Lufthansa to take over Philip Goldson Int'l !!

BELIZE CITY, Thurs. June 6, 2002


Belizean authorities today,
Thursday, June 6, 2002, forwarded
their final comments to Lufthansa
Consulting GMBH in an
effort to wrap up negotiations
between the Government of
Belize (GOB) and the German
company, which reportedly
approached the Government two
years ago to take over the
management of Belize's only
international airport - the Philip
Goldson International Airport
(PGIA).


Prime Minister Said Musa announced
in his State of the
Nation address last September
(2001) that negotiations were
"well underway" with Lufthansa for
a management contract
"to include the expansion of the
existing runway and upgrade
of terminal facilities."


In a discussion with KREMANDALA this morning, Minister
of Budget Management, Hon.
Ralph Fonseca, said that since his Government has
taken office, Government has
received a total of $150 million from the
privatization proceeds. According to the
information we have received, Government will not be
getting any initial lump sum
payment from the contract, but will receive its money
through a stream of revenues over
the life of the concessionary (lease) agreement.


Reliable information reaching Amandala indicates that
the Lufthansa deal actually
involves a consortium of international companies,
including Philip Holzman AG/Anlagen,
Holland and Knight and Key Corporate Capital Inc./Key
Global Finance. The Lufthansa
consortium would lease the facilities from GOB for a
period of 30 years, after which they
would, under the current proposal, return to GOB.


This is according to Senator Eamon Courtenay, Belize's
Ambassador for Trade and
Investment, and also the Executive Chairman of
BELTRAIDE, who informed Amandala in
an interview this afternoon that within a month's
time, a proposal for the 30-year revenue
sharing agreement should be taken to the Belize
Cabinet, for a decision on the proposed
leasing of PGIA.


Fonseca said that under the concessionary agreement,
Lufthansa would make an
anticipated $300 million investment in Belize. The
Lufthansa group would also take on
the airport's debt service payments, as well the
current debt, which is reported at $50
million, according to Amandala sources.


Courtenay told the press that Government would earn a
"concessionary fee" from the
private managers, which would essentially be a yet
undecided percentage of the
revenues collected by Lufthansa. Government's
proposal, he notes, is for quarterly
payments on revenues, projected at an average of $2
million per quarter, according to our
sources. This would be payable whether there is a
profit or not, Courtenay said.


Sixty-percent of the airport's revenues comes from
fees charged, primarily the departure
tax, which was increased from $20 to $30 (plus a $2.50
security fee) in August, 2000,
after Government had invested over $10 million in
infrastructural developments at the
airport terminal building, as well as for apron
expansion, the construction of a new taxi
airway and turning loops.


Under the new development plan with Lufthansa,
Courtenay said, there would be an
initial $42 million investment to extend the existing
7,000-foot runway, as well as further
investments to expand and rehabilitate cargo services,
to expand the apron and to
maximize the use of the existing building - all
estimated at $100 million. A cumulative
$200 million investment is anticipated over the first
ten years.


Courtenay told the newspaper that the Belize
negotiating team, which includes
representatives from the Belize Airport Authority, has
indicated that the Belizean people
are not prepared to pay more for services without
seeing an increase in investment on
the ground. He also said that whatever the airport
fees are, they must be regionally
competitive. They have insisted that "all the
[airport] employees would be retained" and
that "the [concession] stores would stay," Courtenay
further claimed.


The Memorandum of Understanding between the two
parties was signed in January,
2002, and Government is hoping that the deal will be
closed within the current financial
year, 2002/2003. The effecting of the agreement,
according to Fonseca, would mean the
shedding of [$50 million] debt, transfer of technology
and inflow of foreign capital. He also
said that GOB is trying to sell Belize, one of the
most popular tourist destinations in the
world, as a "hub" for the region.


Lufthansa Consulting is a subsidiary of the
75-year-old Lufthansa German Airlines, which
drew in Euro 16.6 billion (US$17.6 bn) in revenues
last year. Fonseca told the press that
Lufthansa Consulting's leasing of the airport would
also mean the introduction of direct
flights from Europe. Courtenay agreed with Fonseca,
adding that more direct flights
between Belize and other destinations would mean
cutting travel time, and also that
Belizean producers would be better able to explore
market possibilities for the
exportation of fresh fruits, flowers and seafood. He
said that the proposed development of
the airport, to include international free zones,
would foster both commerce and tourism.


In terms of international standards, The Philip
Goldson International Airport was rated
Category III, or non-complaint, by the US Federal
Airport Authority (FAA), but Belize
Airport Authority officials say that the FAA ratings
have been condemned by the United
Nations, which does its own assessments through ICAO -
the International Civil Aviation
Organization, based on Montreal, Canada.


Airport authorities say that Belize now has a Category
II rating, indicating "conditional
compliance." Category II countries are allowed limited
operations to the United States
and must be under heightened FAA operations
inspections and surveillance. According
to Enrique Hoare, Civil Aviation's operations manager,
this would impact any new Belize
flag carrier which might want to fly to the US. (The
new company Bel Air, which was
hoping to become Belize's first flag carrier for the
new millennium, has been silent since
its inaugural flight early May.)


Belize is one of the 187 members of ICAO, which
conducted its last assessment in
Belize last March. Ephraim Gomez, Chief Civil Aviation
Officer, told the press that Belize
is now working on its deficiencies in aviation. Legal
consultant, Sagrario Padilla of
Agencia Centroamericana de Seguridad Aeronautica (a
COCESNA affiliate), is now in
Belize assisting with the revision of Belize's civil
aviation laws, which Gomez said should
be completed within the next year. Gomez said the
Authority, which will maintain its
supervisory role once the concessionary agreement with
Lufthansa takes effect, is also
working on fortifying and empowering its inspection
team and improving security
measures.