Bloomberg News

Osaka Said to Plan Hiring Banks for Airport Concession in April

February 04, 2013

New Kansai International Airport Co. plans to hire financial advisers as early as in April for the sale of an airport concession in Osaka, aiming to raise as much as 1.2 trillion yen ($13 billion), two people with knowledge of the matter said.

The state-owned airport operator expects to start a global auction of the concession next year and aims to complete a deal in 2015, said one of the people, who asked not to be named because the plan is private. The winning bidders would be responsible for operating the two airports in Osaka, Japan’s second-biggest city, for three to five decades, the person said.

The proposed deal would mark Japan’s first sale of airport operating rights to private enterprises, paving the way for similar sales by regional airports such as the one in Sendai City in northern Japan.

New Kansai, the operator of the Osaka and Kansai airports in the western prefecture of Osaka, would use part of the proceeds from the sale to reduce debt, said one of the people. The company plans to hire banks with expertise in infrastructure concession sales, according to the person.

The company plans to establish terms for the concession sale in May and will then start meeting potential global investors including pension, infrastructure, private-equity and sovereign wealth funds, the official said. Norihisa Tagawa, a Osaka-based spokesman for New Kansai, declined to comment.

The Financial Times reported in December that the airport concession sale may raise as much as $15 billion, citing New Kansai President Keiichi Ando.

Expansion Plans

New Kansai International Airport was formed in April 2012 through the merger of Osaka International Airport Terminal Co. and Kansai International Airport. The Osaka airport, built at the start of World War II, was seized by the U.S. in 1945, according to its website.

The Osaka port resumed operations for commercial domestic routes in 1951 and was returned to the Japanese government after the 13-year U.S. seizure. The Kansai International Airport opened in 1994, and added a second runway in 2007, according to the company.

New Kansai expects to increase annual takeoffs and landings at the two airports to 305,000 by the year ending March 2015 from 231,000 in the 12 months that ended in March 2012, while boosting the number of passengers to 33 million from 26.8 million, according to a business plan announced in October.

The company has unveiled plans to reduce debt to less than 1.19 trillion yen by March 2015, from 1.24 trillion yen. New Kansai aims to increase earnings before interest, taxes, depreciation and amortization to 60.5 billion yen from 42.6 billion yen during the same period.

The Miyagi prefecture government has proposed to privatize operations of the state-owned Sendai airport, which was damaged by the March 11, 2011, earthquake, according to its website.

Kansai International Airport was ranked No. 19 on Skytrax’s list of the world’s best airports in 2012. Central Japan International Airport in Aichi prefecture was ranked 10th, the highest among Japanese airports.

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net


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