Germany's Hochtief said there are three bidders remaining in its sale of its airports interests, with the sale price expected to be more than EUR1.3 billion, according to a Reuters report. Vinci, HNA and a consortium of Fraport and Deutsche Bank fund, RREEF, are reportedly all offering around the same amount for the assets, which include Hochtief's stakes in airports in Athens, Budapest, Dusseldorf, Hamburg, Sydney and Tirana. A consortium comprising Allianz and Global Infrastructure Partners (GIP) is reportedly no longer in the running.
Three bidders remain in Hochtief Airports sale
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Virgin Australia to commence Beijing and Hong Kong services in 2017 under HNA deal, if slots allow
Virgin Australia's long haul network will double in 2017 as Abu Dhabi and Los Angeles are complemented with daily flights to Beijing and Hong Kong, which Virgin intends to launch from an undisclosed Australian city on 01-Jun-2017. The A330-200 flights help Virgin move widebodies out of the domestic Australian market. The Beijing and Hong Kong flights will be part of an alliance with mainland China's HNA Group, which has announced an investment of 13% in Virgin with the intent of taking it up to 19.99%.
Beijing is the home of the HNA flagship Hainan Airlines, while Hong Kong is home to HNA's Hong Kong Airlines. Restrictions in China and bilateral constraints in Hong Kong mean that the HNA group airlines cannot fly trunk routes. Virgin Australia is free of the restrictions that Hainan Airlines faces in China, and can use the available frequencies for Australian airlines to Hong Kong (Hong Kong-based airlines have exhausted their allocation).
Virgin will however need to secure slots in these opaque markets – Beijing especially. Its partners could help or even give slots, but protective action by competitors should not be underestimated. The focus turns to the commercial arrangement and whether it will be profitable for Virgin. Hong Kong will generate some outbound Australia traffic, but the routes will be heavily sold by HNA – its airlines and travel agency partners. The Hong Kong service will be able to tap into Hong Kong Airlines' mainland China network, with some connections more efficient through Hong Kong than Beijing.
HNA/Hainan stake in Virgin Australia its most significant acquisition yet; & a smart move by Virgin
HNA/Hainan Airlines' 13% stake in Virgin Australia for USD114 million expands HNA's equity airline network outside mainland China to nine airlines on five continents – two airlines more than Etihad has invested in. Even once HNA grows the Virgin Australia stake to 19.99%, as it intends, it will not be HNA's largest in equity or percentage; but it is the most momentous and strategically important yet. It is accompanied by a strategic alliance, subject to approval, through which Virgin Australia will fly to mainland China and Hong Kong.
HNA's past investments have either not met their originally anticipated strategic value (Aigle Azur) or are airlines (Africa World, Comair) that do not have HNA services and are unlikely to be significant in the near future. HNA's Virgin stake is different: Australia is China's largest outbound long haul market after the US but Hainan has had a limited presence. Hainan has previously focused on the US market while regulatory constraints (in both mainland China and Hong Kong) and lack of partnerships have restricted growth.