Airbus investment in EEC hinges on thorny PPP issue

[webfact]

Airbus investment in EEC hinges on thorny PPP issue

By THE NATION

 

 

Airbus’ commitment to invest in the Eastern Economic Corridor could materialise next month if a thorny issue were to be resolved, according to a source at the Eastern Economic Corridor Office (EECO).

 

The European aircraft manufacturer and Thai authorities have still not agreed on the framework of investment in a maintenance, repair and overhaul of aircraft (MRO) at U-tapao International Airport in Rayong province, according to the source at the EECO.

 

The Thai side insists that the joint venture between Airbus and Thai Airways be a public-private partnership (PPP) as a public infrastructure project whose assets would be handed over to the government after 50 years of operation.

 

Airbus, however, is opposed to a PPP joint venture, and instead wants it to be a joint investment project between two private companies without a lifespan for the project.

 

The source said that the selection committee responsible for selecting a partner for the investment project may need to forward Airbus' proposal to the Cabinet for consideration, or make changes to the previous investment framework.

 

The source said that Airbus remains interested in the MRO investment projects as it sees its potential.

 

According to the Thai Airways investment plan, Thai Airways will invest Bt2 billion between 2023 and 2043 of the total estimated investment of Bt6.3 billion in the project. The rest will be invested by business partners. The land area designated for this investment is 210 rai.

 

Its capacity is about 80 to 100 planes. If investment goes as planned, it will start operating in 2023 with revenue projection of Bt400 million to Bt500 million in the first year.

 

It will repair about 10 airplanes in the first year of operation. Revenue is expected to grow about 2 per cent per year and total revenue for 50 years is projected at Bt200 billion.

 

Sumeth Damrongchaitham, president of Thai Airways, was optimistic about the investment plan. He said the selection committee was awaiting a proposal from Airbus, which is expected to submit its plan by next month.

 

“We learn that Airbus will make a proposal due to the high demand for MOR services, but only small details of the investment contract need to be resolved,” he added.

 

Source: https://www.nationthailand.com/business/30376878

 

-- © Copyright The Nation Thailand 2019-09-30

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[leeneeds]

37 minutes ago, webfact said:

Airbus, however, is opposed to a PPP joint venture, and instead wants it to be a joint investment project between two private companies without a lifespan for the project.

Don't blame them who knows what form of transport will be around in 50 years time, the rapid growth of technology is coming in years now not decades. 

[jastheace]

indeed, I was watching 'futurama' just this afternoon, seems so real nowadays

[Cadbury]

Any company that is planning on going into partnership with Thai Airways needs to think hard and long about their decision.

There is a likely risk they could be dragged down to the same level on incompetence as Thai Airways itself.

 

[ChrisY1]

A handover plan in 50 years is very old school...no modern company would agree unless the said business could not change too much in that time span.

Transport is changing almost daily..

[yellowboat]

3 hours ago, webfact said:

Airbus, however, is opposed to a PPP joint venture, and instead wants it to be a joint investment project between two private companies without a lifespan for the project.

 

Thailand needs Airbus.  Airbus does not need Thailand.   PPP sounds like a typical one sided option offered by the junta. 

[DLock]

If Airbus can force Thai Airways hand of only buying Airbus and replacing it's fleet within X number of years, its a good deal for Airbus, and who cares about the PPP portion or only service 10 planes per year...

 

...I do worry about Thai's maintaining airplanes however.

[Srikcir]

7 hours ago, webfact said:

Airbus, however, is opposed to a PPP joint venture, and instead wants it to be a joint investment project between two private companies

To me a confusing statement.

Doesn't Airbus realize that that THAI is not a private company?

The Thai government owns 51% majority stock and 49% is publicly-owned.

Add to the fact that THAI can't make a profit and has had a history of massive losses even with government bailouts, a joint venture would be an economic nightmare for investment risk.

But maybe Airbus meant that the Thai government sell it stake in THAI and THAI investors take it private in order to have a joint venture with Airbus?

[bowerboy]

I find it hard to believe that any company would consider such a long term investment plan here with everything that isn’t happening now with Chevron and what happened to Kingsgate mining.

 

[Cadbury]

16 minutes ago, bowerboy said:

I find it hard to believe that any company would consider such a long term investment plan here with everything that isn’t happening now with Chevron and what happened to Kingsgate mining.

 

Airbus need only look at what happened to Hopewell with SRT and what this slimy dirty tricks government is trying to do to Hopewell now.

Thai Airways and the SRT are like brother and sister when it comes to incompetence and corruption. No foreign investor should ever contemplate doing business with them.

Airbus should give Rolls Royce a call and check with them as to required minimum envelope size. 

[yellowboat]

1 hour ago, Srikcir said:

To me a confusing statement.

Doesn't Airbus realize that that THAI is not a private company?

The Thai government owns 51% majority stock and 49% is publicly-owned.

Add to the fact that THAI can't make a profit and has had a history of massive losses even with government bailouts, a joint venture would be an economic nightmare for investment risk.

But maybe Airbus meant that the Thai government sell it stake in THAI and THAI investors take it private in order to have a joint venture with Airbus?

If the junta offered a 20% stake in Thai immigration, the deal might work. 

[Reigntax]

24 minutes ago, yellowboat said:

If the junta offered a 20% stake in Thai immigration, the deal might work. 

But who would want to be responsible for 8 million Chinese?