Corporacion America Airports S.A 6-K, filed Sep 28, 2021
Corporacion America Airports S.A. (CAAP)
About this 6-K
Corporacion America Airports S.A filed this 6-K on September 28, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20546
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September, 2021
Commission File Number: 333-221916
Corporacion América Airports S.A.
(Name of Registrant)
4, rue de la Grêve
L-1643, Luxembourg
Tel: +35226258274
Fax: +35226259776
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Corporación América Airports S.A. (NYSE: CAAP), (“CAAP” or the “Company”), the largest private sector airport concession operator in the world by number of airports, announces that its subsidiary Aeropuertos Argentina 2000 S.A. (“AA2000”) announced today the commencement of an offer to exchange (the “Exchange Offer”) any and all of its outstanding 6.875% Senior Secured Notes due 2027 issued on February 6, 2017 and its outstanding 6.875% Cash/9.375% PIK Class I Series 2020 Additional Senior Secured Notes due 2027 issued on May 20, 2020 for newly issued 8.500% Class I Series 2021 Additional Senior Secured Notes due 2031. The Exchange Offer is part of AA2000’s plan to increase the efficiency of its capital structure, refinance a material portion of its outstanding indebtedness and improve its liquidity and cash flow in light of the impact of the COVID-19 pandemic.
A copy of the press release issued by AA2000 in connection with the Exchange Offer is attached hereto as Exhibit 99.1. We are also including as Exhibit 99.2 a copy of a traffic report, prepared by an independent traffic consultant in connection with the Exchange Offer, with respect to AA2000’s market overview and traffic forecast. The projections and forecasts included in such traffic report shall not be regarded as a representation or warranty by the Company or AA2000 with respect to the accuracy of such projections or the underlying assumptions of the projected results.
Patricio Iñaki Esnaola
Head of Investor Relations
Email: patricio.esnaola@caairports.com
Phone: +54 11 4852 6716
Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Corporación America Airports S.A. | ||
| By: | /s/ Andres Zenarruza | |
| Name: | Andres Zenarruza | |
| Title: | Head of Legal | |
| By: | /s/ Jorge Arruda | |
| Name: | Jorge Arruda | |
| Title: | Chief Financial Officer | |
Date: September 28, 2021
Exhibit 99.1
PRESS RELEASE
For Immediate Release
AEROPUERTOS ARGENTINA 2000 S.A.
ANNOUNCES EXCHANGE OFFER AND CONSENT SOLICITATION FOR ITS
6.875% SENIOR SECURED NOTES DUE 2027(SERIES 2017 NOTES), (CUSIP: 00786P AC8 / P0092M AE3; ISIN: US00786PAC86 /USP0092MAE32),
AND
6.875% CASH/9.375% PIK CLASS I SERIES 2020 ADDITIONAL SENIOR SECURED NOTES DUE 2027 (SERIES 2020 NOTES), (CUSIP: 00786P AD6 / P0092M AF0; ISIN: US00786PAD69 /USP0092MAF07)
BUENOS AIRES, Argentina, September 28, 2021 – Aeropuertos Argentina 2000 S.A. (the “Company” or “AA2000”) announced today the commencement of an offer (the “Exchange Offer”) to exchange any and all of its outstanding 6.875% Senior Secured Notes due 2027 issued on February 6, 2017 (the “Series 2017 Notes”) and its outstanding 6.875% Cash/9.375% PIK Class I Series 2020 Additional Senior Secured Notes due 2027 issued on May 20, 2020 (the “Series 2020 Notes” and, together with the Series 2017 Notes, the “Existing Notes”) for newly issued 8.500% Class I Series 2021 Additional Senior Secured Notes due 2031 (the “Series 2021 Notes”).
The Exchange Offer is being made only to Eligible Holders (as defined below) who will be eligible to receive and review the Company’s exchange offer memorandum and consent solicitation statement dated September 28, 2021 in respect of the Exchange Offer (the “Exchange Offer Memorandum”), which contains all of the terms of the Exchange Offer. Any capitalized terms used in this press release without definition have the respective meanings assigned to such terms in the Exchange Offer Memorandum.
The Company is offering the Series 2021 Notes as additional notes pursuant to a second amended and restated indenture that will amend and restate the first amended and restated indenture, dated as of May 20, 2020, under which the Existing Notes were issued (the “Existing Indenture”).
