- 7
Low Case
21.
The
In order to test the robustness of the plan developed in the "base case" Wardley have also modelled a less favourable financial scenario or "low case". purpose of this "low case" is to demonstrate the impact on the financial plan for the airport of a number of adverse eventualities. Those modelled were
(a)
an increase in the overall project cost, as against original budget;
22.
(b)
a delay in the completion of the project;
(c)
(d)
lower than expected revenues from the disposal of real estate prior to the opening of the airport; and
lower than expected traffic growth.
in
In order to provide adequate support to the project cashflowS
these adverse circumstances, the financial analysis suggests that the following measures would be necessary
a) provision
b)
c)
of
of
additional the day 1991 prices;
additional equity by Government equity of $8.5 billion at money prices, or $5.9 billion at March
use of Kai Tak surplus on the assumption that the airport project is completed on time in June 1997, the Kai Tak surplus (all
revenues
after subtracting all costs) will cease to
exist as a source of Government Revenue.
To enable the AA to meet its debt service obligations in the event of a delay in project completion, it will be necessary to provide for the surplus generated by the extended operation of Kai Tak to flow to the AA;
increased passenger terminal charge in the event of project delay, the other main revenue support for debt service obligations will be from increasing the passenger terminal charge beyond the $50 (at March 1991 prices) assumed in the 'base case'; and