Turkey's Prime Minister Tayyip Erdogan said a consortium of Turkish construction firms made the winning EUR22 billion bid on to construct and operate a third airport in Istanbul, which Turkey expects will become one of the world's largest by passenger numbers, with the Prime Minister noting "such an airport ... will carry Turkey to a different level on the international stage". The consortium of Cengiz, Kolin, Limak, Mapa and Kalyon bid EUR22.15 billion for the build-operate-transfer project, which includes a 25-year lease, outbidding rivals including TAV Holding (38% owned by Aeroports de Paris) and Fraport (in a JV with IC Holding). The airport is planned to have a total of six runways and will eventually have capacity to handle 150 million passengers p/a. Limak chairman Nihat Ozdemir commented: "We aim to start the construction in a year," adding the group would initially invest EUR10.25 billion. He explained: "We will pay the amount in 25 equal annual installments, and the airport will be start services towards the end of 2018." Mr Ozdemir said the consortium would seek financing from both domestic and international sourcing, adding that the consortium does not anticipate any difficulty raising the funds. The full amount the consortium will pay total EUR26.14 billion with the 18% value-added tax (KDV) added to the final bidding amount of EUR22.1 billion. Commenting on the process, Turkish Minister of Transport, Maritime Affairs & Communications Binali Yildirim said, as quoted by Antara, that "it was a fair and transparent bid. The airport addresses the following 50 years of Turkey". Mr Yildirim stated that the construction area where a new airport to be "built from scratch" would attract substantial investment and noted: "A large airport to be built in an area of 80 billion square meters, with its six airfields and 1.5 billion square metres terminal and all other auxiliary plants. The airport will be the one to address the following 50 years of Turkey. This airport will not only serve Turkey's needs but also become a popular flight destination from west to east, from east to west and from Africa to Europe". 15 Turkish and two foreign companies received approval for their technical capabilities to construct the third airport. TAV Airports CEO Dr Sani Sener, following the tender award, commented: “We have prepared meticulously for the new airport tender in Istanbul with world-renowned consultants and our expert teams in TAV Group. Therefore, we participated in the tender with the right numbers found as a result of this preparation. As a 44% publicly traded company, we’re responsible to our investors. Knowing that this is not solely a construction project but operational capability is pivotal, we have declared that we would not aim at winning the tender at any cost. Such an approach would jeopardise the company’s health, as well as the future of Turkish economy and aviation sector. As Turkey’s leading global brand in airport operations, we will continue to work towards rendering the best possible travel experience at the 12 airports we operate in six countries. As per our smart growth strategy, we’ll continue to pursue new opportunities around the world. I hope that the result of this tender would benefit highly our country and its aviation industry.” TAV's shares dropped the most in three years at close on 04-May-2013, declining 7.8%. [more - original PR - TAV] [more - original PR - Limak - Turkish]
Limak consortium awarded EUR22bn bid to construct and operate third airport in Istanbul
You may also be interested in the following articles...
Turkish Airlines SWOT: a recent pattern of falling quarterly profits, but many strategic strengths
Benefiting both from a large and growing home market and from its strategy to increase transfer traffic, Turkish Airlines (THY) continues to achieve double digit growth in traffic and revenues. Nevertheless, THY reported a year on year drop in its operating profit in 2Q2014 for the fourth successive quarter (although net profit increased due to non-operating items). It was also the fifth successive quarter to suffer a fall in unit revenue (RASK, expressed in USc).
Although it has an efficient cost structure by FSC standards, it has struggled in recent quarters to lower CASK enough to offset downward pressure on RASK. In this report, we put THY's recent quarterly results performance into a more strategic perspective by looking at its strengths, weaknesses, opportunities and threats.
Pegasus Airlines' fourth successive fall in underlying quarterly profit, but perhaps turned a corner
Although Turkish LCC Pegasus Airlines reported a year on year increase in 2Q net profit, the underlying operating result was less than the same period last year. This was the fourth successive quarter of year on year declines in the underlying operating result.
Reading Pegasus' results is complicated by foreign exchange movements, since the majority of its revenues and, particularly, its costs are denominated in hard currency (mainly EUR and USD). Expressed in EUR terms, rather than in Pegasus' reporting currency of TRY, Pegasus lowered its CASK (cost per available seat km) in 2Q, but enough to compensate for the drop in RASK (revenue per available seat km).
Nevertheless, Pegasus reiterated its FY2014 guidance amid some signs that it may have turned a corner and be ready to leave the path of deteriorating margins.