The Series 2021 Notes and the Existing Notes not exchanged in the Exchange Offer will be secured by the same collateral currently securing the Existing Notes on a pro rata and pari passu basis. In addition, to secure its obligations under the Series 2021 Notes, the Company, together with the relevant parties thereto, will amend, on or before the Settlement Date (as defined below), the cargo trust agreement governed by Argentine law, dated August 9, 2019, entered into by the Company and the trustee thereto (as amended, the “Cargo Trust”) in order to grant the holders of the Series 2021 Notes, a security interest, subordinated to (i) the rights of creditors under certain existing loans of the Company, and (ii) any debt permitted to be incurred to finance or refinance any capital expenditures made or to be made pursuant to the concession agreement entered into by the Company with the Argentine National Government (as amended form time to time, the “Concession Agreement”) for the operation of our airports in Argentina.
Once the Existing Notes not exchanged in the Exchange Offer are mature or cancelled in full, the Company is required to amend and restate the Cargo Trust and the current trust related to the tariffs, governed by Argentine law, dated January 19, 2017, entered into by the Company and the trustee thereto (the “Tariffs Trust”), so that the Series 2021 Notes become secured by the Cargo Trust on a pro rata and pari passu basis with the existing beneficiaries of the Cargo Trust, and these other beneficiaries become secured by the Tariffs Trust on a pro rata and pari passu basis with the Series 2021 Notes. In accordance with the Concession Agreement, the collateral assignment of revenue must be authorized by the National Airports Regulatory Organization (Organismo Regulador del Sistema Nacional de Aeropuertos) (the “ORSNA”). It is expected that the ORSNA will approve, on or prior to the Settlement Date, the extension of the Tariffs Trust and of the Cargo Trust to include the Series 2021 Notes as beneficiaries thereto (including their future amendment and restatement, once the Existing Notes are cancelled in full). Furthermore, to the extent it becomes permitted by applicable law, the Company will establish a non-interest bearing U.S. dollar trust account with Citibank, N.A., as collateral agent, located in New York, New York, United States to secure the Series 2021 (the “Series 2021 Offshore Reserve Account”). Provided there is no default, funds will be transferred from the U.S. dollar collection account on a weekly basis until the funds on deposit in the Series 2021 Offshore Reserve Account during the third month, second month and month prior to the immediately following payment date are equal to 125% of one third (1/3), two thirds (2/3) and the full amount, respectively, necessary to pay all interest and principal payable on the Class I Series 2021 Additional Notes on the immediately following payment date. If established, the Series 2021 Offshore Reserve Account and all amounts from time to time therein will be maintained in the name of the Company and pledged in favor of Citibank, N.A., as collateral agent, for the sole and exclusive benefit of the Series 2021 Notes and Citibank, N.A. as indenture trustee and New York collateral agent.
Simultaneously with the Exchange Offer, the Company is soliciting consents (the “Consent Solicitation”) to effect certain amendments and obtain certain waivers (the “Proposed Amendments”) to, and in connection with, the Existing Indenture. The Proposed Amendments will, among other things, eliminate substantially all of the restrictive covenants and Events of Default and related provisions under the Existing Indenture with respect to the Series 2020 Notes.
Eligible Holders who validly tender Existing Notes and deliver the required proxy documents under the Consent Solicitation, and do not validly revoke such tenders and proxies, on or prior to 5:00 p.m. (New York City time) on October 12, 2021, unless extended or earlier terminated by the Company in its sole discretion (the “Early Participation Deadline”), and whose Existing Notes are accepted for exchange by the Company, will receive U.S.$1,000 principal amount of Series 2021 Notes per U.S.$1,000 Outstanding Principal Amount (as defined below) of Existing Notes tendered plus accrued and unpaid interest in cash (the “Accrued Interest”) on such Existing Notes from, and including, the most recent date on which interest was paid on such Eligible Holder’s Existing Notes to, but not including, the settlement date, which is expected to be October 28, 2021 (the “Settlement Date”).
