We refer to the announcements dated 3 February 2017 and 12 April 2019 in relation to the Operating Agreements between the Government of Malaysia (“the Government”) and Malaysia Airports Holdings Berhad (“MAHB” or “the Company”).

MAHB is pleased to inform that as announced by the YB Minister of Transport during a media briefing on 9 February 2023, the Government has approved in principle the new material terms for the Operating Agreements between the Government and MAHB to operate, manage, maintain and develop 39 airports and STOLports until 2069 (“OA 2023”).

Included within the terms and conditions of OA 2023 are the following:

1. The Government and MAHB have the flexibility in the method of funding airport development costs either using Government allocations through Development Expenditure (DE) or MAHB through any suitable investment recovery model mechanism, subject to the mutual agreement of both parties with the weighted average cost of capital (WACC) to be determined only when a project will be implemented and subject to Government approval;
2. The establishment of the Airport Development Fund (ADF), a development trust account under Section 9 of the Financial Procedures Act 1957 [Act 61], to receive contributions from airport users, the public and also airlines and does not involve contributions from Government funds;
3. 50% of the Passenger Service Charge (PSC) component that is taken into account in the calculation of the User Fee will be channelled to the ADF trust account. The percentage of PSC or percentage of other components in the User Fee to be contributed to the ADF account will be reviewed every three years; and
4. The Government has the right to restructure the airport industry through clustering, carving out, divestment of airports, closure of existing airports or terminals or the restructuring of the ownership of any of the facilities subject to the mutual agreement with MAHB.

The approval is a welcome development and affirms the Operating Agreements under two (2) operating frameworks as follows:

1. Operating Agreement and Lease Agreement for KL International Airport (KLIA) between the Government and MAHB and Malaysia Airports (Sepang) Sdn Bhd; and
2. Operating Agreement and Lease Agreement for Designated Airports between the Government and MAHB and Malaysia Airports Sdn Bhd.

Pursuant to the above approval, MAHB and the Government will proceed to finalise the relevant documents to effect the OA 2023 and the relevant terms to be incorporated prior to their execution. A subsequent announcement will be made by the Company to disclose the salient information upon signing of the new operating agreements.

The OA 2023 serves as an affirmation of the airport network framework and cross-subsidisation model, allowing  MAHB to continue operating underserved essential community airports as well as 17 STOLports. The agreements will benefit the country and stakeholders at large through better airport service levels and continued development of airport capacity as OA 2023 will allow and provide an opportunity for the Company to invest and reinvest in the modernisation and development of viable airports under fair and conducive commercial terms with a clear investment return mechanism. This will certainly provide the impetus in facilitating a balanced and sustainable growth for the nation’s airports, which serve as an important economic development lever for the country.

Furthermore, the Government also agreed to the proposal to rebrand KLIA and klia2 to KLIA Terminal 1 and KLIA Terminal 2 to improve their marketability value and effectiveness, in addition to strengthening competition with international airports in the region. 

The execution of OA 2023 is expected to contribute positively to the future earnings, earnings per share and net assets per share of MAHB Group. They are not expected to have any material effect on share capital, substantial shareholders’ shareholdings and gearing of the Company.

This announcement is dated 9 February 2023.

Announcement Info