Newsbreak: MAHB being courted for O&M contract at Clark airport

This article first appeared in The Edge Malaysia Weekly, on April 2, 2018 - April 08, 2018.

Clark International Airport’s current annual capacity is four million passengers.

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THE Philippines is expected to launch a bidding process for a 25-year contract to operate and maintain Clark International Airport in the second quarter of the year, according to an official from the Bases Conversion and Development Authority (BCDA), which oversees the airport.

One of the local companies eyeing the contract is understood to be keen on roping in Malaysia Airports Holdings Bhd (MAHB) as its partner.

“One of our local industry players has said it is keen to participate and is looking among global players to partner, including MAHB. It has already spoken to MAHB,” Joshua M Bingcang, BCDA’s senior vice-president for business development, tells The Edge in an interview in Kuala Lumpur.

He declined to name the Philippine player.

According to him, the operations and maintenance (O&M) contract is for a period of 25 years and worth PHP15 billion (about RM1.1 billion).

“We intend for the bidding to be launched in March, but if not, then sometime in the second quarter of this year. We’re just waiting for the final approval from the president of the Philippines (Rodrigo Duterte) — that’s the only missing part before we can publish the invitation for the selection of the operator of the airport,” he says.

He adds that the BCDA — a Philippine government-owned corporation — hopes to have the O&M operator on board by June.

MAHB, when contacted by The Edge about its interest, says it constantly evaluates opportunities abroad.

“As part of our ongoing efforts in implementing our five-year business plan RtS2020, specifically in the areas of expanding our international footprint, we continuously explore and analyse various suitable and relevant business opportunities, including consultancy and O&M opportunities. At the moment, these are at a very preliminary stage that have yet to go through financial due diligence,” it says in its email reply.

It went on to say that as a Malaysian public-listed company, it would make announcements, if any, in accordance with the stock market’s listing requirements.

Last December, a consortium comprising Philippine builder Megawide Construction Corp and Indian airport operator GMR Group won a bid to construct a new terminal at Clark International Airport with an annual capacity of eight million passengers.

The airport’s current annual capacity is four million passengers. According to Bingcang, the winner of the O&M contract may start with the existing terminal given that the new terminal is not expected to be completed until 2020.

The Clark airport is being expanded to reduce the strain on the congested Manila Ninoy Aquino International Airport.

The BCDA awarded the engineering, procurement and construction (EPC) contract for the new terminal to the Megawide-GMR consortium as it put in the lowest bid of PHP9.36 billion against the PHP12.5 billion ceiling set by the government. It beat four Chinese state-owned firms.

An aviation analyst from a Kuala Lumpur-based foreign research firm says it would make sense for a Philippine player to partner MAHB for the O&M contract, given the latter’s experience in managing airports.

“But in the end, it is whoever that bids the lowest that will bag the contract,” he points out.

He says possible players that may be keen to partner MAHB include the San Miguel conglomerate and JG Summit Holdings, neither of which has experience in operating airports. San Miguel used to own a stake in Philippine Airlines, while JG Summit controls Cebu Pacific Air.

Apart from managing airports in Malaysia, MAHB operates Sabiha Gokcen International Airport (SGIA) in Turkey and the Hamad International Airport in Doha, Qatar. It is reportedly scouting for suitable partners to buy a portion of its 100% stake in SGIA.

Last week, it announced its exit from the airport business in the Maldives. It disposed of its entire 23% stake in loss-making GMR Male International Airport Ltd for US$7.3 million (about RM28.1 million).

And in February, it disposed of its entire 11% stake in GMR Hyderabad International Airport Ltd to India’s GMR Airports Ltd for US$76.05 million cash.

In the past, it also used to manage two airports in Cambodia. That was in fact its maiden overseas venture, back in 1995.

MAHB posted a higher net profit of RM236.49 million last year compared with RM70.39 million a year earlier. Its share price has gained 0.7% this year, closing at RM8.85 last Friday.

Bloomberg data shows that of the 21 analysts that track the stock, 11 have a “buy” call, six a “hold” and four a “sell”, with RM9.59 being the average 12-month target price.


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