a stake in Bratislava’s M. R. Stefanik Airport, the regional government could completely lose any such stake in the airport. On June 21, the cabinet adopted a compromise solution: after the privatization, the Slovak state will retain 34 percent of the properties (compulsory blocking minority required by Act 136/2004 Z. z. on airport administrations), but will cede 10 percent to the regional councils and 10 percent to the town councils of Bratislava and Kosice by 2006. The government will issue an invitation to tender for the sales in July 2005. The state would prefer a single buyer for both airports, but did not rule out two individual buyers. As for the bidders, Austrian Vienna-Schwechat Airport and Austrian Airlines Group (AUA) were first to express their interest in Bratislava Airport – they will bid in two separate consortia. Danish operator Copenhagen Airports A/S is also interested and would also like to participate in the tender for the privatization of Budapest’s Ferighy Airport (this privatization is running almost concurrently with those in Slovakia). Other interested companies include the financial firms J&T Finance Group, Penta Group and Slavia Capital. The first two are already looking for strategic partners in order to form a consortium. The privatization process is likely to be finalized by the end of 2005. Veronika Mizikova, AmCham Staff