As of a given date, the “Outstanding Principal Amount” of Existing Notes equals the original principal amount of such Existing Notes multiplied by the Applicable Amortization Factor as of such date. The amortization factor is determined in accordance with market convention to convert from the Original Principal Amount of the Existing Notes to the Outstanding Principal Amount of the Existing Notes after each principal amortization payment date. The Applicable Amortization Factor for the Series 2017 Notes and the Series 2020 Notes is 0.6875 and 0.91666, respectively.
Eligible Holders who validly tender Existing Notes and deliver proxies after the Early Participation Deadline and before 11:59 p.m. (New York City time) on October 26, 2021 (the “Expiration Deadline”), unless extended or terminated earlier by the Company, and whose Existing Notes are accepted for exchange by the Company will receive U.S.$900 principal amount of Series 2021 Additional Notes per U.S.$1,000 Outstanding Principal Amount of Existing Notes tendered, plus Accrued Interest paid in cash, on the Settlement Date.
It is a condition to the Exchange Offer, among others, that at least 75% of the Outstanding Principal Amount of the Existing Notes is validly tendered for exchange and not withdrawn. Subject to applicable law, the Company reserves the right to waive any and all conditions to the Exchange Offer.
The Exchange Offer and the Consent Solicitation are part of the Company’s plan to (i) increase the efficiency of its capital structure and refinance a material portion of its outstanding indebtedness in order to create a more defensive credit profile that better aligns the debt maturities with the AA2000 Concession Agreement, which was extended in December 2020 for a ten-year period (from February 2028 to February 2038), and (ii) improve its liquidity and cash flow in light of the impact that the COVID-19 pandemic continues to exert in the air transportation industry.
The Exchange Offer is made, and the Series 2021 Notes will be offered and issued, only (a) in the United States to holders of Existing Notes who are “qualified institutional buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)) in reliance upon an exemption from the registration requirements of the Securities Act, and (b) outside the United States to holders of Existing Notes who are persons other than “U.S. persons” (as defined in Rule 902 under the Securities Act) in reliance upon Regulation S under the Securities Act and who are non-U.S. qualified offerees. Holders who have returned a duly completed eligibility letter certifying that they are within one of the categories described in the immediately preceding sentence are authorized to receive and review the Exchange Offer Memorandum and to participate in the Exchange Offer and the Solicitation (such Holders, “Eligible Holders”), provided that Eligible Holders who qualify as Argentine Entity Offerees or Non-Cooperating Jurisdiction Offerees may not participate in the Exchange Offer and the Solicitation unless they also complete, sign and submit a letter of transmittal in the form attached as Appendix A to the Exchange Offer Memorandum to the Exchange and Information Agent. Holders who desire to obtain and complete an eligibility letter, proxy materials and letter of transmittal should visit the website for this purpose at https://bonds.morrowsodali.com/AA2000Eligibility.
Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and Santander Investment Securities Inc. are acting as joint dealer managers for the Exchange Offer and Solicitation.
Argentine Entity Offerees and Non-Cooperating Jurisdiction Offerees are subject to certain tax withholdings in respect of interest collected on, and gains or losses resulting from the tendering of the Existing Notes. See "Certain Tax Considerations—Certain Argentine Tax Considerations" in the Exchange Offer Memorandum.
This press release does not constitute an offer to buy or the solicitation of an offer to sell the Existing Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. This press release does not constitute an offer to sell or the solicitation of an offer to buy the Series 2021 Notes, nor shall there be any sale of the Series 2021 Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The Series 2021 Notes will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act and applicable state securities laws. The public offering of the Series 2021 Notes was authorized by the Comisión Nacional de Valores (“CNV”) in accordance with the Argentine Capital Markets Law No. 26,831 (as amended), the Negotiable Obligations Law No. 23,576 (as amended) and the regulations of the CNV.
None of the Company, the dealer managers, the trustee or any affiliate of any of them makes any recommendation as to whether Eligible Holders should tender or refrain from tendering all or any portion of the principal amount of such Eligible Holder’s Existing Notes for Series 2021 Notes in the Exchange Offer or deliver proxies in respect of any of the proposed amendments to the Existing Indenture in the Consent Solicitation. Eligible Holders will need to make their own decision as to whether to tender Existing Notes in the Exchange Offer and participate in the Consent Solicitation and, if so, the principal amount of Existing Notes to tender.
