Uruguay
Martín Eurnekian, President, Puerta del Sur
Martín Eurnekian (31) holds an engineering degree in information technology. His studies
at the University of Belgrano together with his 11 years of experience in the airports
business, led him to his current position as president of Puerta del Sur S.A., owned
by Corporación América.
The recent inauguration of Carrasco International Airport at the end of 2009 has helped
realise the growth ambitions of Mr. Eurnekian’s business vision, based on achieving
increased regional interconnection. His company is generating a platform for the next 30
years, so that more tourists, more passengers, flights and aircraft can be welcomed while
ensuring improved standards of quality, comfort, safety and technology.
With Montevideo’s new Terminal, Corporación América has not just added another airport to
the over 40 it operates around the world. It has also placed the company at the forefront of
airport design, as the investment of US$165 million has provided the most modern
technology, safety, design and comfort available in Latin America.
This young entrepreneur is very clear about the potential of Corporación América and the
challenges these prospects represent. As the person responsible for the Group’s new
projects, he will shortly announce the signing of a concession contract for the Galapagos
Airport (Baltra-Santa Cruz) which is to be the world’s first green airport, granted gold LEED
certification. As well as being a source of pride for the Group, it will provide an example of
sustainable construction for the rest of the world to follow.
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What do the economies of your key markets require to attain
stability if, indeed, they have not already achieved this?
Are there any particular indicators that would evidence,
or that have already evidenced, that recovery has
already commenced?
At world level, our industry was seriously affected by the crisis. European, American, and Asian airlines and airports were
gravely impacted by this economic situation. However, in our
region the circumstances differed somewhat, but not in any
foreseeable manner. It could be due to the types of economies and/or financial positions that the situation was not as
negative as it became in the developed world. But, air traffic,
one of the chief criteria whereby we examine our business,
was not affected by the crisis. Our analyses showed us that
the worst impact on air traffic over the last few months was
caused more by foreign exchange variations which weakened
the currency of countries that generate significant travel, as in
the case of Brazil, and the H1N1 flu, which impacted the tourism travel market.
How can the flows of capital and the capital markets change,
and how would such changes affect your capital structure?
The capital markets are very cautious but, in our case, since
we deal with strategic projects, we have found excellent receptivity and financing. There is no doubt that, times such as
this demand stronger guarantees and/or earnings but, in our
case, thanks to our type of project, it is possible to meet these
requirements since countries do not disappear and neither
does air traffic and, for this reason, we could always obtain
financing. Moreover, we are in the process of concluding a
new passenger terminal in Uruguay. This was financed mainly
by the issue of Negotiable Securities, but the last sources of
financing were private banks. We believe the liquidity exists
for financing projects and that would-be investors exist. But
the problem is the type of projects in which to invest and the
attendant conditions, all of which are more adverse to risk
than prior to the crisis.
During the economic crisis consumption dropped in a number
of key markets. What are your renewed consumption expectations? Is consumer behavior similar to that seen in the past?
We noted consumer changes in passenger expenditures in
the duty-free stores inside the terminals. There we saw, during
the months following September 2008, a drop in consumer
habits, mostly by the individual’s own decision in the light
of the global crisis and self-induced fears, but this ended in
January and February. Circumstances returned to normal.
Passengers were concerned as to how the crisis would affect
them but, on discovering that there were few major impacts in
the region, consumer dynamism reverted to close to its previous levels.
Do you believe that important structural changes will be
introduced into the economies as they emerge from
this recession?
What I have heard at regional level is that Governments
intend to encourage investments in infrastructure projects.
Now, we just have to wait and see if this becomes a reality.
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What were the most important changes in your strategy, your
management model or the organization you implemented in
response to this economic crisis?
Times of growth show us the variables that demonstrate this,
and efficiency is less analyzed. Because of the crisis, we
reviewed projections, adjusted them in accordance with less
challenging scenarios and began examining our overheads in
order to upgrade efficiency, and proceeded to reduce and/or
control costs. In our business, costs are manageable factors,
while incoming resources are not. Thus, in the context of a
potential crisis scenario, we advocate managing the variables
we are able to control.
Do you believe that your capacity to reply in the face of new
opportunities is limited by difficulties in obtaining capital?
What does the consequent adjustment consist of?
Our group constantly seeks new opportunities and, accordingly, we have not been obliged to hold back on defined projects.
As mentioned earlier, we believe that there are organizations
and individuals in the market with money for financing and
investing, but their conditions are tougher than they were prior
to the crisis. Accordingly, we see focused and wealthy players
seeking opportunities to invest their funds. In other words, the
obstacles to obtaining capital does not limit new opportunities.
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The economic crisis has been stressful for most personnel
and many have been obliged to achieve more with less. How
did you deal with your employees’ morale and motivate them
through this period?
The morale of our staff was not affected because we were
not impacted by the crisis and despite it, our philosophy is
generate actions to motivate our employees, but in markets
where skilled people are very much in demand. Uruguay is
a country where you find such people, but they are few and
their employees are aware of them, so it is vital to motivate
them to stay.
Most analysts predict increased regulation. However, CEOs
have repeatedly told us that excess regulation is one of the
chief threats to growth. Will this new regulatory context lead to
excess regulation?
Our sector is already regulated. We do not foresee an increase and, in fact, would like to see a decrease that would
enable us to reduce such protectionism and increase true efficiency, which would result in more routes and, thus, increase
air traffic. Very few countries in our region have open skies
enabling a greater diversity and volume of routes.
Now, in respect of financial regulations and, prior to the
events of the northern hemisphere, there, indeed, we believe there is a need for more regulation to attempt to ensure
greater economic and financial transparency, since this would
impact us greatly.
What would be most important step that governments could
take in relation to climate change?
The focus of measures for preventing climate change risk is
on the effect of cooling gas emissions. The aircraft industry is
a sector under constant observation, but it strategic for trade
and globalization. Regardless, actions are in place to manufacture more efficient engines and to create incentives for
companies to replace them.
The so-called “Bolivar Revolution” started by Venezuela’s
President, Hugo Chavez, has spread to other South American
countries, notably Bolivia and Ecuador and, up to a certain
point (with differing aims), also Paraguay and Argentina. In
your opinion, what are the possible consequences that the
region could face as a result of this trend?
I don’t believe one can generalize; we are talking about free
countries that have the government they elected. Furthermore, I’m not in favor of a Bolivar Revolution.
Caring for the environment is an inherent part of our company policy. We are in the process of building the world’s first
ecological air terminal on the Galapagos Islands (Ecuador)
designed to minimize the environmental impact on that area.
Low environmental impact materials will be utilized to build
the new airport and electric power and artificial ventilation
systems have been replaced by solar lighting and wind power.
The roofs will be built of reflecting material and the runway will
be made of cement.
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