BergerWorld: 4th Quarter 2006

Bulgaria (population 7,726,000) enjoys one of the fastest economic growth rates in Europe. Its tourism industry, concentrated primarily along the Black Sea Coast, has experienced sustained and significant growth, with most visitors traveling from Germany, the United Kingdom, Russia and the Scandinavian countries. In a span of five consecutive years, Bulgaria saw its tourism industry grow by double-digit percentages. Because the country's tourism industry relies heavily on the aviation sector, the Bulgarian Ministry of Transport and Communication has committed itself to the development of two of the largest airports in the country, Bourgas and Varna. Bourgas International Airport is located on Bulgaria's southern Black Sea Coast, 10 kilometers northeast of Bourgas, while Varna International Airport is on the northern Black Sea Coast, 10 kilometers from Varna. In 2005, Bourgas Airport handled 1.6 million passengers, while Varna accommodated 1.5 million.

The Ministry recently carried out a process to award a 35-year concession to develop and manage the airports, including the preparation of plans for the construction of new terminal facilities and/or the expansion of existing terminal facilities. The Berger Group was commissioned by VINCI to provide advisory services in the preparation of their bid. Berger began the assignment by conducting a number of surveys to analyze the current and future demand at each airport, including historic trends in passenger and cargo traffic, anticipated demand under alternative growth scenarios, seasonal variations and peak hour demand. The Team then assessed the current facilities at each airport to determine the necessary upgrades and prepared master plans for the development of the airports as well as the expansion of commercial facilities that would generate non-aeronautical revenues, including on-site restaurants and shops. The Team's master plans included cost estimates; Capital Expenditure (CAPEX) and Operational Expenditure (OPEX) estimates for the length of the concession period; and an assessment of each facility's needs to meet international standards.

The proposed $286 million improvements at Bourgas Airport include a new terminal, an expansion to its cargo handling systems and additional parking spaces for cars and buses. The $250 million master plan for Varna Airport includes the development of a modern terminal building, the expansion of apron areas and the acquisition of airport vehicles. The proposed improvements at each airport will enable the facilities to accommodate at least 1.8 million passengers annually.