COVID-19 Effect: Adani For More Time To Takeover Airports Won Recently

Privatisation AAI officials handing over the signed documents for Mangaluru Airport to Adani Group officials
File photograph of AAI officials handing over the signed documents for Mangaluru Airport to Adani Group officials. Source: AAI

In what is being seen as a fallout of the second wave of the pandemic or COVID-19 effect on aviation, the Adani Group, which won bids for 6 airports, has pushed plans to take over airport assets in Jaipur, Guwahati and Thiruvananthapuram to December 2021.

The Mint reported that Adani Group deferred plans to December as operating these airport businesses is not likely to be financially feasible during the pandemic. This comes even as the group made huge strides to emerge as India’s biggest airport operator.

Adani Airports Holding Ltd (AAHL), the airport arm of the conglomerate, has sought to invoke force majeure, citing disruptions caused by the second wave of the pandemic, the newspaper reported.

The Airports Authority of India (AAI), which had last year approved AAHL’s request for extension to take over Lucknow, Ahmedabad and Mangaluru airports, will meet later this month to decide on the latest request of Adani group.

A senior AAI official confirmed the development. However, the public sector airport operator is yet to take a decision on this, the official said.

The conglomerate’s intent to foray into the airport business was aimed at leveraging the aviation boom in India, the report said quoting Nripendra Singh, research head and strategy consultant, aviation, Frost and Sullivan.

“The domestic traffic is expected to increase exponentially once the pace of vaccination increases and the majority of the population gets vaccinated by December. All three airports, whose takeover is being delayed, are dominated by domestic traffic,” Mr. Singh was quoted as saying.

Six Airports with Adani Group

Adani group had won competitive bids to operate airports in cities such as Jaipur, Ahmedabad, Guwahati, Lucknow, Mangaluru and Thiruvananthapuram when the airport privatization process was rolled out by the government in the past few years.

AAHL became the country’s largest airport operator after picking up a controlling stake in Mumbai International Airport Ltd, which operates the Mumbai airport, earlier this year. The Chhatrapati Shivaji Maharaj International Airport is the second-largest in India in terms of passenger traffic.

AAHL bid aggressively for airport assets as the company assumed certain growth in air traffic, but the takeover has since been delayed due to the pandemic, with domestic passenger traffic expected to pick up in financial year 2023, said an expert who tracks the airport and logistic business of the conglomerate closely.

Officials in the AAI said that as part of its takeover, the Adani Group had already posted key officials to head operations under the new dispensation at Thiruvananthapuram international airport.

The Hindu reported that the AAI board is meeting this month-end in New Delhi to look into the request of the AAHL, sources said.

The AAHL had also asked for a similar extension for Guwahati and Jaipur airports. The AAI had earlier given approval to the request of the AAHL when it sought an extension of the observation period for Lucknow, Ahmedabad and Mangaluru airports that was privatised by the AAI.

The move, the report said, comes amidst pending cases in the Supreme Court against the handing over of the operations, management and development of the international airport in the capital through public-private partnership mode for 50 years.

IPL in Pipeline?

Other news reports said that the Group had started initial discussions to hive off its airport business from holding firm Adani Enterprises Ltd.

Business Today reported that the Gautam Adani-led group will likely raise $500 million through a private placement of shares in Adani Airports Holdings prior to an eventual IPO (initial public offering).

Adani Group controls Mumbai airport as well as six regional facilities and is aiming at a valuation of Rs 25,500-29,200 crore ($3.5-4 billion) for the business.

As per the Business Today report, discussions were held between top company officials and potential investment bankers. “At least half a dozen global banks and a bunch of domestic bankers have met top officials recently,” a source told the Economic Times, adding that the group is awaiting better air passenger numbers as the COVID-19 pandemic substantially curtailed passenger traffic, and “would like a year-end listing”.

 

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