Sale of Frankfurt-Hahn Airport: Down the Tubes?
The sale of the money-losing Frankfurt-Hahn airport in Germany to Chinese investors may be on the verge of collapse.
At least, so say published reports that are following developments in that area.
The airport, owned by the German state of Rhineland-Palatinate, was under contract to China’s Shanghai Yiqian Trading Company (SYT).
But when SYT was due to make an initial payment last week, the money was not forthcoming, leading to speculation among German and international press outlets that the deal was done, and handwringing among local politicians and officials over an apparently collapsed deal.
Chinese investors have been spreading their capital around in recent years, and logistics assets have been of particular interest to them. COSCO Shipping, the Chinese state-owned ocean carrier, took a major stake in the Port of Piraeus in Greece within the last year, hoping to develop it into a logistics hub for central and western Europe.
In the case of the deal involving Frankfurt-Hahn Airport, the State of Rhineland-Palatinate was looking to unload the facility thanks to falling air cargo volumes and less passenger business over the past ten years. Frankfurt-Hahn competes with nearby Frankfurt International Airport and others in Cologne and Dusseldorf.
SYT made a winning bid for 82 percent of the company, beating out two rivals.
The failure to make its payment led to reporting that by Reuters that the purchaser had not informed the Chinese authorities early enough to allow the required finds to move across the border. The conventional wisdom concluded that that failure would lead to the death of the deal.
But the same reporting also indicated that SYT had indeed made the request to move funds to the proper authorities, leading to the possibility of an alternative scenario: that the funds will eventually be forthcoming, albeit late.
The story points to complexity of moving investment funds out of China and highlights the strict controls the government of China maintains over the export of capital. For all the changes in the Chinese economic system, government approval is likely necessary for a deal to succeed.
In any event, the Rhineland-Palatinate government has said it is pursuing other offers for the airport.