Negotiations on the state's renationalisation of Budapest Airport have stalled, possibly due to a dispute between the Hungarian and French consortium's members over the future operation of the airport, 444.hu reported on December 13.

The inclusion of the Qatar sovereign wealth fund, either as a financial or strategic investor, in the consortium could further complicate the negotiations, local media added.

Despite the budget deficit looking set to overshoot the revised 5.2% target, the Hungarian government remains steadfast in its plan to buy back the strategic asset worth €4bn-5bn.  

Viktor Orban's government tried to take ownership of Liszt Ferenc International Airport before the pandemic, in a bid to boost the domestic stake in sectors deemed strategic, including energy, banking, telecom, or the media. A consortium of businesses close to the government submitted a non-binding offer in 2021, but the energy crisis hit and the acquisition plans were temporarily taken off the agenda.

After the 2022 elections, the new government relaunched negotiations and in September, the state submitted a formal offer as part of a consortium with France's Vinci Airports, one of the largest airport operators with 65 transport hubs in 13 countries.

Earlier reports suggested that Hungary would seek funding from Gulf states such as Qatar, but sources told VSquare that pressure from Western governments has forced Budapest to abandon that plan.

The French company's involvement may not be surprising, as economic cooperation between Hungary and France has intensified in other areas. Hungary signed an agreement recently with French nuclear firm Framatome to take part in the expansion of the Paks nuclear power plant to sell turbines, after the German government blocked Siemens' participation in the project. Hungarian media have also cited Orbán as saying at a closed-door meeting that Budapest could potentially purchase French nuclear fuel in the future. The energy ministry later reassured Moscow that it would continue to rely on Russian fuel.

Under the terms of the consortium with Vinci,  the "friendly co-investor" would take 49% of shares, but also management rights, which, according to 444.hu sources, is causing tensions with Budapest.

A consultant familiar with the aviation industry told 444.hu that Vinci as a strategic investor will put together a professional management team, but the government reportedly wants to ensure that "the right Hungarian business circles" benefit from state ownership. This could lead to a further delay in the acquisition process, according to the report.

Qatar could also still get involved in the project, according to the latest comments by Economic Development Minister Marton Nagy, who has recently moved up the government's economic policy ladder one notch, taking over the leadership of the Economic Cabinet under Orbán. Nagy told Bloomberg that Hungary is in talks with the Qatar sovereign wealth fund to join the consortium, either as a financial or strategic investor.

Signing of the agreement is unlikely to be completed this year because an agreement is needed with three owners and 10 creditors. Also, parties have not agreed on the price. On that issue, Nagy said it is "a very difficult negotiation process and the government wants to negotiate a market-based price".

The state, as a majority owner, will push for the construction of a third terminal and expand capacity for both passengers and cargo, he said.

In related news, the European Commission, under the simplified merger control procedure, cleared the acquisition of the airport operator. It concluded that the proposed concentration does not raise competition concerns, as the parties are not present in the same market or in vertically related markets.

Budapest Airport was the fastest-growing hub in the region before the pandemic, posting double-digit growth in traffic that reached a record 16.2mn in 2019. Last year, it handled 12.7mn travellers, or 75% of pre-pandemic levels.

Budapest is majority-owned by a consortium of Germany's Avialliance (55.4%), Malton, a subsidiary of Singapore's state investment fund GIC (23.33%), and Canadian pension fund Caisse de dépôt et placement du Québec (21.23%). After two years of posting €198mn in losses in 2020 and 2021 combined, it returned to profit in 2022. The company booked net profit of €76.6mn as revenue came to €278mn and Capex reached €47mn. Budapest Airport said it would pay no dividend to shareholders on last year's profit.