SWOT Analysis – VINCI Airports – globally ambitious - Je vole, donc je suis

A world leader in the 'concessions' business

The French company VINCI Airports is a division of VINCI SA, headquartered in the Nanterre business district to the west of Paris and employing 280,000 people. It is an acknowledged world leader in concessions, energy and construction, operating in more than 120 countries.

Established for 125 years initially as 'Société Générale d'Entreprises S.A.', VINCI SA is listed on Euronext's Paris stock exchange and is a member of the Euro Stoxx 50 index.

The present-day company VINCI, formed out of a series of mergers and acquisitions since 1966, was renamed from Vivendi in 2000.

Thereafter, VINCI acquired a host of French and international companies, such as Autoroutes du Sud de la France, the British construction companies Norwest Holst and Taylor Woodrow, the French engineering firm Cegelec from the Qatari sovereign wealth fund (which has a 5% stake in VINCI SA), and the Spanish construction conglomerate ACS Group's Industrial division which led to the creation of a joint venture focused on the renewable energy sector.

Large-scale involvement in surface transport projects

Since 2010 VINCI has been involved in the Grand Paris project to link up the entire Greater Paris region, creating "the city of tomorrow" by extending existing public transport lines and building new lines to link up reinvented economic and cultural hubs.

The project draws on all of VINCI's business lines and areas of expertise. It is scheduled for completion in 2030.

It has also acquired multiple contracts to construct portions of London's Crossrail (east-west) project, the final total bill for which exceeded GBP19 billion. It then went on, as part of a joint venture with Balfour Beatty and SYSTRA, to be awarded multiple contracts to work on Britain's High Speed 2 project (HS2), a south-north rapid rail network (that has since shrunk to become one line between London and Birmingham).

During the COVID-19 pandemic in the UK VINCI was involved in the rapid construction of several specialist treatment hospitals, known as the 'Nightingale' hospitals.

It is currently the 13^th largest French company by market capitalisation (USD68.4 billion/EUR61.9 billion), and seventh biggest by revenues.

VINCI SA is organised into the following divisions:

• Vinci Autoroutes (Autoroutes du Sud de la France, Cofiroute, Escota, Arcour)
• Vinci Concessions (airports, stadiums, highways)
• Vinci Energies (Cobra IS)
• Vinci Construction

Strong financial position

The group's finances are strong.

In FY2023 revenues were EUR68.8 billion; operating profit EUR8.3 billion; and net profit EUR4.7 billion. Total assets amounted to EUR118.5 billion, and total equity EUR32 billion.

In the first half of 2024 (interim figures as of early Sep-2024) revenues amounted to EUR34.25 billion (+4.6% compared to 1H2023), operating profit EUR3.64 billion (+6.7%), and net profit EUR2.17 billion (-3.1%).

VINCI Airports was dependent on its part-owned Cambodian operation for several years

Turning to the airports division - which resides within VINCI Construction - VINCI Airports dates to 1995, when it obtained its first airport concession.

That was a contract through a joint venture, Cambodia Airports, for the Phnom Penh and Siem Reap facilities, until 2040. Later it added the third international airport in Cambodia, at Sihanoukville, to the portfolio.

Cambodia Airports has been instrumental, in some ways, in shaping VINCI Airports' fortunes. For quite some time and then in the mid 2010s they were the only international investments in the sector that had been made by a company which seemed to be losing interest in it, despite having won several management contracts for small and sometimes quite insignificant secondary and tertiary level airports around France.

Cambodia Airports was also the target of some considerable vitriol from politicians in Cambodia, who levelled accusations that VINCI was taking too much in income from those three airports and not offering a reasonable 'quid pro quo' by investing adequately in them.

Subsequently, Cambodia Airports/ VINCI lost the right to bid to operate the new Siem Reap airport, and it looked as if that might also be the case with the new Phnom Penh airport until high level governmental negotiations put the entity back in the frame in mid-2024.