Gimena Albanesi Planning Manager +5411-44852-6411 galbanesi@aa2000.com.ar |
OR | The Exchange and Information Agent Morrow Sodali Ltd +1 203 609 4910 AA2000@investor.morrowsodali.com |
Joint Dealer Managers for the Exchange Offer are:
Citigroup
Global Markets Inc. Attn: Liability Management Group Toll Free: (800)558-3745 Collect: (212) 723-6106
|
Goldman Sachs & Co. LLC 200 West Street New York, New York 10282 Attention: Liability Management Group U.S. Toll-free: +1 (800) 828-3182 Collect: (212) 357-1452 Email: GS-LM-NYC@gs.com |
Santander Investment Securities Inc. 45 East 53rd Street New York, New York 10022 Attn: Liability Management Toll free: (855) 404-3636 Collect: (212) 940-1442
|
ABOUT AEROPUERTOS ARGENTINA 2000 S.A.
Aeropuertos Argentina 2000 was founded in 1998 in order to develop and operate the airports throughout the Argentine territory, becoming one of the largest private sector airport operators in the world, with 35 airports under management. Over the last 20 years, AA2000 developed and modernized infrastructure in the main airports in the country, incorporating cutting-edge technology in relation with safety and services. It also contributes to the social, economic and cultural development of the country, thus becoming a regional and international example in the aviation industry. AA2000’s mission is to enable the connection of people, goods and cultures, to contribute to a better world. For more information, visit www.aa2000.com.ar.
Exhibit 99.2
 |
FOTOGRAFÍA COLOR MARKET OVERVIEW AND TRAFFIC FORECAST AEROPUERTOS ARGENTINA 2000 NETWORK Executive summary September 27, 2021 |
 |
Executive summary Argentina handled 30 Mpax before the COVID-19 outbreak, growing at an average CAGR of 6.9% between Passenger traffic analysis (Mpax) 2010 and 2019… 6.9% International 47% 30.5 Total Mpax 2019 International Domestic 30.0 4.0% 28.9 -70% Domestic 53% Others 10% 30.5 Total Mpax 2019 9.1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 AA2000 90% Source: ANAC Note: ANAC commercial traffic is shown, domestic traffic counted only once. … but then COVID-19 outbreak hit the world and air transport was one of the lockdowns and travel bans most impacted sectors due to 2 10.2%26.9 23.2 21.5 20.1 14.6 16.517.1 12.7 11.2 9.910.8 12.314.0 6.66.27.38.1 14.2 18.419.2 11.5 11.111.1 8.910.010.5 14.9 15.8 3.2 5.8 |
 |
Executive summary Argentina has 59 airports, 35 of them are operated by AA2000. EZE is the main international gateway Airport network in Argentina Bolivia to the country (>80% of int’l traffic) Traffic by airport in Argentina (2019) 12,597 Ezeiza - EZE Aeroparque - AEP Córdoba - COR Mendoza - MDZ Bariloche - BCR El Palomar - PAL Iguazú - IGR Salta - SLA Neuquén - NQN Tucumán - TUC Ushuaia - USH Rosario - ROS El Calafate - FTE Comod. Rivadavia - CRD Jujuy - JUJ Mar del Plata - MDQ Trelew - REL Bahía Blanca - BHI Posadas - PSS Resistencia - RES Río Gallegos - RGL Corrientes - CNQ San Juan - SJU Chapelco - CPC Río Grande - RIG Santiago del Estero - SDE Formosa - FMA Santa Fe - SFN Puerto Madryn - PMY San Luis - LUQ La Rioja - IRJ Paraná - PRA Catamarca - CTC San Rafael - AFA Esquel - EQS Santa Rosa - STS Viedma - VDM Río Cuarto - RCU Termas Río Hondo - RHD JUJ SLA TUC 12,247 Paraguay Brasil FMA IRJ RHD CTC IGR rnational RES PSS y and main RCQ SDE 1,172 int’l base of Aerolineas Argentinas UAQ MDZ AFA LGS stic base of VME PRA COR RCU FDO serving also Uruguay AEP EPA EZE 623 regional traffic LUQ GPO RSA Cordoba ), Bariloche (BRC), El Palomar (EPA), Salta (SLA), Tucuman (TUC) and Rosario (ROS) AA2000 airport network handles 90% of the airport traffic in the country Chile MDQ 248 189 148 144 144 143 105 95 BRC VDM PMY – EQS Note: Analysis excludes airstrips, Aeroclubs and small aerodromes. CRD RGL RGA 48 Source: ANAC, Aeropuertos Argentina 2000, ALG analysis 3 onal AA2000 Gateway AA2000 International AA2000 Domestic Non AA2000 1,079 11,518 11,513 735 2,719 699 3,418 1,780 507 2,287 1,837 1,609 1,545– EZE is the main inte 1,406gateway to the countr 949 900 734– AEP is the main dome 663Aerolineas Argentinas, 386 376– There are also 6 other 345 336international airports: 314(COR), Mendoza (MDZ 275 79 75 61 59AA2000 Domestic 57 54AA2000 International 53Non AA2000 Domestic 39Non AA2000 Internati 37 10 |
 |
