Reported timetable for completion appears tight(330 words)

Published: 1/31/2001

Aeroflot has accepted tenders for the project management of the third terminal at Moscow's Shermetyevo Airport and is due to announce the start of the project on the 7th February. According to sources, tenders for the project management have come from most of the major international airport project managers, including Aeroport de Paris, Bovis, Parsons and Parsons Brinkerhoff. The cost of the development is estimated to be between $200-250m. This is regarded by some sources as being at the lower end of the possible price range, given the conditions of Moscow and the reported timescale for completion by 2003. Although this is achievable, it is seen as cutting it fine. Advisors on the project are reported to included Morgan Stanley, Arthur Anderson and McKinsey. The development of the airport comes as a result of the agreements between Aeroflot and the Moscow Region, signed in December, regarding the construction of the terminal. Aeroflot will, apparently, provide 30% of the financing, with the remainder of the venture's funding yet to be clarified. Some sources indicate the terminal may even be a self-development for the carrier. Given that Aeroflot currently has $60m in cash on its balance sheet, with a heavy development plan, this option would be a considerable undertaking given Aeroflot's net debt of $1.1 billion including leases. Details of the funding may emerge on the 9th of February. This does appear to be premature, given the early stage of the project and the role of the project manager in defining the costs. The nearness of the operating date for the new terminal has been ascribed to the fact that the completion of the new terminal is seen as the key for Aeroflot's full entry into the SkyTeam alliance. Seemingly, similar developments are required in Paris and Seoul from the alliance members, Air France and Korean Air. The current round of tendering comes after the dropping-out of Swedish contractor, Skanska, at the end of last year - reportedly due to disagreements between the two parties over the level of government guarantees on the project.

Article ID: 2332