Cargo handling is helping company to go through a critical period
09/13/2022
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Patrick Fehring and Leandro Lopes — Foto: Leo Pinheiro/Valor
Just like the airline industry, RioGaleão, the concessionaire that runs Rio de Janeiro’s international airport, also went through turbulent times in the last two years, especially with the sharp drop in the number of flights at the height of the pandemic. The effects of the health crisis led the company controlled by Singaporean owners to announce in February that it would return the airport to the federal government. This is a long process likely to be concluded in 2023. In the meantime, the concessionaire continues to operate the airport terminal, one of the main ones in the country. The pandemic, however, allowed RioGaleão a turning point in the cargo business, helping the company to get through this most critical period.
In July, RioGaleão signed a contract with United Airlines for use by the American company of a new aircraft maintenance center. The agreement will allow United to operate, for 17 years, the hangar previously occupied in Galeão by the maintenance and engineering arm of TAP Air Portugal.
The Portuguese airline’s subsidiary is leaving a space of more than 60,000 square meters, which will receive investments of R$70 million by United in adaptations and modernization. The new center will be responsible for the maintenance of all the U.S. airline’s aircraft, most of which were made by Boeing and Airbus. United, which has a daily route between Rio and Houston, is expected to take over the activities in Galeão in the second half of the year.
“United has now a 17-year bond with Rio de Janeiro,” said Alexandre Monteiro, CEO of RioGaleão. United told Valor that the partnership includes the lease of a hangar for the United Tech Ops team, as the airline’s maintenance, repair and overhaul division is called. According to the U.S. company, the maintenance team at Galeão will be able to make better use of ground time to perform maintenance services on the company’s aircraft.
When it comes to the airport, the most common image is of people arriving and departing, but RioGaleão has made the cargo terminal a key business for the company’s finances and for the state of Rio. Considered one of the country’s main logistics hubs, Galeão handles 80% of all domestic air cargo that arrives in Rio through the airport. The terminal also receives 25% of the cargo imported by the state.
RioGaleão is controlled by Singapore’s Changi Airports, which holds a 51% stake in the concessionaire, and Infraero, with the remaining 49%. Changi entered the deal together with Odebrecht, as minority shareholders, by purchasing the airport for R$19 billion, a premium of almost 300% in relation to the initial price in an auction held in November 2013. Changi took over Galeão in 2017, when Odebrecht, entangled in the Car Wash scandal, left the business. In February, RioGaleão asked the federal government to launch a new auction for the airport.
“Galeão has a strategic position in Rio de Janeiro,” Mr. Monteiro said, highlighting the airport’s location, close to the country’s main highways: Via Dutra and BR-101. In the first half of this year, the executive said, the terminal handled $4.3 billion of imported cargo, and if this pace is maintained, the company will close the year with record handling since the beginning of the concession, in 2014. The company closed last year with $8.5 billion in imported cargo handled at the terminal, which competes for the market with Viracopos, in Campinas, and Cumbica, in Guarulhos, both in the São Paulo state.
The company estimates an average reduction of 63% in the time to release imported cargo and has accounted for $60 billion in cargo handling since RioGaleão took over the operations, said Leandro Lopes, RioGaleão’s commercial and cargo business development manager. Patrick Fehring, the company’s head of airline business, added that imported cargo handling accounts for 55% of the company’s revenues, up from 21% in 2019, before the pandemic, and 43% in 2021.
Next year, RioGaleão will start operating a new 30,000-square-meter shed, the result of a partnership with the real estate investment company Hire Capital.
The cargo terminal will anchor United’s activities, since parts and equipment for the aircraft will pass through there. The unit has in the air transport industry one of its main service activities, together with the oil and gas, pharmaceutical and chemical sectors – among other activities, mostly with higher added value volumes. This category also includes equipment, musical instruments and materials for Rock in Rio.
Pharmaceutical and chemical products, in fact, meant a high volume of cargo handled. Several batches of Active Pharmaceutical Ingredient (API), a necessary input for the production of the Covid-19 vaccine, came through the terminal, taking advantage of the available structure, with thermal chambers with temperatures between 2 and 8 degrees, Mr. Lopes said. The terminal also started to receive products destined for agribusiness when activities resumed.
The demand for flights and, consequently, passenger traffic in the airports is still an unknown factor for the segment, not only for the company. At the same time, RioGaleão is losing ground as most domestic flights depart or are destined for the neighboring airport Santos Dumont. As Galeão receives international flights and hosts fewer domestic routes, the hub concept is compromised, making the airport less profitable.
*By Fabio Couto — Rio de Janeiro
Source: Valor International