Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily, on April 28, 2016.

 

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) is about to finalise the terms on the liquidated and ascertained damages (LAD) imposed on Bina Puri Sdn Bhd and UEM Construction Sdn Bhd for the delay in completing the klia2 terminal in Sepang.

Managing director Datuk Badlisham Ghazali said MAHB is concluding certain details with the Bina Puri-UEM joint venture and expects to resolve the issue in the next two months.

“There are some final details we need to conclude. We hope to resolve this latest by the second quarter of 2016,” he told reporters after MAHB’s annual general meeting yesterday.

Bina Puri-UEM was awarded a work package worth RM997 million to construct klia2’s main terminal building, satellite building, sky bridge and piers. The LAD was imposed when the two contractors did not meet the June 15, 2013 deadline. klia2 was only operational on May 2, 2014 after several delays.

Meanwhile, Badlisham said MAHB intends to resolve the arbitration with Kuala Lumpur Aviation Fuelling System Sdn Bhd (KAFS), which is claiming RM456 million from the airport operator, by year end.

The dispute arose from the shorter-than-expected tenure of the operating agreement that MAHB has entered into with the government. Consequently, the airport facilities agreement between MAHB and KAFS has to be halved to 25 years from 50.

Badlisham said the board is in talks with the government to seek a longer tenure for the agreement to operate the Kuala Lumpur International Airport. The current operating agreement ends in 2034. With the extension, MAHB would be able to extend the concession period for KAFS under the airport facilities agreement as well.

Asked if MAHB was prepared to pay the damages claimed by KAFS if the government maintained the operating period at 25 years, Badlisham said the group will look into other ways to resolve the issue first.

Yesterday, MAHB also announced its results for the first quarter ended March 31, 2016 (1QFY16). Net profit declined by 47.78% to RM17.01 million, from RM32.58 million a year ago mainly dragged by the amortisation of fair value for the concession rights arising from the acquisition of Istanbul Sabiha Gokcen International Airport (ISG). This is despite a 16.35% rise in revenue to RM1.02 billion, from RM876.18 million in the previous corresponding quarter.

MAHB said demand for air travel continues to remain positive despite the double-digit cut in Malaysia Airlines Bhd’s frequencies as the cuts have been more than replaced by higher load factors and other airlines’ operations.

Thus, it is optimistic its final passenger numbers would at least meet the estimated 2.5% growth for 2016.

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