Civil aviation agency could empty cash reserves for new airport

The Airports Corporation of Vietnam (ACV) might have to use up five years of cash reserves for building the Long Thanh International Airport.

An artist’s impression of the interior of the Long Thanh International Airport in the southern Dong Nai Province. (Photo: ACV)

The corporation plans to invest VND99 trillion ($4.28 billion) in the first phase of the mega airport to be built in the southern province of Dong Nai. For this, it will have to use up all of its current cash reserves of VND36 trillion and accumulate the remaining sum in 2020-2025, analysts of brokerage VNDirect said in a statement.

The cash reserves of the ACV plays an important role in its business as its yield constituted 16-19 percent of the firm’s pre-tax profits in 2018 and 2019.

In the first nine months of this year, the yield rose 28 percent year-on-year to VND1.63 trillion, which has kept the corporation going even as most flights were suspended over the Covid-19 pandemic.

ACV, which manages 22 airports, will also have to borrow around VND60 trillion from commercial banks or issue bonds over the next five years, which means its debt to equity ratio could surge from 0.4 by the end of this year to 1.3 by 2025, the VNDirect statement said.

The corporation had earlier said that the construction of Long Thanh would improve its business performance. By 2030, the project will account for 5.4 percent of its total number of passengers and 19.8 percent of foreign passengers, it has estimated.

The ACV plans to begin construction of the airport’s first phase in December and complete it by 2025.

The government approved construction of the $4.6 billion first phase of the Long Thanh International Airport earlier this month.

The first phase will have a 4-kilometer long runway with a width of 75 meters and a system of taxiways and apron, and a 373,000-square-meter passenger terminal designed to serve 25 million passengers and 1.2 million tons of cargo per year.

This will be the first of three phases of the airport that is expected to be completed by 2040. By then, it will have four runways, four passenger terminals and auxiliaries to accommodate 100 million passengers and handle five million tons of cargo every year.

Lying 40 kilometers east of HCMC, the airport is expected to take up the overflow from the Tan Son Nhat International Airport, which is the largest existing airport in the country.

Cre: VnExpress

Nguyen Xuan Nghia – COMM