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Saturday, October 30, 2010

Budget for KLIA 2 increased

Malaysia Airports' board of directors has mandated RM2.5 billion for the overall construction cost of Kuala Lumpur International Airport 2.

Malaysia Airports Holdings Bhd (MAHB) is ready to spend some RM500 million more than the earlier budgeted RM2 billion for total construction cost of Kuala Lumpur International Airport 2 (KLIA 2).

Prime Minister Datuk Seri Najib Razak had said in his second stimulus package announcement in March last year that the new permanent low-cost carrier terminal (LCCT) would cost RM2 billion.

The airport operator said yesterday that its board of directors had mandated a sum of RM2.5 billion for the overall construction cost of KLIA 2.

MAHB chief financial officer Faizal Mansor, however, stressed that the RM2.5 billion budget was not final.
"While we will try to keep it below the budget, it is important to us to get the terminal completed well," he said at a briefing to announce the group's third quarter results in Sepang, Selangor.

While some big contracts have been dished out, Faizal declined to reveal how many more would be awarded.

KLIA 2 is now being planned to have double the initial size of 120,000 sq m.

While the new terminal is only half the size of KLIA's main terminal building, it is designed to have more than double the commercial space of the main terminal building.

After the recent completion of a retail optimisation plan at the KLIA main terminal building, about 7 per cent of the building is now commercial space compared to KLIA 2, which is expected to have about 20 per cent commercial space.

"What this means is that while the cost of running KLIA 2 will be half that of the main terminal building, it will be more viable, more sexy," Faizal said.

On its results for the third quarter ended September 30 2010, MAHB said net profit was down by almost 26 per cent. This was largely due to accounting losses it had to recognise in that period because of the adoption of the Financial Reporting Standard (FRS) 139.

MAHB made RM61.8 million net profit compared with RM83.4 million a year ago. The loss arising from adopting FRS 139 was about RM30 million.

Part of this loss came from recognising concessions payable at fair value for the Sabiha Gokcen International Airport in Istanbul, Turkey.

Year to date, the group recognised RM54 million accounting losses from the associate. MAHB has projected that the full-year figure will touch RM80 million.

Group operating profit in the period reviewed was up 12 per cent to RM128.3 million compared with RM114.4 million in the previous corresponding period.

By Business Times

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