Airport's Public Investment Package Cleared by Commission
The European Commission has found a German public investment package to complete the construction of Berlin Brandenburg airport Willy Brandt to be in line with EU state aid rules. The investment will be made on market terms and will thus involve no State aid to airport operator FBB.
In January 2016, Germany notified plans by the airport's public shareholders to grant a €1.1 billion shareholder loan and a shareholder guarantee covering additional debt financing of up to €1.1 billion to the developer and future operator of the airport, Flughafen Berlin Brandenburg (FBB). The financing to be covered by the shareholder guarantee will be provided by commercial banks. Part of the investment is to address technical issues (for example, with the fire protection system), and to enhance noise protection. The rest will be used to increase capacity, as traffic growth will exceed the previous forecasts on which the initial project was based.
Interventions by public authorities in companies can be considered free of state aid when they are carried out at conditions that a private investor would have accepted (according to the so-called "market economy investor principle" – MEIP). In this context, the Commission carried out a detailed economic analysis, assessing FBB’s long-term business plans and market forecasts. The Commission then compared the planned investment project with various alternative scenarios. This assessment found that expanding and completing the airport was the most profitable option, especially taking account of steadily increasing passenger numbers, as forecast by independent market studies. In addition, the Commission carried out a stress-test to determine whether the investment scenario was robust enough to overcome a number of risks, such as a further delay of the airport opening, or higher costs. Even in the worst-case-scenario, the investment would remain profitable.
The Commission therefore concluded that a private investor seeking long-term profitability would have been ready to provide the same funding package on similar terms, to finally ensure that the airport is completed and made operational. Moreover, the terms of the shareholder guarantee are commensurate with market practice and thus confer no unfair advantage on the airport operator.
Background
For historical reasons, Berlin originally had 3 airports: Tegel and Schönefeld, both still operating, and Tempelhof, which was closed in 2008. Tegel and Schönefeld are operated by FBB. The new airport, ‘Berlin Brandenburg Airport Willy Brandt’, is being developed and will also be operated by FBB. Once the new airport is operating, the Tegel airport will be closed down.
FBB is owned by the Länder of Berlin and Brandenburg, holding 37% of the shares each, and the Federal Republic of Germany, holding 26 %. In the mid-1990s, these public shareholders decided to build a single airport for Berlin and its surrounding area. The airport project incorporates and develops part of the Schönefeld site.
In 2009, when it looked at public financing for the project, the Commission found that one single airport at this location would have a positive impact on the entire region and would in particular improve access to the Berlin-Brandenburg region and increase its attractiveness for new investment.
Construction of Berlin Brandenburg airport started in 2006. The opening of the airport was initially scheduled for 2011 but has been repeatedly postponed, mainly due to technical problems.
In this context, in 2009, the Commission initially approved state aid in the form of a €224 million debt-for-equity swap, a €430 million capital injection and a €2.4 billion state guarantee. In 2012, the Commission found that an additional €1.2 billion equity injection, provided by FBB’s shareholders, was carried out on market terms and thus involved no state aid.
State financing for companies carrying out economic activities such as building or operating airports can be considered free of state aid if, in similar circumstances, a private investor operating under normal market conditions would have acted in the same way. If this is the case, the public intervention does not provide the company with an undue economic advantage which could distort competition.
The non-confidential version of the decision will be made available under the case number SA.41342 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
