MADRID/MILAN Italy's Autogrill (AGL.MI), the world's biggest airport retailer, outbid rivals to run duty free shops at 26 Spanish airports owned by public operator Aena, including key hubs such as Madrid and tourist destinations Malaga and Ibiza.
Aena's board will study Autogrill's offers, and formalize its decision on the auctions of three lots of airports at a meeting on December 18, Spain's public works ministry said on Monday.
Autogrill bid via Spanish subsidiary World Duty Free Group for two lots of airports, and one of World Duty Free Group's own subsidiaries, known as Canariensis, gained control of duty free shops in six airports in the Canary Islands.
In total for the three lots, Aena said it would receive around 2 billion euros ($2.59 billion) out of the projected earnings of Autogrill and its subsidiaries over the 2013-2020 contracts.
It added that it would be doubling its earnings from duty free shops at these airports over those seven years.
Autogrill already runs duty free shops at most of the airports where outlets were up for grabs, although five of them, including the airport for the southern city of Granada-Jaen, do not yet have such stores.
Autogrill shares rose after the announcement, outperforming a negative Italian market. They closed up 1.51 percent at 7.75 euros.
The Italian group reported revenue of around 532 million euros at the Spanish airports where it operated in 2011, or 9 percent of its global sales.
Aena said it was hoping to maximize earnings at the duty free shops after handing out the contracts, so that operators' sales would rise to 700 million euros annually.
All the groups submitting offers have also pledged big investments in the airport stores, including new designs for the shops and an expansion of the retail space, according to Aena.
Although the auctions have helped Autogrill cement its grip on duty free networks at Spain's airports, it also comes at a time when passenger traffic is on the wane. Aena data showed on Monday that there were nearly 10 percent fewer travelers passing through its airports in November than the year before.
Still, Autogrill beat off competition from three rival bidders in the first auction round involving 11 airports, including that of capital city Madrid and several northern destinations such as Bilbao in Spain's Basque country.
Two other bidders tabled offers for shops in the second lot of nine airports, which included Barcelona and the Mediterranean island of Ibiza, and for the third lot of Canary Island hubs.
About half of the 80 duty free stores will be concentrated in Madrid and Barcelona airports. ($1 = 0.7736 euros)
(Reporting by Robert Hetz and Antonella Ciancio; Writing by Jesus Aguado and Sarah White; Editing by David Cowell, Julien Toyer and Phil Berlowitz)