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CNA explores stake in Vietnam's airport concession after deal on new terminal

CNA Group said on Thursday that it is looking at acquiring a stake in Vietnam's 30-year airport concession after it has signed a Letter of Intent (LOI) to provide mechanical, electrical and plumbing services for a new terminal in Ho Chi Minh City, Vietnam.

The US$70 million (about S$95.8 million) LOI was signed between CNA's subsidiary, CNA-HTE Vietnam Co, and Vietstar Airlines Multirole Corporation.

The new terminal - which sits on a 180,000 sq m site in Ho Chi Minh City - is expected to be completed in 18 to 20 months and operational by early 2017. The current Tan Son Nhat International airport capacity has been recently expanded from 20 million to 25 million passengers per annum as it was running at over capacity.

The new terminal will comprise a 39,500 sq m passenger terminal building, a cargo terminal building and a multi-purpose warehouse, as well as ancillary buildings such as a sewerage treatment plant.

It is designed for nine million passengers per annum handling capacity. The traffic is expected to be 85 per cent domestic and 15 per cent international passengers, growing at an average of over 13 per cent per year.

CNA said it is exploring the possibility of equity participation in the 30-year airport concession to secure long-term recurring income opportunities.

The latest contract is expected to have a material impact on the results for the financial year ended Dec 31, 2015.