Revamp to put Malaysia Airports on stronger footing

  • Business
  • Friday, 13 Feb 2009

SERI KEMBANGAN: Malaysia Airports Holdings Bhd (MAHB) sees slower passenger traffic growth at its airports this year, but managing director Datuk Seri Bashir Ahmad says the recently-approved group restructuring plan will enable the company to weather the industry downturn on a stronger financial footing.

“Our initial forecast was to achieve growth of between 2.5% and 2.8% this year. However, we may have to review this,’’ he told a press briefing yesterday.

Last year, passenger arrivals at MAHB-operated airports rose 5% to about 45 million people. Bashir said some airlines had reduced their flight frequency as worldwide travel volume shrank.

“Like any other commercial business, we have to manage our cost” to ride out the slowdown, Bashir said.

With its restructuring in place, MAHB was expected to announce its five-year business plan by end-March.

Bashir, however, declined to comment when asked on the status of MAHB’s talks with AirAsia Bhd over the development of a low-cost carrier terminal (LCCT) within the KL International Airport (KLIA).

He viewed the project as “commercially viable” for MAHB, and stressed that any issues that might arise from the planned project could be addressed in a “proper forum.”

“We treat all our working partners equally as professionals,’’ he said.

In a separate press conference earlier, Transport Minister Datuk Seri Ong Tee Keat said both MAHB and AirAsia were in talks on the LCCT project, although no deadline was set on when the project would start.

MAHB had listed building a permanent LCCT and a second satellite terminal at KLIA as among its major capacity expenditure obligation going forward.

The restructuring plan, announced on Dec 23, allows MAHB to focus on its core airport management business. Under this, non-related activities, like the Formula One racing circuit and the convention centre in Subang, will be sold back to the Government.

The Government will purchase F1 circuit management company SIC Sdn Bhd for RM1 and assume its liabilities of RM121mil. The track itself will be sold at book value (currently at RM319mil) via a 10-year call option.

The asset sales, coupled with write-off from money spent by MAHB on infrastructure development at KLIA and RM508mil cash payment, will allow the company to settle RM1.01bil owed to the Government.

A key part of the restructuring plan involved a revenue-sharing mechanism with the Government that replaced the current concession agreement.

Under this, the Government will get an 8.3% cut from all economic activities at airports and land provided by the Government. “This ensures both the Government and MAHB’s interest will be aligned during good and bad times,’’ Bashir said.

The Government’s share of revenue will grow 0.25% every year, but should increase by a bigger portion depending on the Government’s future spending on airport infrastructure.

The portion of the Government’s share of revenue will be capped at 33%.

MAHB has also a set benchmark for passenger service charge at RM65 per person for international departures, which is higher than the current RM51 rate.

Bashir said the decision to implement the new rate remained with the Government, as in all other aeronautical charges.

He added that the difference between the benchmark rate and actual rate charged would be compensated.

A framework was established in which MAHB will “receive financial restitution” from the Government if its policies have impact on MAHB’s profitability.

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