ENG-1997 — Page 329

THE AIRPORT CORE PROGRAMME

Construction

Construction and fit-out work entered its most intensive phase during the year. All time-critical elements of the airport, from the airfield to the passenger terminal building and ground transportation centre, and from the airport island's road network to the installation of utilities and communications systems, were well in hand.

The passenger terminal building, with a gross floor area of 516 000 square metres at airport opening, dominated the landscape on Chek Lap Kok. During the year, the work focus moved from the exterior to the interior of the building. The structural and building services work were substantially complete by the year's end, and the installation and integration of the airport's vital and all-embracing communications and security systems were well under way.

The transportation centre was rapidly taking shape. Incorporating the AR Airport Station, it will act as an integrated transport hub for all surface transport. Access roads to the terminal and the transportation centre were completed in the year.

Flight trials at the first (or southern) runway began on schedule in February 1997. Trials were then conducted on electronic and visual systems throughout the year. Works for landside infrastructure made good progress.

Contracts for the second (or northern) runway and for the main building contract for the extension to the passenger terminal north-west concourse were awarded in April and September respectively. The northern runway, which is outside the ACP scope, is scheduled for operation in late 1998.

Government Facilities

Work progressed well on the government facilities, including the air traffic control complex and tower, the Government Flying Service Building, an airmail centre, a police station and three fire stations. Additional government facilities were being developed to support the operation of the northern runway.

Finance

The AA continued to plan and control its finances within the parameters of the AA Ordinance and, with regard to first-phase development, in accordance with the provisions of the Financial Support Agreement (FSA) signed with the government in 1995. The FSA has given the AA a package of financial support to faciliate the raising of finance. Following success in securing an $8.2 billion syndicated loan facility which covers a substantial part of its permitted borrowings for the first phase development, in September 1997 the AA signed a $4 billion syndicated revolving loan with 32 international financial institutions for general corporate purposes. These include the financing of the second runway, the north-west concourse and new capital expenditure arising after airport opening. In October, the AA signed a $5 billion Note Issuance Programme arranged by the Hong Kong Monetary Authority.

Commercial Franchises and Real Estate Development

The AA has awarded the major franchises on aviation support services that are required on airport opening. Works on these franchisees' facilities were moving ahead rapidly. The award of other commercial franchises and licences continued. At the

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