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5. AIR SERVICE AGREEMENTS (ASA). FERREIRA SAID TALKS WITH THE USA HAD BEEN FIXED FOR 12-13 MAY. HE UNDERSTOOD MACAU, NOT PORTUGAL, WOULD NEGOTIATE ANY AGREEMENTS, WHICH WOULD NEED THE APPROVAL OF CHINA TO SATISFY THE OTHER PARTY. HE WAS NOT SURE WHETHER THE USA TALKS HAD CHINA'S APPROVAL. MACAU ALSO WANTED TALKS WITH JAPAN SOON. FERREIRA SAID THE USA AND JAPAN HAD BEEN CHOSEN BECAUSE THEIR LEVERAGE ON CHINA WAS GREATEST. A DRAFT DOCUMENT BY MACAU ON ASAS HAD MET THE RESPONSE FROM PEKING THAT IT WAS NOT YET APPROPRIATE TO DISCUSS SUCH A DOCUMENT.
6. FINANCE. FERREIRA SAID ORIGINAL 1988 ESTIMATES FOR THE AIRPORT'S COST WERE PATACAS 3.5 BILLION (A PATACA IS SLIGHTLY LESS THAN A HONG KONG DOLLAR). THE AIRPORT FINANCIAL ADVISORY COMMITTEE HAD JUST RE-ESTIMATED PATACAS 5.5 BILLION (ABOUT US DOLLARS 760 MILLION). THIS LEFT A SUBSTANTIAL SHORTFALL FROM THE SUM CURRENTLY RAISED BY SHAREHOLDERS (1.3 BILLION). FERREIRA SAID HE INTEND TO RAISE AN EXTRA 800 MILLION FROM ADDITIONAL SHARES. THE GOVERNMENT WOULD HAVE TO CONTRIBUTE, EITHER BY 10 YEAR LOANS (THE FINANCIAL ADVISERS' RECOMMENDATION) OR BONDS OR STRAIGHT INVESTMENT. ON LOW TRAFFIC FORECASTS THE CONSULTANTS PREDICTED BREAK EVEN BY 2001, AND ON MEDIUM FORECASTS A RETURN ON INVESTMENT OF 7 PER CENT. THIS MEANT A PERILOUS CASH FLOW SITUATION IN THE FIRST FEW YEARS.
7. FERREIRA SAID THE ITALIANS HAD PLEDGED EXPORT CREDIT FOR THEIR PATACAS 300 MILLION CONSTRUCTION BUSINESS: HE WOULD APPROACH CHINA FOR THE SAME (IN RENMINBI) FOR THEIR 700 MILLION SHARE OF BUSINESS. HE KNEW IT WOULD NOT WORK, BUT THOUGHT IT WOULD BE USEFUL TACTICALLY. UNLESS EUROPEANS MADE SOFT LOANS AVAILABLE FOR EQUIPMENT PURCHASE, AMERICAN PRICES WOULD BE HARD TO BEAT.
8. FERREIRA ALSO EXPRESSED DOUBTS ABOUT THE CURRENT DESIGN OF DEPARTURE HALLS, WITH SEPARATE CHINESE AND MACANESE CUSTOMS/IMMIGRATION FACILITIES. HE COULD SEE DIFFICULTIES OVER
SOVEREIGNTY.
9. HE THOUGHT THE PROJECT WOULD BE HELPED BY THE HONG KONG BUDGET INCREASE IN AIRPORT DEPARTURE TAX. MACAU DEPARTURE TAX REVENUE WOULD GO TO THE AIRPORT COMPANY, BUT LEVELS WOULD NOT EXCEED THOSE OF HONG KONG. HONG KONG'S DEPARTURE TAX INCREASE WAS CONSEQUENTLY WORTH PATACAS 45 MILLION PA TO HIS CASH FLOW.
10. FERREIRA ACCEPTED THAT THE ECONOMIC CASE FOR MACAU'S AIRPORT
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Y.