A consortium involving Aer Rianta has been asked to submit a binding bid to develop and operate two airports in Cyprus.The Hermes group, backed by French and Canadian interests, is one of five on a shortlist compiled by the island's communications and works ministry.
But while the Cypriot government wants the strategic partner it chooses to invest up to €347 million (£273 million) in the airports, Aer Rianta is unlikely to pay equity for its stake.
The State company's practice in such international diversifications is to provide developmental and management expertise to complement financial investors.
In addition, curbs on the company's capital expansion plans set by the aviation regulator, Mr Bill Prasifka, suggest it will not have excess capital for a large financial bid.
Aer Rianta has significant operations outside the State. The company's international division owns 48.25 per cent of Birmingham Airport; half of Dusseldorf Airport; and 7.2 per cent of the airport in Hamburg. It also operates duty-free shops in 20 airports in states such as Russia, Canada and Qatar.
While such operations contributed to a post-tax profit of €14.2 million last year in the international division, Aer Rianta has shied away from further expansion. It decided against bidding for Sydney Airport last year and withdrew from a competition in 2000 to run Turin Airport in northern Italy.
Aer Rianta's partners in Hermes include Vancouver Airport Services and Nice Chamber of Commerce, in addition to a number of Cypriot firms.
Competing bids have been requested from four other groups: the Alterra Consortium, backed by the airport operators in Singapore and Manchester; the Cyprus Gateway Airports group, backed by Austrian interests; Project Pegasus; and Fraport AG, which operates Frankfurt Airport.
A decision is expected in September after the binding bids are received. These were expected in December but the process was delayed. The successful bidder will be awarded a build-and-operate contract for the airports at Larnaca and Paphos for 20 years.