Executive summary Two commercial airports are inhabitants) after El Palomar Buenos Aires Multi-airport system serving Buenos Aires metropolitan area (15 M (EPA) closure: Aeroparque (AEP) and Ezeiza (EZE) International gateway to accommodate long term growth - Ezeiza (EZE): Handled 12.7 Mpax in 2019. Argentina’s main international gateway, being the main international base of Aerolineas Argentinas. EZE should be able to offer Dom-Int connections to consolidate its gateway positioning (following the example of Guarulhos (GRU) in Sao Paulo). 30 km 20 km Premium domestic airport in the city center 10 km - Aeroparque (AEP): Handled 12.3 Mpax in 2019. Located in the city center, serves domestic and regional traffic. Before COVID outbreak was close to saturation. The airport aims to become a premium airport as Congonhas (CGH) in Sao Paulo, with focus on short haul routes and business travelers. Low-cost base as a complement to the system - El Palomar (EPA): handled 1.7 Mpax in 2019, was a base for LCC. Traffic volumes closed. EPA could become operational achieves certain critical volumes, as it 4 Buenos Aires airport system has a combined capacity of 50 Mpax with AEP and EZE. Current demand is 25 Mpax (pre COVID) so Buenos Aires can double demand with two commercial airports (AEP & EZE). For traffic volumes over 50 Mpax (very long term vision), two options arise: constructing a 3rd RWY in EZE or reopening EPA do not justify its existence and it was again in the long term, when demand happened with Viracopos (VCP) in SP. San Fernando Airport (FDA) – General aviation – Operator: |
 |
Executive summary In 2010-2019 decade, domestic traffic grew thanks to an increasing propensity to fly, a metrics that is Factors of air traffic growth in directly Argentina related to the expansion of the middle class Domestic propensity to fly 2019 (DOM trips per capita) vs. GDP per capita (USD 2019) 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 1 Economic development x1,75-2 The expansion of middle class with a higher propensity to fly 2 na 2019 Argentina 201 Growing tourist demand and internationalization 3 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 – Argentina GDP and GDP per capita have been flat during the last decade, as the country suffered important economic crises. The country’s economy growth has been the lowest compared to its neighboring countries. However, air transport sector was growing even the stagnation of the economy, showing resilience and clear latent demand for air transport. The domestic traffic grew thanks to an increasing propensity to fly. This ratio of trips per capita represents the population that has flown domestically in one year and its increase is associated to the expansion of the middle class, as it happened in Argentina. Chile has the highest propensity to fly due to its orography and its high purchasing power. Argentina, presenting similar orographic and socioeconomic conditions, has the potential to grow between 75-100%. Progressive air transport liberalization 4 – Development of low-cost business model 5 – 5 Intrinsic to the aviation industry Extrinsic to the aviation industry Chile Co lombia Brazil Mexico Peru Argenti 0 |
 |
Executive summary Argentina handled >14 M int’l passengers by air before COVID-19 outbreak, this traffic segment was fueled Factors of air traffic growth in Argentina by the development of outbound traffic Evolution of inbound/outbound traffic (Millions) Outbound Inbound 14.9 14.6 14.2 1 Economic development The expansion of middle class with a higher propensity to fly 2 3.2 Growing tourist demand and internationalization 3 2012 2013 2014 2015 2016 2017 2018 2019 2020 – Argentina international traffic was growing at 3.5% CAGR during the last decade (2010-2019), mainly fueled by outbound traffic (CAGR 4.8%). Outbound: Argentinians traveling abroad Progressive air transport liberalization 4 – International propensity to fly of Argentinians (outbound) has grown significantly mainly due to the expansion of the middle class. Outbound reached 63% of total int’l traffic and there is further potential to develop this segment compared to the country’s socioeconomic position. – Inbound: international travelers visiting Argentina – Inbound segment grew organically during the last decade (1.6% CAGR) and represented 37% of total international traffic in 2019. – The country has an enormous touristic potential and it is expected that inbound traffic can continue to grow organically. Development of low-cost business model 5 6 Intrinsic to the aviation industry Extrinsic to the aviation industry 12.7 11.111.111.211.5 68% 67% 58%59%58%64% 42%41%42%36%33%32% 66% 34% 63% 37% 63% 37% |
