Fraport to pay Euro50m for Xian airport stake

Fraport, one of Europe's leading airport operators, is to buy a 24.5 per cent stake in Xian International Airport for Euro50 million (HK$524.48 million) to become the first foreign airport operator to invest in a non-listed mainland airport.

The Frankfurt-based company signed an agreement with Xian International Airport in the capital city of Shaanxi province yesterday under which Fraport will also help to improve the airport's operations and take charge of its commercial development, a press release said.

Mainland airports such as Xian are seeking increased investment to expand and cater for a fast-growing aviation sector amid the country's booming economy.

Shanghai International Airport yesterday said it would issue a 2.5 billion yuan domestic corporate bond to finance its 15 billion yuan expansion of Pudong International Airport.

Xian's deal with Fraport follows last month's call by Diao Yonghai, a vice-minister with the General Administration of Civil Aviation of China, for broader methods of financing expansion in the sector, such as inviting foreign investors to put money into airports. A single foreign company is limited to holding no more than a 25 per cent equity stake in a mainland airport.

Xian Airport handled 9.36 million passengers last year, up from 7.94 million in 2005, lifting its ranking to No9 in the country. It expects about 11 million passengers this year.