Aecon: Lower Revenue Due To Flight Suspension
Aecon Group – the Canadian company involved with Bermuda’s airport project – reported their results for the 2020 second quarter, saying that lower revenue was “primarily due to a slowdown and then suspension of commercial flight operations” at the Bermuda airport.
A statement on their website said, “Revenue for the three months ended June 30, 2020 of $779 million was $88 million, or 10%, lower compared to the second quarter of 2019. Revenue for the three months ended June 30, 2020 was lower in the Construction segment ($69 million), driven by lower revenue in nuclear operations ($95 million) and in civil operations and urban transportation systems ($27 million), each of which was impacted to some extent by project slowdowns and suspensions related to COVID-19 during the second quarter.
“These decreases were partially offset by higher revenue in utilities ($27 million) and industrial operations ($26 million). In the Concessions segment, lower revenue for the three months ended June 30, 2020 of $52 million was primarily due to a slowdown and then suspension of commercial flight operations on March 20, 2020 at the Bermuda International Airport Redevelopment Project for reasons related to the COVID-19 pandemic and was partially offset by inter-segment revenue eliminations that decreased by $33 million due to revenue between the Concessions and Construction segments related to the Bermuda International Airport Redevelopment Project.
“Operating loss of $0.8 million for the three months ended June 30, 2020 worsened by $28.9 million compared to an operating profit of $28.1 million in the same period in 2019 driven by a decrease in gross profit of $42.5 million. In the Construction segment, gross profit in the second quarter decreased by $22.3 million primarily from lower volume and gross profit margin in civil operations and urban transportation systems and lower volume in nuclear operations.
“These decreases were partially offset by higher gross profit in industrial operations driven by higher volume and gross profit margin. In the Concessions segment, gross profit decreased by $19.5 million compared to the same period in 2019, due to the suspension of commercial flight operations on March 20, 2020 at the Bermuda International Airport Redevelopment Project for reasons related to the COVID-19 pandemic.”
“Operating profit in the Concessions segment for the three months ended June 30, 2020 decreased by $10.6 million compared to the same period in 2019. The lower operating profit occurred in the Bermuda International Airport Redevelopment Project and resulted from the above noted COVID-19 impact on airport operations.”
The company’s statement also added, “Aecon holds a 100% interest in Bermuda Skyport Corporation Limited, the concessionaire responsible for the Bermuda airport’s operations, maintenance and commercial functions, and the entity that will manage and coordinate the overall delivery of the Bermuda International Airport Redevelopment Project over a 30-year concession term.”
The statement on their website actually contains far more detail, so for those who want further information please see the original statement from Aecon.
The airport finances have been the topic of discussion recently, as on Friday in the House of Assembly, Minister of Transport Neville Tyrrell said that Government has paid $5.7 million as the revenue received by Skyport “fell short of the Guaranteed Minimum Regulated Revenue for the quarter as set out in the Project Agreement.”
“Although commercial flights resumed at the beginning of July, it will take time to build up to the air arrival numbers we enjoyed previously,” the Minister said. “Therefore, the Government assumes it will be forced to provide the Airport Authority with additional supplementary funds at quarterly intervals this year. ”
Following his statement, OBA Leader Craig Cannonier said that the Minister of Transport’s statement to Parliament was “misleading and hypocritical” as “the money the PLP are talking about is not going to Aecon”, and it is “going to our lenders.”
“The only reason the lenders are getting some money is because too few planes have been flying here – because of the pandemic,” Mr Cannonier said. “Through a profit-sharing deal with Skyport, it is likely that the money paid to the lenders will be recovered.”
MP Lawrence Scott also commented on the matter, saying the previous OBA Government entered into the airport deal which “included a clause that stipulated that if airport traffic numbers were to fall the Government would provide a Minimum Regulated Revenue Guarantee.”
“The bottom line is, we, the Bermudian taxpayers have paid out $5,770,995.54 and counting because of the deal,” Mr Scott said.
And just to think they were ready to sell our Airport to the Chinese.
Thank you SpongeBob and OBA!!!!!!!!!!!!!!!!
That’s 20 million plus a year thanks to the oba aka UBP. When a party selects Jetgate as it’s leader you know it’s not serious about winning any future elections. Later they complain that so many voters left them and they wonder why.
How much would we have lost if the Government was still running the airport?
Well right now we are on the hook for a billion $ loss over 30 years thanks to OBA! I’m thinking even the PLP would have done much better!
What do you think about the PLP hospital WING that costs us $30mn a year for 30 years?
At least we got a whole airport for you same amount.
The airport used to make a net profit of $4m per annum prior to Aecon taking over airport revenue. Like I was opposed to this project back in 2016, I continue to be opposed today. We are a small nation and the airport we had was just fine. Small is beautiful!
Do you have any idea how much it was costing in maintenance alone? A cost that would increase year on year? You really would not have wanted to work under such conditions. A new airport was a no brainer, even Brown’s PLP knew that, yet his would have cost a damn sight more.
“Therefore, the Government assumes it will be forced to provide the Airport Authority with additional supplementary funds at quarterly intervals this year.”
That is good to know. Now the PLP Government will be planning for further payments to our lenders for the airport construction.
The PLP Government stopped paying into the sinking fund, so we won’t have savingsto pay our current debt when it falls due.
But you have nothing to say about this shady deal that was made?
LMAO
The shady deal to let the BIU off its obligation to pay the $7.5m Performance Bond?
OJ. Shady deal? It was reviewed many times over by outside entities, including the UK. If you want to look at shady deals, look at the money paid to Global Hue; the money spent on Port Royal which resulted in a lawsuit; the terms of the new “hospital” which has still never been released and the soon to be signed PPP to build the Arbitration Centre. When will the marches and blockades of the HOA start?
Given that Correia Construction is in liquidation, I did not think it appropriate to discuss the deal that allowed for sub-standard material to be used at the King’s Wharf Cruise Ship Terminal
Why is this a surprise? Why didn’t the Minister of Finance build this into his planning? The PLP knew the terms of the contract so would know as soon as they closed the airport all revenue would cease and the guarantee triggered.
I agree. This had to have been obvious since February.
They also make a big deal of $5.7m, but it was the PLP who let the Union off its $7.5m obligation under the Berkley Performance Bond.
Berkeley is a drop in the bucket versus Caroline Bay and the 1 Billion over 30 years with the airport deal! Thanks OBA! They have got to get rid of Cannonier and Dunkley if they even want to compete – but they won’t!
Suddenly you don’t want to talk about cost overruns.
Or the PLP hospital WING whichcosts is $30mn a year doe 30 years.
They never remember the hospital they sold to foreigners to the tune of $10 Billion over the next 30 years, or the $800 Million….or putting Bermuda Billions of dollars into debt.
Has the BIU finally filed their accounts with the Bermuda Government as required by law after all, all, all these years?
Nahhhhh not going to happen.