A Real Options Model for Evaluating Investments in the Guarulhos Airport Concession Program
American Journal of Theoretical and Applied Business
Volume 5, Issue 3, September 2019, Pages: 47-52
Received: Aug. 6, 2019;
Accepted: Sep. 3, 2019;
Published: Sep. 24, 2019
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João Carlos Félix Souza, Faculty of Technology, University of Brasilia - UnB, Brasilia, Brazil; Graduate Program in Applied Computing - PPCA, University of Brasília – UnB, Brasília, Brazil
Matheus Martins Silva, Faculty of Technology, University of Brasilia - UnB, Brasilia, Brazil
Luiza Moury Fernandes, Faculty of Technology, University of Brasilia - UnB, Brasilia, Brazil
Guilherme Nóbrega, Faculty of Technology, University of Brasilia - UnB, Brasilia, Brazil
Felipe Moutinho, Faculty of Technology, University of Brasilia - UnB, Brasilia, Brazil
The Brazilian government began, in 2012, the program of concessions of the administration of Brazilian airports in order to improve customer service through private capital. One of the main subjects of this concession plan was the airport of Guarulhos, in the state of São Paulo (Brazil), which is the largest airport in the country, responsible on average for over 20,000 flights and transporting approximately 4 million passengers per month. Concessions of this scale demand large investments, which in turn can result in greater uncertainties regarding future cash flows. In certain cases, the NPV (Net Present Value) of these investments may become negative, which does not necessarily mean that the undertaking is unfeasible, or that it should not be encouraged. Changes in the overall economic scenario can subsequently lead to updated results in the expected cash flow, making the investment viable. One of the ways to evaluate a project under an uncertain scenario is to use the Real Options model as a strategic complement to cash flow analysis. This article presents an application to calculate the value of the expansion option for the Guarulhos international airport. For the models of uncertainty related to passenger load and flight volume, the value of the expansion option using the Black-Scholes-Merton model is calculated. The article concludes with the recommendation for the expansion to be carried out on a 4-year horizon, which in this period results in a positive strategic NPV, in addition to optimizing the utilization of the airport’s terminal capacity.
João Carlos Félix Souza,
Matheus Martins Silva,
Luiza Moury Fernandes,
A Real Options Model for Evaluating Investments in the Guarulhos Airport Concession Program, American Journal of Theoretical and Applied Business.
Vol. 5, No. 3,
2019, pp. 47-52.
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