May 24, 2004
The collapse of a terminal roof at Charles de Gaulle Airport near Paris is a major blow to the image of French airport operator Aeroports de Paris (ADP) and could delay its partial privatization, analysts said.
State-owned ADP, which was due to sell shares on the market in about a year, may now be forced to demolish the showcase EUR750 million (USD$896.6 million) terminal that opened last June, the operator's chairman said on Monday.
Even if Terminal 2E is salvageable, analysts said ADP could pay a heavy price for the accident, which killed at least four people on Sunday when slabs of concrete, metal and glass from its modernistic oval shell crashed down on passengers.
"This has to be a significant embarrassment," said Dan Solon, a Barcelona-based analyst at aviation consultants Avmark International. "Airports are infamous for troublesome construction projects, but I cannot recall a structural failure on this scale."
Addressing these concerns, French Budget Minister Dominique Bussereau said despite the accident, the government would go ahead with the partial privatization.
"The process will continue normally, Aeroports de Paris will overcome this terrible event," Bussereau said in an interview with financial daily Les Echos.
But analysts noted it was still early days and warned that if ADP was forced to share the blame for the collapse, a share sale might be difficult to pull off any time soon.
ADP, which manages all the civil airports and airfields within a 50 km (31 mile) radius of Paris, has weathered the civil aerospace crisis that followed the September 11, 2001 attacks relatively well.
It is blessed with room to expand and a successful national carrier in Air France.
But under its current status, ADP has had trouble expanding abroad and raising capital to cover its investments, which total some EUR600 million per year.
ADP peers like Britain's BAA and Germany's Fraport are both listed on the stock market.
SLATED FOR STOCK SALE
As a result, successive French governments have put ADP at the top of their list of salable state-owned firms and momentum towards a partial stock sale has grown over the past year.
Last November, ADP selected banks Credit Agricole Indosuez and Morgan Stanley to advise it on a possible share sale. Chairman Pierre Graff has said France could partly privatize ADP in the spring of 2005.
Analysts said the weekend accident could put these plans in jeopardy, particularly if ADP ended up sharing the blame for any construction faults that led to the collapse.
The terminal was designed by French architect Paul Andreu and built by the GTM and Eiffel units of French construction firms Vinci and Eiffage.
However, as operator of the airport, ADP would have signed off on the design plans and overseen construction.
"It is early days but I would think they would have to put this issue well behind them before the privatization could go ahead," said a London-based airline and airport analyst. "At the end of the day the operator is responsible for an accident of this nature."
ADP could also incur substantial costs over the coming months as it pushes passengers onto other Charles de Gaulle terminals.
Company spokesman Jerome Dutrieux declined to speculate on how long Terminal 2E might be closed and noted that only the boarding area of the new building had been damaged in the collapse.
But he conceded that redirecting the thousands of passengers who use the terminal each day was a complex task. "For now we are coping. We are asking airlines at other terminals to squeeze a bit," he said.
"But the problem is not the flights. There are 20,000 to 25,000 passengers that pass through each day. The problem is managing this flow of passengers."
(Reuters)
