Galeão,which saw a surge in passenger volume over the past year,is expected to resolve the concession impasse through a new auction — Foto: Guito Moreto / Agência O GLOBO

An agreement crafted between the Federal Audit Court (TCU),the federal government,and RIOgaleão aims to secure the concession of Rio de Janeiro's International Airport,setting the operation's value at R$600 million. This amount will serve as the minimum bid for the airport,which will undergo a streamlined bidding process to attract potential investors.

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Despite an arrangement allowing the operator Changi (the majority stakeholder in RIOgaleão) to continue at the terminal,the asset must be put on the market to prevent any legal challenges regarding potential favoritism. Given the agreement to revamp contractual terms,RIOgaleão will be allowed to participate in the bidding.

The operation entails Infraero's exit from the venture at the federal government's request. The state-owned company holds a 49% stake in the consortium,while Changi,a Singaporean operator,owns 51%. Following financial reconciliations between RIOgaleão and the National Civil Aviation Agency (Anac),addressing fines,overdue concession fees,and investments,Galeão's valuation was set at R$600 million.

If a second interested party emerges,they must at least match this value. However,if no other bidders surface,RIOgaleão will compensate Infraero proportionate to its consortium stake. If another investor acquires the airport,they will be required to reimburse the current operator.

Flexible Payment

To address the issue of the high annual concession fee,around R$1.4 billion,a major challenge of the concession,an agreement was reached to convert upcoming installments into variable amounts based on the airport's revenue. The revised contract will correspond to 20% of the operator's future earnings.

The option to extend the contract,initially set to expire in 2039,by an additional five years did not materialize. Once the contract term concludes,the airport will undergo a traditional bidding process.

The discussion also excluded the trigger to construct a third runway due to a lack of necessity for increased capacity and the potential environmental and social impacts the project could have on the surrounding airport site.

For the operation to be finalized,the proposal must be approved by the TCU plenary,but expectations are that ministers will approve it,according to insiders. The agreement,reached on December 16,was handled by the Secretariat for External Control of Consensual Solution and Conflict Prevention (SecexConsenso),established to resolve significant national issues.

First Quarter

The Ministry of Transport and the National Civil Aviation Agency (Anac) participated in the negotiations. Government experts believe that once all procedures are completed in the court,the Galeão auction could take place in the first quarter of this year.

The agreement to secure Galeão's concession aligns with the seventh phase of airport bidding,experts familiar with the situation explain. A quick resolution to the airport's situation is also argued to facilitate the resumption of investments.

A traditional re-bidding process would take time and could hinder service delivery. As reported by O GLOBO,RIOgaleão has projected a historic record of international traffic in 2024,with 4.7 million international passengers,a 30% increase over 2023.

This figure is also 4% higher than the 4.5 million international passengers in 2018,a historic mark. For January,the projection is to end the month with 596,309 international travelers,28% more than January of the previous year,following the return of events and shows in the city.

Experts suggest that the growth reflects the coordinated operation of Galeão and Santos Dumont,Rio's downtown airport,which has had its annual passenger movement capped.

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Galeão was acquired in late 2013 by a consortium consisting of Odebrecht Transport and Changi for R$19 billion,a 294% premium over the minimum bid. The initial commitment was to prepare the airport for the Olympic Games with estimated investments of R$5.7 billion over the contract's duration.

However,the concessionaire faced financial difficulties during the economic downturn in former President Dilma Rousseff's second term. Odebrecht's involvement in the Operation Car Wash also complicated matters.

In 2017,the current majority shareholder,Changi,acquired Odebrecht's stake,and with a capital injection,the concessionaire restructured its concession with the federal government,regularizing the situation. Concession payments were suspended until 2022.

The Covid-19 pandemic exacerbated the situation,leading the operator to request to return the concession in early 2022. However,following the federal government's change in 2023,Changi reversed its decision and expressed interest in continuing the operation.

The strategy was reinforced by the state government and Rio's city administration's initiative to restrict movement at Santos Dumont,aiming to boost passenger numbers at Galeão. Nevertheless,revenues remain insufficient to meet commitments to the federal government,according to government insiders.

Contacted,the company confirmed the completion of the commission's work within SecexConsenso. “The Concessionaire will wait to comment until the subsequent stages of the process are finalized and reaffirms its commitment to operate with recognized excellence and safety,as well as to engage in the airport's commercial development,with policies aimed at attracting airlines,passengers,and new businesses.”

The Rio City Hall stated it would not comment. The State Government of Rio affirmed it maintains its stance,advocating,with technical arguments,the coordination between Galeão and Santos Dumont airports to prevent any hindrance to the international airport's growth recovery.