PHILIPSBURG — “The best way forward is that all layers of PJIA group are aligned. Only then can we become efficient and get the airport fixed correctly,” SXM Airport CEO Brian Mingo said in a Zoom-interview with StMaartenNews.com.
Mingo said that he received a 90% score on his performance evaluation for 2020. He provided proof that this evaluation took place before the holding company (PJIAH) demanded his removal due to poor performance output in a letter dated December 3, 2020.
“Corporate actions such as these are very daring since it confirms we are not all on the same page within the airport group. This creates uncertainty for the many different parties not excluding the sponsors of the present reconstruction project valued over $100 million. A project we have been waiting on for nearly 3½ years.”
Mingo emphasized that he did not want to make the interview about the attempts to remove him from his position. “This is not about Brian Mingo. This is about the airport,” he said.
The supervisory board of PJIAE consists of “professionals,” Mingo said, adding that the present supervisory board evaluated his performance. Currently it consists of four members: Kamla Besancon, Clarence Derby, Alain Maca and Helma Etnel.
Next to Mingo as Chief Executive Officer, the managing board consists of Michel Hyman (Chief Operations Officer) and Leo van der Meiden (Chief Financial Officer). They are all three statutory directors.
“COO Michel Hyman is an experienced operational person and Leo van der Meiden is a financial executive with vast knowledge who worked for more than 32 years for the Royal Shell Group until 2016 as global controller of the Project and Technology Division and whose appointment in July 2020 at the airport was seconded by the Royal Schiphol Group.”
With this management team the recovery program to rebuild the business and the reconstruction of the main terminal is being executed. “It is not an easy task since our airport is the only airport in the world that is facing a double crisis, the reconstruction of its building and the present Covid-19 business recovery.”
PJIAE was an airport which always held a great financial position with reserves, however at the end of 2018 this was not the case and in 2019 the airport needed immediate intervention of its shareholder the government.
“The airport could not meet its obligations and had consumed all its cash and was unable to secure any capital funding to rebuild its damaged main structure. The company had performed many initiatives in 2017 and 2018 after Hurricane Irma, these were to reopen and keep the airport functioning but with the low passenger numbers, without any new funding and the delayed insurance proceeds, the plan to recovery became impossible.”
In 2019 the government and the airport agreed to the funding of the World Bank which included a bridge loan of $20 million and a $100 million capital package to rebuild the terminal building.
In a presentation to the Central Committee of Parliament last week, it was mentioned that Princess Juliana is the only airport in the world that must deal with a double crisis: the devastating consequences of Hurricane Irma in 2017 and the huge impact of the COVID-19 pandemic. And the airport is doing relatively well: in 2020 it recovered 37 percent of the passengers it handled in 2019, compared to a global average recovery percentage of 25%.
“We are not out of the woods as yet, but it is a great effort by all stakeholders, the airlines, the airport community, the government and the airport. We need to face the reality and if the numbers do not climb beyond the 70 percent, we are losing money every day. Today our airport is on life support,” Mingo says.
“The good news is that we have made a plan, a plan that we are finalizing to get the airport back on its feet. One part tackles the business the other the reconstruction project. With this plan we have forecasted a baseline recovery.”
The baseline recovery projection assumes 49 percent recovery in 2021 and 77 percent in the following year. In 2024 the airport will for the first time beat the numbers from 2019 (102 percent). But there is also a worst-case scenario with 36 percent recovery in 2021, 58 percent in 2022 and just 97 percent in 2024.
For now, Mingo’s focus is on the airport’s reconstruction project. While parliamentarians have echoed the baseless accusations of the holding’s supervisory board that he has caused cost overruns (from $107 to $119 million and according to MP Emmanuel to an unsubstantiated $131 million), Mingo showed that this is not the case.
“The $107 million represents Package 2 (the main reconstruction project) of which the capital funding by the World Bank and the European Investment Bank is for $100 million. We already paid a lot of expenses out of pocket this for the preparatory works and other fixes to keep the airport running. For now, there are no cost overruns. We have reported a possible increase in pricing, but this is a precautionary measure,” Mingo said.
Since all numbers are based on blueprint estimates made in 2018 and the actual bids are not known until the end of March 2021, no concrete confirmation can be given on the overall project costs. Prices are only confirmed after we get to see how the market reacts, and during these extraordinary times the market can respond differently.
“We have reviewed the estimations and due to the price indexation (6%), update of scope (3%) and finalization of the detailed design (3 %) we have estimated a 12% increase. Market prices swing. Some go up, some go down. We have reported this to many of the stakeholders and to the Council of Ministers. It was also misinterpreted by some as a project overrun, but it is rather an reporting obligation we have decided on.”
The bidding process takes time, Mingo says, each potential contractor has the ability to ask questions on the provided bidding documents and these have to be answered accordingly. Some of these questions and answers lead to clarifications and amendments in the bidding documents to be shared with all potential contractors. The airport has had to answer well over 200 technical questions from potential bidders. The process is guarded by the World Bank and these steps are taken to avoid any future disagreements and even litigations as we have seen in the past.
The mold remediation (in other words: solving the mold-problem in the terminal building) is scheduled to be completed in April. Bids for the main reconstruction work are expected in March, followed by an evaluation in April and awarding contracts in May. This process is governed by World Bank protocols. Work will begin as early as June and will take 22 months to complete, setting the tentative completion date at March or April of 2023.
Fun fact: Mingo bought the Carousel (that is, the merry-go-round from the former ice cream parlor in Simpson Bay) from Toppers for a symbolic one dollar. It has been dismantled and put in storage and will return at a later date to make being at the airport a more memorable experience – with a big thank you to Topper and his family on display.
“In closing,” Mingo concluded. “St. Maarten can only move forward if all parties are on board. The government, the sponsors, the airport group of companies and not forgetting the organization and its workers. Fixing the airport is so important and so grand and it’s not only for St. Maarten. We also serve the region. We need to work together; we need to get this right. Anything else is fruitless.”
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