COVID-19 Can’t Sway Builder From $2.3 Billion Manila Airport Plan
By Andreo Calonzo
The coronavirus pandemic and its devastating impact on global aviation and economic growth isn’t swaying Megawide Construction Corp. from its 109 billion peso ($2.3 billion) plan to upgrade Manila’s airport, the main gateway to the Philippines.
The company proposed a 10-year plan to double annual capacity at the aging and overcrowded Ninoy Aquino International Airport to 65 million passengers, expecting pre-pandemic passenger volume to be back by 2023. It is working in partnership with India’s GMR Infrastructure Ltd.
“It’s more practical for us to develop Manila airport, because while others will start from scratch, we already have the expertise and manpower,” Megawide President Edgar Saavedra said in an interview, referring to another project with GMR at Cebu airport. Megawide was granted original proponent status in July to upgrade Manila’s 72-year-old airport, meaning it has the right to match subsequent competing offers and win the project.
Insufficient infrastructure has long been a constraint to economic growth and investment in the Philippines, which entered a recession this year amid its coronavirus outbreak. Red tape and lawsuits among private contractors have delayed projects in the past.
Ninoy Aquino International Airport, named after a politician who was assassinated on its tarmac in 1983, has capacity for 31 million passengers a year, but traffic reached 48 million in 2019, before the coronavirus.
Megawide and GMR’s proposal to operate the airport for 25 years has yet to get final approval from the government, which had been negotiating with a consortium of conglomerates before they pulled out earlier this year. The companies plan to finance the project with debt and internal cash, including proceeds from Megawide’s recent sale of preferred shares, Saavedra said.
Two other airport projects in Bulacan and Cavite provinces are underway to serve the Philippine capital and nearby areas, but Megawide doesn’t see itself competing with the gateways planned by San Miguel Corp. and a venture between MacroAsia Corp. and China Communications Construction Co.
Megawide can complete its airport expansion project faster than the other two as they both require land reclamation, which can take years, Managing Director Louie Ferrer said. The other airports can accommodate excess passenger demand from areas north and south of the capital when Manila’s capacity has been exceeded, he said.
“NAIA will always be the main airport,” Megawide Chief Financial Officer Ramon Diaz said. “It’s something that will never change.”
© 2020 Bloomberg L.P.