 |
Executive summary Liberal policies (e.g. deregulation of domestic fares) attracted new LCCs, travel costs decreased and traffic was Factors of air traffic growth in Argentina stimulated (but market is not mature yet) 1 Economic development The expansion of middle class with a higher propensity to fly 2 Growing tourist demand and internationalization 3 Progressive air transport liberalization 4 Development of low-cost business model 5 7 Intrinsic to the aviation industry Extrinsic to the aviation industry Kirschnerism ‘19-’23 Macrinism ‘15-’19 Kirschnerism ‘03-’15 – Kirschnerism was a political movement founded in 2003 which continued during 3 mandates – During this period, the government focused on protectionist measures, maintaining the market closed for new entrants and sheltering Aerolineas Argentinas from international and domestic competition – Re-nationalization of Aerolineas Argentinas and Austral (2008) through the purchase of the companies' shares from Interinvest, controlled by the Spanish group Marsans Macri’s “Aviation Revolution” – Deregulation of domestic fares (2018): The new resolution authorized airlines to sell tickets below the minimum price, which was into place since 2002. The former regulation limited competition, preventing new entrants of underprice state airlines – International airlines were allowed to serve Argentina’s secondary markets – LATAM Airlines Argentina was given freedom to expand – Conversion of Buenos Aires El Palomar Airport, former military base, to handle commercial aviation as an LCC base – Expansion and upgrading of airports – Covid-19 – The impact of the pandemic was aggravated due to the economic crisis and devaluation of the currency – Argentina’s prolonged closure, strong restrictions and lack of predictability resulted in the exit of many operators: Air New Zealand, Emirates, Qatar airways, LATAM Argentina – Additional 35% tax on international air tickets was announced, which could further reduce Argentina’s attractiveness for airlines |
 |
Executive summary COVID-19 crisis has caused the closure of various Argentinian airlines; only three are operational in the domestic Current situation of the main airlines in Argentina market in Sep-21 78 24.7% .4% 14 ! 14.8% 22% 4 0.1% ! 3.4% 2 0.1% 0.5% ! 4 0.4% 5.4% N/A N/A ! 7.7% ! Regional Narrow Body Wide Body 4 1.5% 3.7% Source: OAG, CAPA 8 – Low-Cost operator focused on low-density, high-potential domestic routes, operating with A320-200 – Formerly based at El Palomar Airport, expected to relocate its operations to Ezeiza or Aeroparque – Low-Cost operator focused on domestic routes – Norwegian Argentina was acquired by JetSmart (its aircraft, infrastructure, personnel, routes and slots) – Low-Cost operator focused on domestic routes with low traffic density operating with B737-800 – Formerly based at El Palomar Airport, expected to relocate its operations to Aeroparque – All 2 aircraft are currently inactive, no clear plans to re-start operation – Focused on domestic short-range routes – Based at Aeroparque Airport! – All 4 aircraft are currently inactive, no clear plans to re-start operation – Focused on domestic routes with high traffic density – Based at Aeroparque Airport operated with MD-83! – On Jun-20 LATAM group announced the closure of LATAM Airlines Argentina, diverting its aircraft to other subsidiaries of LATAM Airlines Group – FSC carrier focused on the international market! – Currently 33 aircraft are inactive; although 12 narrow body aircraft have been ordered for 2023-2025 – Main domestic & regional connectivity at Aeroparque; domestic flights at Ezeiza to feed long-haul flights Airline highlights and key aspects Fleet Sep-2021 (in service + inactive aircrafts) Market share (%) AR DOM 2019 Market share (%) AR INT 2019 |
 |
