Tuesday, May 05, 2020

Fairfax India foresees delay in Bangalore Airport expansion due to Covid-19

Bangalore: The lockdown and the resulting suspension of construction activities are expected to delay the completion of the first phase of the Terminal-2 expansion of Bangalore International Airport Limited (BIAL). Its aeronautical and non-aeronautical revenues have been significantly impacted during the quarter ended March 31, due to a 43 per cent drop in domestic traffic and 72 per cent decline in international traffic, said Fairfax India, which has invested in the airport.

In the company's financial result announcement, Fairfax India said, "In the first quarter of 2020 the Covid-19 pandemic significantly impacted BIAL's airport business, which faced reduced passenger traffic starting in February 2020."
All domestic and international commercial airlines scheduled March 25 onwards, ceased operations as a result of the lockdown. Cargo flights and flights catering to medical emergencies and other essential requirements remain operational. Construction activity at BIAL's capital projects has also been suspended. The airport is expected to be operational immediately upon lifting of the present lockdown though may be subject to certain restrictions, it said in the interim report for the quarter ended March 31.

"The lockdown and resulting suspension of construction activity are expected to delay the completion of the first phase of the Terminal-2 expansion by approximately six months till September 2021. The total cost of the Terminal-2 expansion is expected to increase primarily due to incremental interest and pre-operational expenses. BIAL has sufficient liquidity in place to continue its operations," it said.
As a result of the business disruptions due to the pandemic, free cash flow projections were revised by BIAL's management in the first quarter of 2020 to primarily reflect a temporary reduction in passenger traffic and it is expecting a gradual recovery in passenger traffic over two years to levels expected before the pandemic. It is expecting updates to estimated airport tariffs for the third control period commencing in BIAL's fiscal year 2022 to reflect a recovery of lost return during the lockdown and subsequent period and there would be delays in BIAL's capital projects and real estate development plans.
05/05/20 TE Narasimhan/Business Standard
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