Coronavirus: Ability to service US$250m T3 loan in jeopardy

Decline in the global aviation industry is expected to considerably affect revenues of the Ghana Airports Company Limited (GACL), and its ability to service loans secured for the Kotoka International Airport’s Terminal 3 project.

Already, the Aviation Ministry had earlier asserted that the US$250 million T3 project which is partly funded by the African Development Bank, has a very high interest rate of 8.5 percent on the loan used for the project.

Government’s renegotiation of that interest rate to five percent according to Aviation Minister, Joseph Kofi Adda, is still not enough because of the reduction in the company’s revenues resulting from the coronavirus outbreak.

Indeed, the current temporary closure of the Kotoka International Airport (KIA) and ban on all air travel does not augur well for raking in the required revenue to service the existing loan including the interest accruing on it.

Arrivals through the five million capacity KIA in 2019, were three million passengers, but significantly lower numbers are projected in 2020, should the coronavirus pandemic extend to mid-year or beyond.

Based on the International Air Transport Association’s (IATA) projections, the current drop in load factor—a measure of airlines’ capacity utilisation—will continue for the next three months before loads recover to pre-coronavirus levels.

IATA estimates, under two potential scenarios—partial containment and widespread community transmission—that passenger revenue losses for its member airlines will be between US$63 billion and US$113 billion.