Key Facts
- ✓ The Russian government failed to sell Domodedovo Airport in an auction with a starting price of over 130 billion rubles.
- ✓ Industry experts estimate the fair market value of Domodedovo Airport to be between 25 and 45 billion rubles.
- ✓ Sheremetyevo Airport has expressed readiness to participate in a new auction if the starting price is reduced.
- ✓ Analysts believe that increasing passenger traffic and achieving profitability for Domodedovo is unlikely in the near future.
- ✓ The failed sale highlights the challenges the state faces in privatizing major infrastructure assets at current valuations.
Auction Ends in Silence
The Russian government's first major attempt to privatize one of its largest aviation assets has ended without a single bidder. An auction for the sale of Domodedovo Airport, with a starting price exceeding 130 billion rubles, concluded with no applications submitted.
The failed sale highlights a significant disconnect between state valuation and market reality. Industry sources suggest the ambitious price tag was simply too high for potential investors, casting doubt on the future of the privatization plan.
The Failed Bid
The state's strategy to sell the major Moscow airport was predicated on a high valuation, but the market response was nonexistent. According to industry insiders, the auction failed primarily due to the overestimated price. The lack of interest suggests that investors are wary of the financial health and future prospects of the asset at that cost.
The silence from the market speaks volumes about the current valuation. No serious contenders were willing to commit to the initial asking price, forcing the state to reconsider its approach immediately.
- Starting price exceeded 130 billion rubles
- Zero applications were submitted
- Price cited as the main barrier to entry
"In the industry, they believe that an increase in passenger turnover and the exit of Domodedovo to profitability in the foreseeable future is almost excluded."
— Industry Insiders
Market Reality Check
Experts within the aviation sector believe the state's valuation does not align with the airport's actual financial standing. There is a prevailing sentiment that Domodedovo faces significant hurdles in increasing passenger traffic and achieving profitability in the near future. These bleak forecasts heavily influence the asset's true worth.
Consequently, industry estimates place the fair value of the airport significantly lower than the state's asking price. Valuations range from 25 to 45 billion rubles, a figure that reflects the challenges the airport faces in the current economic climate.
In the industry, they believe that an increase in passenger turnover and the exit of Domodedovo to profitability in the foreseeable future is almost excluded.
Sheremetyevo Waits
While the Domodedovo auction stalled, another major player is preparing to step up. Sheremetyevo Airport has indicated its willingness to enter the bidding process, but only if the government adjusts its expectations. The airport is ready to participate in a repeat auction, provided the starting price is reduced to a more realistic level.
This readiness signals a potential shift in the privatization landscape. If the state lowers the barrier to entry, Sheremetyevo could become a key participant, potentially reshaping the competitive dynamics of the Moscow aviation market.
- Sheremetyevo is ready to bid
- Participation is conditional on a price reduction
- A new auction is anticipated with lower stakes
Looking Ahead
The failed auction forces the government to rethink its strategy for selling Domodedovo. A significant price reduction appears inevitable if the state wishes to attract serious interest. The coming weeks will likely determine whether a new, lower starting price can be established.
The outcome of this privatization attempt will serve as a barometer for the health of the Russian aviation sector. Investors are clearly looking for value and realistic growth projections rather than inflated asset prices.
- Government must lower the starting price
- New auction expected to launch soon
- Market will test the true value of aviation assets
