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The Brazilian National Civil Aviation Agency (ANAC) has launched the administrative proceeding for the cancellation of the concession for Viracopos airport in the state of São Paulo. ANAC has filed an administrative process to investigate breaches of obligations under the concession agreement by the concessionaire Aeroportos Brasil Viracopos S.A., operator of the airport.

The establishment of the administrative process does not affect airport operations, and the concessionaire remains responsible for maintaining the quality levels of the services provided to passengers, as stipulated in the Concession Agreement and monitored by ANAC.

Among the defaults that motivated the initiation of the cancellation process, it is worth mentioning the non-recomposition of the guarantee of contractual execution by the concessionaire, generating a deficit of more than BRL 160 million (US$160 million). The remaining administrative proceedings related to the Viracopos concession will be judge separately.

As we reported in July 31, shareholders of Aeroportos Brasil Viracopos S.A,comprising Triunfo (45%), UTC Participações (45%) and Egis (10%), decided to return the concession to the government to seek other bidders in a new auction citing unexpectedly low passenger traffic.

Passenger traffic is only 52 percent of projections. The airport was projected to serve 17.9 million passengers in 2016, but only had 9.3 million travelers. ABV will continue to operate the airport until the new tender is complete.