Executive summary Domestic supply in Argentina has not recovered due to internal air travel restrictions, but most of international routes are likely to re-start in late 2021 2019 Air travel traffic levels recovery trend Outlook for COVID recovery in Argentina Tourism for neighboring countries is expected to re-open in October 2021 The presence of LCC in domestic market and capacity at airports can leverage domestic traffic (e.g. faster recovery observed in AEP) - Globally, and according to ACI, domestic traffic is expected to recover in 2023 or faster, while international traffic will return to 2019 levels only in 2024 International travels will take longer to recovery due to the complexity of governmental regulations, obligatory quarantine periods and uncertainty on policy changes Business trips will recover in a slower pace than leisure trips, as teleworking and video Cease of operations of LATAM Argentina makes supply recovery harder than in other countries where it keeps local operations (Brazil, Chile, Peru…) - - conferencing have become more popular (Zoom, Google Meet and Microsoft Teams cases) after the pandemic hit the world Restrictions on supply (“cupos”) enforced by Argentinian Government. Aerolineas Argentinas is setting the pace of recovery - Business travelers will favor domestic trips over international ones due to smaller costs, better ticket availability, safety (regarding international travel restrictions) and less risks Source: McKinsey, ACI The global pattern (Domestic faster recovery than Int’l) might not be the case in Argentina because: (1) Most of int’l travel is related to leisure and (2) there were several airlines exiting the domestic market 9 FasterSlower recoveryrecovery DomesticInternationalDomesticInternational leisureleisurebusinessbusiness tripstripstripstrips |
 |
Executive summary Air transport and airport network highlights – DOMESTIC MARKET: Domestic traffic growth was fueled by Argentina’s large latent demand and the expansion of the middle class, resulting in an increased propensity to fly that is still smaller than in comparable countries, which reflects growth potential in the domestic market. Argentina is one of the largest aviation market and economies in Latin America, with a strong growth of the air transport market despite economic stagnation during the last decade. – INTERNATIONAL MARKET: ~63% of Argentina’s international traffic is outbound (9.1 Mpax). International propensity to fly of Argentinians (outbound) has grown significantly mainly due to the expansion of the middle class and this segment has still room for growth according to the country’s socioeconomic position. Inbound traffic is the other ~37% of international traffic. The country has an enormous touristic potential and it is expected that inbound traffic can continue to grow organically. – LIBERALIZATION AND PLAYERS: New entrants (LCC) entered the market during the last decade, mainly thanks to the market opening during Macri’s mandate with liberal policies (e.g. deregulation of domestic fares). The Argentinian market needs that the government supports liberalization measures as the liberal policies were game changers in other LatAm countries, contributing to enhance competition, decrease travel costs and stimulate demand. – COVID OUTBREAK AND EXPECTED RECOVERY: Air transport market in Argentina was severely hit by the COVID outbreak. Out of the 7 airlines operating in the domestic market before COVID-19, only three are still operating: Aerolíneas Argentinas, Flybondi and JetSMART. – Aerolineas Argentinas continues as the leader of the market. The airline is being protected by the Government and the airline is setting the pace of recovery in the country. Flybondi and JetSMART have moved from El Palomar to premium, central Aeroparque. Despite Aeroparque being congested pre-COVID, it has now available slots. Current offering distribution shows that Aeroparque is having a faster recovery than Ezeiza. – Domestic traffic may take more time to recover than international traffic given that (1) most of domestic traffic is related to business whereas international is more leisure-related, (2) there were several airlines exiting the market and (3) other limiting factors such as the establishment of offering restrictions (cupos) to some airlines. 10 |
 |
