[Jamaica] GAP to spend US$60m over three years on NMIA

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[Jamaica] GAP to spend US$60m over three years on NMIA

Unread post by bimjim » Wed Oct 17, 2018

http://jamaica-gleaner.com/article/busi ... years-nmia

[Jamaica] GAP to spend US$60m over three years on NMIA
Steven Jackson/ Senior Business Reporter
Wednesday | October 17, 2018

Airport operator Grupo Aeroportuario del Pacifico, GAP, announced plans to invest US$60 million in the first three years of operating the Norman Manley International Airport, NMIA, according to stock market filings.

Additionally, the Mexican company will pay the Jamaican Government US$7.1 million - J$950 million at current exchange rates - over a period of one year before officially taking control of the airport based in Kingston.

The details go beyond what was outlined at the local signing ceremony last week for the Government's award of the 30-year concession to GAP, which spoke to a commitment to upgrade the airport under a modernisation plan for more than US$100 million.

"In accordance with the concession agreement, certain works must be completed during the first 36 months from the date of taking over operations; these projects are valued at approximately US$60 million," GAP stated in the market filing. It plans to raise the funds via bank loans and recover the investment through tariffs charged at NMIA.

GAP formally takes control of the operations and management of NMIA in October 2019 from the Airport Authority of Jamaica.

NMIA is mostly served by carriers JetBlue, Caribbean Airlines and American Airlines, respectively.

During 2017, a total of 1.6 million passengers traversed through the NMIA, which represented 27 per cent of the country's total passenger traffic, said GAP. Sangster International Airport, the island busiest airport, which handles 73 per cent of Jamaica's air traffic, is also controlled by GAP through MBJ Airports Limited in which it holds 74.5 per cent interest.

CONCESSION FEE

Once GAP takes control of NMIA, the Mexican company says it will pay a concession fee of 62 per cent "over the total amount" of aeronautical and commercial revenues, to the Jamaican authorities.

The airport has a passenger terminal of roughly 10,000 square metres and a runway that is 2.7 kilometres long, with capacity for long-range aircraft. GAP did not outline the specific expansion plans for the airport.

GAP operates 13 airports most, of which are in Mexico. Its terminals handled a total passenger throughput of 33.5 million between January to September 2018, or up 10.9 per cent year-on-year.

Currently, 70 per cent of its passenger traffic comes from the United States and Canada, 16 per cent from the Caribbean, and 14 per cent from Europe.

GAP expects NMIA to contribute approximately 3.5 per cent growth in passenger traffic for the group, increase revenue by six per cent, and grow earnings or EBITDA, by close to 1.5 per cent.

For its second quarter ending July, GAP reported EBITDA of 2.14 billion pesos (US$114 million) on total revenues of 3.4 billon pesos (US$183 million). Earnings rose 9.5 per cent year-on-year.

GAP indicated in its filings that for NMIA, Jetblue Airways is the main operator with 24 per cent of total passengers, followed by Caribbean Airlines with 23 per cent, American Airlines with 19 per cent, and Cayman Airways with six per cent. The main routes are New York, Fort Lauderdale, Miami, Toronto, Atlanta and London.

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Re: [Jamaica] GAP to spend US$60m over three years on NMIA

Unread post by bimjim » Sun Nov 04, 2018

https://www.jamaicaobserver.com/sunday- ... ent_148547

Gov't clarifies NMIA agreement
BALFORD HENRY Senior staff reporter
Sunday, November 04, 2018

There is no doubt that there is still some confusion in the minds of some Jamaicans, both at home and in the Diaspora, about the latest development concerning the operations of the Norman Manley International Airport (NMIA) in Kingston. Has the airport been sold to foreigners; or has the Government signed a concession agreement giving a private company, based in Mexico, the daily operations of the facility which is still owned by the Government?

In an effort to clarify the issue, the Government issued a full-page advertisement last weekend in the press which sought to clarify the issues in the mind of the public. In the advertisement it was made clear that on October 10, 2018, an agreement for the operation of the airport, under a 25-year concession, was signed between the Airports Authority of Jamaica ( AAJ) and PAC Kingston Airport Ltd, a wholly owned subsidiary of Grupo Aeroportuario del Pacifo, SAB de CV (GAP), and the special purpose vehicle incorporated as required under the concession agreement.

The advertisement explained that a concession agreement gives a private entity the long-term right to use all the assets granted to the concessionaire, including responsibility not only for operation and maintenance of the assets, but also for financing and managing all required investment. Asset ownership typically rests with the awarding entity in this case, AAJ/Government of Jamaica, and all rights in respect to those assets revert to the awarding entity at the end of the concession period.

With respect to the NMIA public-private partnership (PPP), the ownership of the NMIA remains with the AAJ and the responsibilities of operation will revert to AAJ at the end of the concession period.

The advertisement also listed the terms of the concession agreement as follows:
a) AAJ as the owner will retain ownership of the airport's assets;
b) The concession will be for 25 years (with an option to extend for an additional 5 years) and will be a finance, design, build, operate, and transfer arrangement;
c) The concessionaire will pay an upfront amount and a monthly concession fee to AAJ over the life of the concession;
d) The concessionaire will upgrade and return the operation of the airport to the AAJ/Government at the end of the period;
e) The concessionaire will be required to meet specified service levels as established over the life of the agreement.

It also advised that the concessionaire is expected to invest a minimum of approximately US$110 million over the life of the concession, of which approximately US$60 million will be within the first 36 months after the handover.

It will include upgrades to the runway extension and runway end safety area and utilities, and the concessionaire will be responsible for the design, procurement, construction and management of the rehabilitation of the terminal apron and cargo apron works that form the airside pavement.

In terms of the financial structure of the deal, there will be an upfront concession fee of US$5 million payable to AAJ prior to financial close and a project development fee of US$2.1 million payable to the lead advisers, International Finance Corporation.

A concession fee of 62 per cent of the total revenues earned by the concessionaire is payable to the Government on a monthly basis by the concessionaire, and an investment of a minimum of US$110 million in capital investment works is also required.

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