See related CAPA - Centre for Aviation report: VINCI wins rights to manage Phnom Penh's new airport as French-Cambodian entente cordiale takes off

After a period with little activity, it mushroomed from 2013

After VINCI's spending a period in the doldrums, with only a clutch of small French airports and the Cambodian ones in the portfolio, the year 2013 was a big year for the company, with the acquisition for EUR3 billion of the 10 ANA Airports of Portugal facilities, including Lisbon's Humberto Delgado airport. ANA held a 50-year concession on the airports.

The operation marked a key stage in VINCI Airports' expansion outside France.

Then, in 2015, new contracts were won in Japan and Chile.

In Japan it concluded the second national airport concession deal there, after the introduction of a wide-ranging procedure by the government, taking control of the Osaka International and Kansai Airports on an (enforced) 50:50 equity share deal with the Japanese financier Orix - for 44 years, beginning in Apr-2016. The value of the deal, including debt, came to EUR18 billion. Kobe Airport was added to the deal later.

It also set up the Nuevo Pudahuel consortium together with Aéroports de Paris (Groupe ADP) and Italian builder Astaldi, to operate the Santiago de Chile airport for 20 years.

Among many other deals and bids since then - all of which are chronicled in the CAPA - Centre for Aviation Global Airport Investor Database - the most prominent ones were:

• The acquisition of Aeropuertos Dominicanos Siglo XXI (AERODOM) in the Dominican Republic under concession until Mar-2030 (2016);
• The concession to operate Salvador Luis Magalhaes Airport in Brazil for 30 years (2017);
• A concession contract to operate Belgrade Airport in Serbia for a 25-year term (2018);
• The acquisition (2018) of Airports Worldwide and the concession on eight airports including Belfast International, UK; Stockholm-Skavsta Airport, Sweden; Orlando-Sanford Airport in the US; and the San Jose Juan Santamaria International Airport in Costa Rica, together with partial contracts at numerous US airports. With that agreement, VINCI's portfolio rose to 45 airports worldwide;
• An agreement (2018) to buy 50.01% of the equity in Gatwick Airport Limited - the company that owns London Gatwick Airport, the UK's second busiest - enabling it to become the majority shareholder, for EUR3.2 billion.

Global ambitions became the norm

VINCI Airports CEO Xavier Huillard said in Jan-2020 that at that stage the company was looking at every possible global airport sector investment opportunity, "except perhaps China, as that market is not open" (which remains the case).

• In 2021 VINCI Airports won, as part of a consortium, the concessions for seven new airports (Manaus, Tabatinga, Téfé, Cruzeiro do Sul, Porto Velho, Rio Branco, Boa Vista) in the Amazon region of northern Brazil for 30 years, having satisfactorily operated the Salvador Airport since 2017 without some of the recriminations experienced by other foreign operators in Brazil. Unlike some of them, VINCI has not set up a separate operating company in Brazil.
• In 2022 VINCI Airports acquired 30% of OMA (Grupo Aeroportuario del Centro Norte) - one of the three privatised operators in Mexico, with 13 airports in that country.
• Also in 2022 (the transfer was completed in 2023 when the company secured the financing) VINCI Airports acquired seven airports in Cape Verde and subsequently took over their operation, with VINCI owning 70% of the shares and ANA Airports of Portugal 30%. Portugal was the colonial power there before independence.
• In 2024 the government of Hungary announced that, together with VINCI Airports, they had purchased Budapest Airport, the operator of Budapest Liszt Ferenc International Airport, from its previous majority owner, AviAlliance for a cash and debt total of EUR4.3 billion. VINCI, which owns 20% of the equity (a government agency holds 80%) will be the operator until 2080.
• Also in 2024, VINCI Airports finalised the GBP1.3 billion acquisition of a 50.01% majority shareholding in Edinburgh Airport. Global Infrastructure Partners (GIP) will continue to manage a 49.99% interest in the airport. The airport becomes VINCI's third in the UK, alongside Belfast International Airport and London Gatwick Airport - in fact, it is the operator in three of the four UK capital cities.

Portfolio of 73 airports, and counting, but still on the hunt for more

At the time of writing, VINCI Airports continues to be involved in potential deals to acquire assets in Australia and the Caribbean, as well as having been selected as a preferred bidder in the competition for a strategic investor in the New Central Polish Airport.

VINCI Airports' portfolio now runs to 73 airports, including three partially managed ones in the US.

Active airports for VINCI Airports (VINCI Concessions)

Source: CAPA - Centre for Aviation.

Clearly VINCI's strength lies in Western Europe (although it is making advances into the eastern part of the continent) and throughout the Americas generally. In Asia Pacific including Australasia, though, it has little presence, apart from in Cambodia, and the same applies to West Asia and to Africa, apart from Cape Verde.

Interest is slowly growing generally in Africa, and opportunities will continue to arise in the Middle East, although they are likely to be for individual terminals on a BOT/PPP basis rather than for entire airports, and that may not suit VINCI in that region.

Fly me to the Moon - powered by impressive financials

Apart from that, it is highly likely that VINCI will figure again quite soon in more MA activity in the sector. If there was an airport on the Moon VINCI would probably covet it!

The division's finances are also in a good place, having overcome the COVID-19 pandemic years, when it still achieved a positive EBITDA result and went on to make an EBITDA margin of 59% in 2022 and 64% in 2023.

Financial data for VINCI Airports, 2021-23

Financial data (EUR billions)	2021	2022	2023
Revenue	1.2	2.7	3.9
Operating income	(0.206)	1.0	1.9
EBITDA	0.385	1.6	2.5
EBITDA margin	32.1%	59.2%	64.1%
Net profit (loss)	(0.485)	0.5	0.7

Source: CAPA - Centre for Aviation and VINCI Airports reports.
VINCI Airports Financial Year ends in December.
Values shown are in EUR.

In summary, there now follows an independent SWOT analysis for VINCI Airports as it stands in Sep-2024.

Strengths

• Financial strength of the holding company and of the division.
• Interaction with the construction company, so it can bid for airport ownership, lease, management and associated building projects at the same time.
• Experience and use of multiple ownership, lease and management models, tailored to suit the circumstances.
• Well established in three world regions.
• Growing strength in Eastern Europe.
• Ability to operate within a highly regulated structure such as the one in Japan.
• Support of the government to win foreign contracts.
• Continuity of management - Nicolas Notabaert, President of VINCI Airports since 2006, and CEO of VINCI Concessions since 2016.
• Global ambitions.

Weaknesses

• Lack of a significant presence in two world regions - Asia Pacific and mainland Africa.
• Limited exposure in Asia, apart from Cambodia and Japan; other opportunities there may have been missed.
• Loss of Cambodian airport lease at Phnom Penh (Cambodia Airports, in which it is a 70% shareholder); disgruntlement within government there.
• Loss of the Notre Dame-des-Landes contract, one for EUR580 million and a 55-year contract, for a new airport at Nantes in France following intense pressure on the government (see also threats) with associated financial losses and also the contract to operate the existing airport (since re-instigated).
• Global ambitions - could become too widely stretched.

Opportunities

• Resurrection of opportunity at Phnom Penh and associated business opportunities with Lagardère, which also won a contract there (potential for future cooperation).
• In-house (VINCI SA) experience of the renewable energy sector, to 'green' airports.
• In-house (VINCI SA) experience in the rail sector, at both national and local levels for air/rail co-operation.
• Involved in social engineering projects, such as the 'Grand Paris' project, which could be extended into airport city developments.
• Potential for further investment into the Paris airports (and the wider holdings of Groupe ADP) if they are fully privatised (currently an 8% shareholder), which is currently on hold, along with any further privatisation of French regional airports.

Threats

• Enforced closure of domestic air routes in France in favour of rail (although that, conversely, becomes an opportunity for VINCI Construction in respect of rail lines as above).
• Commitment to difficult areas such as Cape Verde, where numerous island airports are in need of refurbishment, with little prospect of a big increase in utilisation arising from the investment.
• Brazilian investments could be threatened by the socialist government there; so far there has been no indication of that.
• Potentially adverse perception politically following a deal with the Hungarian government to operate Budapest Airport as a minority shareholder.
• Competitors such as Global Infrastructure Partners, which will be the de facto infrastructure arm of BlackRock, the world's largest asset manager.
• Outright opposition to airport construction activities on home ground in France, and opposition to new airports.