Varna and Bourgas Airports Concession

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In September 2006, Fraport Twin Star Airports Management, the German-Bulgarian joint company of Fraport and BM Star, was awarded a concession by the Bulgarian government to modernize, expand and operate the Bourgas (BOJ) and Varna (VAR) airports for more than 35 years. During the concession period, Fraport committed to invest $529 million for the two airports, including $246 million for the Varna Airport and $283 million for the Bourgas Airport. The concession was important for Bulgaria to reach the European standards at the two Black Sea airports. The contract included taking over the operations for the airports, building new terminal facilities and acquiring the airport vehicles and equipment. Fraport owned 60 percent share in the concession deal while BM Star had the remaining 40 percent. Fraport agreed to pay the Bulgarian state $3.9 million one time fee and 19.2 percent of the airports’ operating revenues annually for the concession contract duration. Fraport was the operator of the Frankfurt International Airport. Initially, in June 2005, the Bulgarian government granted the contract to the Copenhagen Airports (CPH) for the 35-year period. Fraport Twin Star Airports Management and France’s Vinci Airports and Vinci Concession were ranked second and third in the international tender. However, CPH failed to meet the financial requirements of the bidding and also lacked the management criteria required for the international tenders, including management of more than one airport. In the end, the court accepted the objections of Fraport and Vinci companies against the Bulgarian government decision. After more than a year delay, the Bulgarian government signed the concession agreement with the German-Bulgarian joint company Fraport and BM Star. By the end of 2009, the new terminals were expected to be launched. In November, 2011 an EPC contract was signed for the construction of the two new terminals scheduled to become operational in 2013. The runway of the Varna aiport was operational as of February 29,2012. In 2013, Fraport Twin Star Airport Management reported that the number of passengers serviced at the Varna airport rose by 8.0% to 1.32 million in 2013, while at the Burgas airport traffic increased by 4.2% to almost 2.5 million passengers, an all-time high. In December, Fraport announced it had opened a new terminal at the Burgas airport. It had invested $55.6 million (80 million levs) in the design and construction.