Wednesday, 16 Jan 2019

Airport giant pours over US$430 million to build Tan Son Nhat passenger terminal

Updated at Wednesday, 02 May 2018, 08:35
The Hanoitimes - Building a new passenger terminal T3 is one of the six key investment projects of the Airports Corporation of Vietnam.
As informed by Airports Corporation of Vietnam (ACV), the company is concentrating on investments in building, renovating and improving its service capacity at several airports with high passenger growth plus the potential for economic and tourism development. The demand for capital disbursement this year is expected at VND7,567 billion. In particular, the projects related to fundamental investment and equipment procurement brought forward from 2017 will be around VND4,262 billion.
Illustrative photo
Illustrative photo

From 2018 onwards, ACV plans to divide its projects into two groups: one group includes new key investment projects and the other comprises renovating and supplementary projects. The investment capital is estimated at VND29,492 billion.
Group A consists of six projects, with the total investment of VND21,350 billion. Each project to build cargo or passenger terminal together with synchronous infrastructure items at Phu Bai, Chu Lai or Cat Bi International Airport is estimated at VND2,900 billion.
The largest project is the construction of a new passenger terminal called T3 at Tan Son Nhat International Airport with the designed capacity of 15 million passengers per year, requiring a total investment of VND9,800 billion, equivalent to more than US$430 million. 
Group B consists of 11 projects, mainly expanding service lines of the existing passenger terminals, building more aircraft parking lots and purchasing ground service equipment.
ACV aims to increase its annual transport volume by 8%, to nearly 102 million passengers. Revenue and profit before tax would be VND16,030 billion and VND5,665 billion respectively, representing a corresponding growth of 7% and 9% over the last year.
This target has not yet taken into account the effect of foreign exchange differences due to the revaluation of loans in foreign currency, mainly in Japanese Yen.
Explaining about the cautious financial plans, the company's management said the reason came from the slowdown in the domestic market as various airlines had already opened up too many flight routes and applied a flexible price policy to increase competitiveness. In addition, the aviation market is facing many challenges such as the rising tendency of production costs and fuel prices, and the political instability affecting travelling needs...
ACV's last year consolidated financial statements recorded revenue of VND13,870 billion. The revenue structure did not change significantly when aviation and non-aviation services accounted for a formidable rate of over 89%. Due to the decrease of its ownership in Southern Airports Services Joint Stock Company to less than 51%, the company no longer recorded income from lounge operation, while the preceding-year figure was more than VND300 billion.
This result does not include revenue and expenses related to the assets of the airport flight operation areas, such as runways, taxiways, lighting and positioning equipment, etc., due to the Ministry of Transport requested the company to exclude from the financial statements until the negotiation process finishes. Currently, the Company recognizes the above-mentioned revenue and expenses in other receivables and payables on the balance sheet.
Assets in the flight operation areas are the biggest barrier, making the company ineligible for listing on HoSE. If the negotiation goes smoothly, the company can change the trading floor in the fourth quarter and open more opportunities for the company’s stocks such as inclusion into the VN30 Index, eligibility for margin trading after 6 months of listing ...
Previously, the company had proposed to the Ministry of Transport two alternatives to handle the assets in the flight operation areas. First, the assets in such areas will be handed over to the State then subleased to company for service operation. ACV will receive all revenues from these assets and pay a lease fee of VND270 billion per year to the State as well as bear all expenses for repairs. Second, the State will use this asset as the capital contribution to the company in lieu of the share purchase when the company mobilizes more capital from the existing shareholders. The estimated value of the assets in the flight operation areas is about VND8,000 billion, while the company can mobilize VND8.386 billion.
At the end of March, Prime Minister Nguyen Xuan Phuc decided to expand Tan Son Nhat Airport as proposed by ADP-I (France).
According to this plan, the consultant proposes to take 36 ha of national defense land and the passenger terminal will be built in the area south of the current airport, with a floor area of ​​200,000m2. Several auxiliary structures will be built to the north of the airport. The estimated capital for this project is VND18,000 billion.

Cam Anh
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