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The consortium formed to build and operate the world’s biggest airport in Istanbul was facing enough challenges even before the government minister in charge of the project started talking about insolvency.
In a television interview late Monday, Transport Minister Ahmet Arslan confirmed the government was considering giving the consortium an unspecified amount of time before requiring it to start paying rent, which has been set at more than $1 billion annually over 25 years. But then he went a step further.
“We’re not in a position to say ‘let them build it or let them go bust,’” Arslan said. “What’s important is that the situation remains manageable while protecting the rights and interests of the public.”
What makes the unsolicited insolvency talk interesting is that until now there has been no such talk about the IGA consortium, which is made up of businesses considered friendly to President Recep Tayyip Erdogan. Other Turkish corporations are facing increasing financial difficulties due to foreign-currency debt, and major Turkish companies including the owner of Godiva have publicly asked to restructure. IGA declined to comment when contacted by Bloomberg on Tuesday.
Corporate foreign debt in Turkey is equal to about 40 percent of economic output.
Financial talk aside, the project poses numerous challenges, chief among them turning an area of wetlands larger than Manhattan into a series of buildings and runways able to eventually handle as many as 200 million passengers a year. The new airport is scheduled to open in October.
Erdogan touts the airport as a legacy project and a crowning achievement of his 16 years in power. He’s claimed that the possibility of Turkey hosting the world’s largest airport upset foreign powers so much that they stoked the 2013 Gezi Park protests in Istanbul — the largest street challenge to his rule — to derail the project.
–With assistance from Kerim Karakaya
©2018 Bloomberg L.P.