Executive summary The forecasting methodology used captures COVID-19 impact in the short term and reflects Methodology the market dynamics in the long term DOMESTIC MACRO VISION – An econometric model reflects the country’s latent demand and growth potential according to its socioeconomic position. – A linear regression is the used with population as the main descriptive variable, as the historical analysis shows even the economy stagnates domestic traffic increases thanks to the development of the middle class with an increasing propensity to fly. INTERNATIONAL MACRO VISION – An econometric model reflects the country potential for international traffic, taking into account the dynamics of both outbound and inbound segments. A linear regression is the used with population as the main descriptive variable for outbound traffic and with the GDP of the countries originating traffic as the main driver of inbound traffic. – DOMESTIC & INTERNATIONAL TRAFFIC RECOVERY – Short term traffic is estimated based on a route by route analysis. For each route: (1) the reopening of each route is estimated based on news and airline analysis plus analysis of government policies and travel restrictions to/from main markets (Brazil, Uruguay, Europe, US, etc.), (2) the recovery pace profile is estimated based on the route profile (business route slower recovery pace than leisure routes), (3) the recovery time assumed proportional to economic recovery, corresponding to the return of passengers' confidence, (4) the final recovery volume assumes the loss of part of the business travelers. Industry reports reveal part of the business traffic will not be recovered due to new paradigms in companies (e.g. videoconference). 11 Short term Long term |
 |
Executive summary AA2000 passenger traffic: 10.0% CAGR for the concession period left (‘21-’38), ending the period with AA2000 Traffic forecast (Mpax) 57 Mpax Total Total Total 57.0 56.0 54.9 2019 20202021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 20342035 2036 2037 2038 General aviation is not included Source: ALG analysis 12 Historical Forecast 53.8 51.6 49.2 46.7 44.218.7 18.2 17.5 16.9 16.2 15.5 13.214.7 12.8 24.911.3 6.9 36.537.2 29.730.631.532.3 9.624.1 1.921.2 18.0 9.5 6.2 19.0 52.7 50.4 48.0 45.5 42.918.4 17.2 36.916.5 15.8 32.615.1 33.234.034.935.7 27.811.426.827.828.7 3.3 41.041.517.8 38.0 CAGR ‘21-‘24‘24-'38‘21-’38 Dom 36.5%3.3% 8.5% Int 90.0%2.9% 14.7% Total 48.1%3.2% 10.0% |
 |
Executive summary AA2000 ATMs: 6.1% CAGR for the concession period (‘21-’38), with potential of 13.1% CAGR increase AA2000 Traffic forecast (kATMs) in international traffic Total Total Total 452 449 445 441 437 432 427 425 422 416 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 General aviation is included Source: ALG analysis 13 Historical Forecast 398404411 38439166.266.2 96.135766.266.266.2 66.2101.7102.4103.1 92.126566.294.395.696.8 85.7 66.2 164 269273276 67.3205226232 28.4154 85 66.2 66.266.266.266.2 32366.266.266.2 103.7 91.693.0 75.1 15045.1 279 181 54 66.2 97.999.0100.0100.9 23766.2237243248252257261265 104.2 282 CAGR ‘21-‘24‘24-'38‘21-’38 Dom 34.1%2.3% 7.3% Int 88.3%1.4% 13.1% Other 0.0%0.0% 0.0% Total 29.6%1.7% 6.1% |
 |
Executive summary Traffic forecast highlights – AA2000 airport network is expected to achieve ~57 Mpax by the end of the concession period (CAGR 10.0% 2021-2038) with ~19 Mpax being international. – Domestic traffic in Argentina is expected to achieve pre-COVID levels in 2026. The market suffered from severe restrictions and Argentina GDP is expected to recover in a slower pace than some neighboring countries. Also, there were several airlines exiting the market (LATAM, Andes, Avianca), so a late recovery is expected, up to 5 years. – International traffic is expected be recovered in 2025, showing high growth rates as traffic bans are progressively removed. It is foreseen to recover faster than domestic traffic given that most of int’l traffic is related to leisure and VFR tourism rather than business-related, which would take longer. – After the recovery, the market is expected to grow at ~3% annually up to 2038, an organic growth based on a macroeconomic analysis, with domestic growing slightly faster than int’l after its late recovery. – AA2000 network is expected to handle ~452.000 operations in its 34 airports by the end of the period (CAGR 6.1% 2021-2038) based on the expected up gauging of the aircraft fleet size used and an organic increase of load factors. 14 |
 |
THANK YOU SÃO PAULO Av. Guido Caloi 1.002 Torre III, 3º andar 05802-140, São Paulo, Brasil T +55 11 5186 3100 |