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Tue September 20, 2011
In Need Of Cash, Spain Auctions Airports, Lottery
Originally published on Tue September 20, 2011 11:50 am
DAVID GREENE, Host:
As Spain struggles to cope with its national debt, the socialist government there is turning to some extreme measures. It's auctioning off state industries, like airports and the national lottery. The government is hoping to generate enough cash to avoid asking the E.U. and International Monetary Fund for a bailout. But as Lauren Frayer reports from Madrid, selling off state assets is not the most straightforward solution.
LAUREN FRAYER: Madrid's Barajas airport is one of the biggest hubs in Europe and the continent's gateway to Latin America. Terminal 4 is an architecture icon, up there with the Guggenheim Bilbao or Gaudi's funky houses as symbols of modern Spain. But this fall, it's being sold off, part of a government push to privatize the last remaining state assets here.
LUIS CASTALLANOS: Many symbols of Spain are now in the private hands. But the economy, nowadays, the more important thing. We are now in the economy hands.
FRAYER: Luis Castallanos is a chauffeur who's ferried tourists back and forth to Madrid's airport for more than 15 years. He thinks a private operator might be more efficient.
CASTALLANOS: It's a monopoly, you know? Because it's ruled by the government. I think if there are more companies, the prices should be going down, and I think it would be better for us.
FRAYER: But it's a desire for cash, rather than efficiency, that's prompted Spain to sell off its two biggest airports, in Madrid and Barcelona, along with another Spanish icon, the lottery, the biggest in the world. Children sing the winning numbers at the Christmas drawing, El Gordo.
GROUP: (Singing in foreign language)
FRAYER: La Loteria has an unofficial triple-A bond rating, a safer investment than Spain's treasury bonds. But Fernando Fernandez, an economist at Madrid's IE Business School, says regional governments will retain a minority percentage of shares in the airports, making them a riskier investment.
FERNANDO FERNANDEZ: That to me is very worrisome, very dangerous, because it will mean, in particular the operator in Barcelona, probably in Madrid too, will be subject to a lot of political wrangling. And that is a big question mark from the point of view of a private investor. And the rest of the airports, well, there are very few that are profitable.
FRAYER: Still, seven private companies are bidding for 20-year contracts. The government hopes to raise more than $7 billion from the deal.
The airports and lottery are basically all the Spanish government has left to sell. Socialist governments began privatizing state assets in the 1980s as a reaction to the monopolies that existed under the military dictatorship of Francisco Franco.
Spaniards also lost patience with monopolies after last year's air traffic controllers' strike, which stranded thousands of travelers on a holiday weekend. Fernandez says the air traffic controllers were able to hold Spaniards hostage.
FERNANDEZ: Because they were given an extraordinary amount of political power by the government. Any private-owned company that would have operated an airport, could not have afforded those labor conditions.
(SOUNDBITE OF AIRPLANES)
FRAYER: Back at the airport, the driver, Luis Castallanos, shudders when I ask him about last year's strike. He says he thinks this building's architectural clout distracts from mismanagement inside.
CASTALLANOS: In the skyline, you look on a really good building. It looks amazing. It looks huge. For the normal people, it's really good, but sometimes it's a nightmare.
FRAYER: Bidding is underway for the two airports, and the government plans to grant operating licenses by the end of November.
For NPR News, I'm Lauren Frayer in Madrid.
(SOUNDBITE OF MUSIC)
GREENE: This is NPR News. Transcript provided by NPR, Copyright National Public Radio.