[Airport Three Runs] The airport three-run system cost 141.5 billion yuan to build. The AA recently stated that the new third runway has completed the test flight and is expected to be opened within this year.
The AA's latest three-run project progress document submitted to the Legislative Council shows that due to the uncertain outlook for air traffic, additional funds need to be raised from the market to fill the financing gap.
The AA stated that the financial plan of the three-run system was updated in March this year, and the total debt level is expected to increase from HK$89 billion to HK$111 billion. Together with the issued perpetual capital securities equivalent to HK$11.6 billion, it will be raised from the market. The amount of external financing will be HK$123 billion.
The Airport Authority pointed out that in response to the epidemic, passenger traffic recovery and market conditions, it will consider issuing HK$5 billion of fixed-rate retail bonds.
The third runway is expected to open this year, and the middle runway will be closed for two years for reconfiguration
The AA stated that the flight verification of the three runs was completed in April 2022, and it plans to launch an aircraft accident rescue exercise this month to simulate a manned aircraft accident on the third runway to assess the airport's handling of the accident. It hopes to meet the required requirements and obtain an airport license to operate the third runway and related taxiways by the end of this month.
The AA also pointed out that after the opening of the third runway this year, the airport's middle runway will be closed for about two years for reconfiguration. At that time, the airport will operate with a temporary dual runway system.
▼The AA re-allocated some parking spaces earlier to prepare for the third run▼
The epidemic affects the aviation industry and the AA needs to raise additional funds from the market
As for financial arrangements, the AA stated that the three-runway system financial plan was updated in March this year. Due to the emergence of a variant virus, flights have dropped sharply, hindering the pace of air traffic recovery. The outlook for air traffic is not clear. The share will be significantly reduced, so additional capital will need to be raised from the market to fill the financing gap.
The AA expects that the total debt level will increase from $89 billion to $111 billion. Together with the perpetual capital securities issued equivalent to HK$11.6 billion, the amount of external financing raised from the market will be HK$123 billion.
The AA stressed that no form of financial guarantee from the government is required to finance the Three-Runway System project.
▼September 7, 2021 The completion of the three-run laying project▼
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Although the proceeds from the recent bond issuance will be able to meet the financing needs of the AA until the 2022/23 financial year, the AA will still have different financing activities to maintain its liquidity level, including in response to the epidemic, passenger traffic recovery and the market Considering the issue of HK$5 billion fixed-rate retail bonds; considering issuing institutional bonds of up to HK$15 billion as a contingency measure; if necessary, it will withdraw the amount from its HK$17.5 billion standby syndicated revolving loan.
In addition, the AA will also consider issuing long-term US dollar agency bonds of up to US$3 billion.
Financing Scheme for the Three-Run System (Legislative Council Paper)
AA: The industry expects passenger traffic to gradually return to pre-pandemic levels in three years
The AA stated that the industry generally expects that passenger traffic will gradually return to pre-epidemic levels within three years. It is believed that the aviation industry and air traffic will gradually recover as the epidemic subsides.
The AA said that the third runway has completed the test flight plan this month. This year, 3D technology will be used to simulate the underwater hunting wonders of mangroves.
Withdrawal of the ban on flights from nine countries, the number of flights to Hong Kong continued