KLIA2 slated for February 2014 opening, blame game begins

POTENTIAL DELAY: Photo shows an artist’s impression of KLIA2. KLIA2’s opening date has been slated to open on February 1, 2014, as speculation of a delay and potential cost overruns intensify.

KUCHING: The Kuala Lumpur International Airport 2’s (KLIA2) opening date has been slated to open on February 1, 2014, as speculation of a delay and potential cost overruns intensify.

RHB Research Institute Sdn Bhd (RHB Research) in a recent research note, “It is understood that the terminal’s contractors have requested that KLIA2 commence operations on February 1, 2014, in view of the enlarged scope of work involved.”

To recap, Malaysia Airport Holdings Bhd (MAHB) has announced earlier this year that its contractors might have difficulty completing the KLIA2 on schedule for the June 28, 2013 opening dateline.

As a result, the airport is seeking compensation by imposing liquidated ascertained damages (LAD) from the contractors for the damages caused by the delay of the opening.

RHB Research highlighted, “Several key contractors claim that their work packages are on track for timely completion, which has turned the spotlight on UEM Group, the party contracted to construct the main terminal building.

“It would seem that the delay in completing the main terminal building has resulted in the delay being spilled over and affecting other smaller work packages.”

Additionally, it outlined, “We gather that the LAD may cost each contractor found to have been at fault RM200,000 a day, or RM6 million a month.

“Our calculation of the potential revenue loss amounts to at least RM700,000 per day, assuming zero per cent traffic growth, due to loss of rental and royalty revenue.”

Meanwhile, on the airport’s passenger traffic, the research firm noted, in April, MAHB handled a record 5.9 million passengers (up 12.5 per cent year on year, 9.7 per cent year to date for that month owing to capacity additions by many airlines. It added, “So far, the airport operator’s passenger numbers are on track to hit our 11 per cent growth forecast.”

As a result of the delay, the research firm said had retweaked its earnings assumptions as it appears certain that KLIA2 likely to open only by 2014.

“We lift our financial year 2013 (FY13) earnings by 63 per cent due to the steep fall in depreciation expenses due to the delay in commencement. However, we trim our earnings estimates for FY14 and FY15 by four and 10 per cent respectively,” it added.

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