Malaysia Airports Holdings Bhd (MAHB) plans to make “meaningful” forays overseas as it expands its footprint abroad.
If previously it had a cautious stance when investing overseas and taking on service contracts globally, the future will be a lot different as MAHB has been recognised as a capable and competent airport player.
It has a 60% stake in Sabiha Gokcen International Airport in Turkey, and two airports in India in Hyderabad and Dehli with 11% and 10% respectively.
“People recognised our skill sets and our standards are world class and we were even shortlisted for the Stanstead Airport, We have the competency and ability to deliver. The momentum will continue. The investment has to be ‘meaningful’,” Datuk Badlisham Ghazali tells StarBizWeek. There are airports in Asia, including in Myanmar, that MAHB is looking to invest in or have service contracts with.
As for Sabiha Gocken, he says a decision has yet to be made if MAHB will invest more than the 60% it already has.
In April, MAHB increased its stake in Sabiha Gokcen by investing 209 million euros (RM907.1mil) to increase its stake to 60%. It now has the second right of refusal to buy over TAV Havalimanları Holding AS to take up Limak and Limak Yatirim’s stake in two airports in Turkey. Limak has 40% in Sabiha Gocken.
Apart from the global forays, MAHB operates and manages 39 airports in Malaysia, including Asia’s biggest low cost air terminal, KLIA2.
Badlisham, who succeeded Tan Sri Bashir Ahmad Abdul Majid as managing director on June 23, has been busy fitting into his new position. From an information technology background, Badlisham is learning fast about the aviation industry. He is fast to point out that he has joined MAHB for 116 calendar days and 79 actual working days.
“You can’t help but see Bashir’s work. He has done a lot,” Badlisham says, acknowledging that his predecessor Bashir has left a legacy and is often credited for the success of MAHB.
“They didn’t hire me to just to run an airport operation, they hire me to run the company,” he says.
He adds that the 116 days have been good for him to have a better understanding of the business though it has been a continuous learning process. He notes that MAHB is a public institution with a broad range of audiences ranging from customers to airlines as well as various stakeholders including the Government.
His immediate priority is to ensure stakeholders including consumers are happy with the services they provide.
His big plan is to make KLIA2 the low-cost gateway for Asia. Malaysia has tried for many years to make KLIA the hub of connectivity in Asia but Singapore and Bangkok continue to lead. But as a low-cost air terminal, KLIA2 is viewed as the gateway to Asia.
“It is up to us to make it sparkling and shinning. We’re ahead of the curve,” Badlisham says, maintaining that KLIA2 was built below RM4bil price tag.
KLIA2, which has set a new standard as the largest purpose-built terminal for low-cost carriers, can cater up to 45 million passengers per annum.
He also has to come up with the new business plan for MAHB going forward as the current plan “Runway to Success 2014’’ expires this year.
Runway to Success
“We are preparing a six-year plan which will spur the group’s growth and the future growth focuses on the gateway and the aeropolis,’’ Badlisham says.
He adds that “Rome was not built overnight. MAHB is on a growth curve and I’m charting the next phase of growth in our six-year business plan, Runway to Success 2020, which will see MAHB emerging as a more agile, dynamic and competitive global business entity.’’
Though the plan is still in the making, he expects passenger traffic to hit 83 million this year against last year’s 79 million but going forward passenger growth will taper and will hit the airport but he wants to look into new areas of ensuring that MAHB continues to deliver profits.
As for net profit, he expects “net growth’’ though it would be not as rosy as 2013.
For the full year 2013, MAHB reported a net profit of RM388.9mil on revenue of RM4.09bil. As for the first half of 2014, MAHB posted RM84.03mil in net profit and a revenue of RM1.95bil.
Over the longer term, Badlisham expects to see its non-aeronautical revenue grow bigger.
In the past MAHB has had a rocky relationship with its biggest customer, AirAsia Bhd. On whether the relationship has improved, he says: “Yes. AirAsia is an important customer. I have met up with Malaysia Airlines group CEO Ahmad Jauhari Yahya and Aireen Omar, the CEO of AirAsia Bhd two weeks into office. Since then, we had five face-to-face meetings with Aireen and her team to iron out things. It is not true that we don’t talk to each other,” Badlisham says.
But currently analysts are downgrading the stock, and this does not bode well for the airport operator. However, Badlisham is unperturbed, though he acknowledges it would be tough as passenger growth will not be as good as last year.
To him, it is unfortunate that Malaysia has been hit by two unprecedented aviation disasters which impact passengers growth.
Analysts say MAHB is not weighed down by legacy issues but they believe there was room for improvement as the potential is enormous.
Badlisham is working towards maximising the company’s potential. The building of KLIA2 had resulted in delays caused by contractors and due to that, MAHB had imposed liquidated and ascertained damages (LAD) on the main contractor UEM-Bina Puri JV,
Asked if UEM-Bina Puri had asked for a reprieve, he says: “Generally speaking, it will look bad on the user on the other side of the contract when they don’t exercise their rights when the contractor has committed to deliver.” He adds that he hopes to resolve the issue by year-end.
Badlisham adds that for now there is no plans to raise more funds. He also refutes that KLIA2 cost more than RM4bil.
“It is well contained at RM4bil,’’ he says.
MAHB has committed to add three walkalators at KLIA2 to enhance passengers’ experience at the new terminal by year-end. It will add 10 to 15 walkalators at both the international and domestic sites to further ease passenger flow.
“We have a roll-out plan. I’ll love to install everything in one month but we will need to shut operations. Allow us some time to install it,” Badlisham says, adding that KLIA2 has been operational since May this year.
He also points out the difficulties in securing stocks for the pitless walkalators, hence the long period to complete the installation. MAHB has put in place eight buggies to help ease passenger flow.
To give an idea how far the walk is, Badlisham says one needs to walk some 1.2 km for the longest end at the old LCC terminal for international flights against 1.6 km at KLIA2.