6 November 2014
COMING on the heels of Transport Minister Datuk Seri Liow Tiong Lai’s moronic parliamentary statement that flooding at the RM4 billion Kuala Lumpur International Airport 2 (klia2) is expected, DAP Petaling Jaya Utara MP Tony Pua makes minced meat of Malaysia Airports Holdings Bhd (MAHB)’s financial performance.
Releasing a statement in Parliament earlier this week, the DAP publicity secretary said both the ministry and MAHB had repeatedly denied the potential negative financial consequences of the RM4 billion “low-cost” klia2 which exceeded its original budget of RM1.7 billion.
“In fact, MAHB Chief Financial Officer, Faizal Mansor asserted to the Public Accounts Committee in a meeting earlier this year that the cost overrun will not require MAHB to raise airport and passenger taxes and fees in order to remain financially strong and profitable.
“However, in the third quarter earnings report ending September 2014, the first financial report after the commencement of operations of klia2, the airport operator saw its net profit plunge 98.6 per cent from RM112.78 million to a paltry RM1.61 million a year ago.
“In the report to Bursa Malaysia, MAHB said the steep profit decline was mainly due to higher costs incurred by the new ‘low-cost’ carrier terminal, as well as higher financing costs on borrowings incurred for the construction of the terminal.
“To quote the English idiom, the chickens have finally come home to roost. MAHB now suffers the double-whammy of not only having to account for higher depreciation cost of klia2 as a result of the massive cost overrun.
“As a result of the bloated RM4 billion or more to build klia2, the company was forced into a borrowings-spree to raise the necessary funds to finance the airport. In 2010, it raised RM3.1 billion via a 15-year Islamic Medium Term Notes (IMTN) Programme. Last year, it had to raise another RM2.5 billion via a 20-year Senior Sukuk Programme and a Perpetual Subordinated Sukuk Programme. The borrowing-spree hence caused substantially higher financing cost for MAHB.
“As earnings and cash flow declines sharply for the airport operator, it is clear that MAHB will appeal to the government to approve massive increases in airport and passenger taxes, and the government will in-turn be hard pressed not to approve the hike in order to bail out MAHB.
“According to media reports on MAHB analyst briefings, the operator has already proposed to the government to increase domestic klia2 charges by 50 per cent, from RM6 to RM9. For international passengers, the hike is even steeper at more than 100 per cent from RM32 to RM65.
“Without these price hikes, it is clear from the warning provided by MAHB’s latest quarter financial reports, the company will not be able to fulfill its debt obligations when they become due starting 2023,” Pua said.
Reacting to Pua, Liow had said that the government would not agree to any increase in airport taxes and passenger fees for klia2.
He also denied that the ministry received an appeal from Malaysia Airports Holdings Berhad (MAHB) to approve any increase.
“I have had no such request or proposal given to me, and we will never agree to a heavy increase in airport taxes and passenger fees.
“This is all based on speculation and there are some people out there who are trying to spin the issue,” he added.
Whatever it is, is MAHB’s financial debacle surprising? Doesn't it mirror the financial fiasco faced by the likes of MAS and 1Malaysia Development Bhd (1MDB)?
Original Source: www.malaysiandigest.com
Did you find what you are looking for? Try out the enhanced Google Search: