Dubai Aerospace Enterprise reached an agreement yesterday to take a controlling interest in Auckland International Airport Ltd.

DAE's stake, which still must be approved by AIAL shareholders, is expected to be at least 51% and as high as 60% and is valued at as much as NZ$2.6 billion ($2.07 billion). Under terms of the agreement, other bidders will be allowed to submit rival proposals for a controlling stake that AIAL's board also can consider.

The proposed deal with DAE is likely to add to the frosty relationship between AIAL and airlines, which are furious about a yearly 2.5% increase in landing fees for the next five years announced earlier this month. AIAL said the higher fees are justified because it has doubled the value of the airport's land by using some of the property for other industrial purposes.

At the recent IATA AGM in Vancouver, IATA CEO Giovanni Bisignani called Auckland, Sydney, Hong Kong and Seoul airports "happy monopolies" with profit margins above 40%. In AIAL's case, the profit margin was just under 50% for the year ended June 30, 2006.



AIAL shareholders will be asked to vote on the DAE proposal at a November meeting and the AIAL board is not restricted from considering competing proposals from other parties. Industry watchers expect Australia's Macquarie Airports, which controls or has significant interests in airports in Sydney, Brussels, Copenhagen, Birmingham and Bristol, to field a bid.

Macquarie recently reached agreement to sell its 44.7% stake in Aeroporti di Roma to the Gemina investment firm for €1.24 billion ($1.66 billion), nearly triple the €480 million it paid in March 2003. That transaction is subject to regulatory approval.