Could Investor Mohamed Ali Rashed Alabbar Take Over Brac Airport?

By 7 November 2022
Could Investor Mohamed Ali Rashed Alabbar Take Over Brac Airport?
Miranda Cikotic/PIXSELL

November the 7th, 2022 - With news of Arab investors more or less dominating the local press of late (see the Fortenova saga), could another investor from that part of the world end up taking over Brac Airport?

As Poslovni Dnevnik/Marija Brnic writes, before going into any details, it's important to say that the state intends to withdraw from the ownership structure of Brac Airport, located (as the name should suggest) on a certain Central Dalmatian island across from the City of Split. The first step in starting the procedure for the sale of the shares the government has within that company is contracting work with consultants to assess the company's value, and then those shares that will be offered through a public tender.

DO Advising and Agram Brokers were hired as appraisers, and judging by past practice, it can be expected that CERP will announce a tender for the sale sales in early 2023. Although, as a rule, such procedures are only initiated when investors express interest and submit letters of intent, unofficially from CERP it has been circulating that the Brac Airport government shares sale is proceeding as part of the plan to reduce the state portfolio, and allegedly without the need for prior inquiries from investors.

However, as has been heard from several interlocutors, the majority owner of the company - Sunce hotels, which holds 50.2% of the shares, is interested in the complete takeover of Brac Airport. CERP, on the other hand, has 33.8% of the shares available for sale, and according to data from the ownership structure of Brac Airport, the state has a total of 38.5%, while smaller shares are held by Svpetrvs hotels, HT, the municipality of Puscica, Sardina and some other small shareholders.

Sunce hotels was taken over a year and a half ago by an Arab investor from the United Arab Emirates - Mohamed Ali Rashed Alabbar and his company Eagle Hills Real Estate. Several people in the know claim that until now he has been focused exclusively on the hotel business, but he is allegedly interested in the complete takeover of Brac Airport as well, which is extremely important for Brac's tourism.

However, significant investments are needed, and projects have been being discussed and prepared for years. Admittedly, other investors related to the tourism sector on that island, which were involved in the relatively recently opened (and controversial) Grand Hotel View, could also be interested, and more greenfield investments are underway.

New airport director Petra Bonacic-Sargo also announced the investment in the annual financial report for last year, but when asked about the plans, she didn't go into details.

"Even before the coronavirus pandemic, we applied for two infrastructure projects in order to extend the track and reconstruct the passenger buildings with the help of EU funds. We haven't given up on them, we're still working on them and we hope for a positive outcome,'' said the director of Brac Airport.

At the time when the projects were being prepared, the head of the company from Brac was Tonci Peovic, and the plan was to extend the runway from 1,760 to 2,400 metres and widen it from 30 to 45 in order to enable the landing of larger planes. Investments were also prepared for upgrading the terminal building, and the airport was then going to be made to be able to receive three large aircraft at the same time.

A total investment of around 21 million euros was foreseen, however, in the meantime, certain changes have taken place and now, according Peovic, there is no reason for such a large investment and expansions for Brac Airport. Originally, the project was prepared based on cooperation with the Austrian TUI and a fleet whose planes had 175 seats, but that cooperation no longer exists, and Croatia Airlines has been renewing its fleet and replacing the existing planes with the Airbus 220, and the tendency, he adds, is to switch from turbo-propellers on jets and airplanes that carry fewer passengers.

According to his assessment, and he left the company before the summer, it is enough to extend the runway to 2100 to 2200 metres and keep the width as it is now. Considering the characteristics of the terrain, this will greatly reduce the cost of the investment, estimated to stand at a whopping 6-8 million euros, and there remains the possibility that part of the money for reconstruction and modernisation will also be provided through EU funds.

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