Air Astana - Technical Centre

Location:

Kazakhstan

Project number:

47354

Business sector:

Transport

Notice type:

Private

Environmental category:

B

Approval date:

28 Oct 2015

Status:

Complete

PSD disclosed:

10 Aug 2015

Translated version of this PSD: Russian

Project Description

The EBRD is providing an up to USD 18.2 million (EUR 16.5 million) senior secured corporate loan to JSC Air Astana (“the Borrower”, “the Company” or “AA”) for the construction of the new technical maintenance centre of the Company in Astana International Airport (the “Centre”). The proceeds of the proposed financing will be used to build an aircraft hangar (including storage area and administration offices) and a garage for specialised vehicles.

The operation will enable the Company to streamline its maintenance operations, increase efficiency and expand its presence in a fast-growing Astana hub in Kazakhstan.

Transition Impact

The transition impact of the Project is expected to derive from:

  • Market expansion/increased competition. Currently there are no aircraft maintenance facilities in Central Asia for large aircrafts. International airlines need to have their aircrafts to be maintained in foreign countries (UK and China). There is a need to enhance the aircraft maintenance market in the region. The Project will contribute to the market expansion of maintenance activities for large aircrafts. A maintenance facility of this size will be new to the country and to Central Asia. Moreover, the availability of access to third parties could contribute to increased competition and safety standards in the aviation sector in Kazakhstan.
     
  • Skills Transfer. Apart from standard management and administrative skills that are required to run any commercial organisation, a set of highly technical and specialised skills in the aircraft repair and maintenance industry will be required to successfully operate the Centre. Availability of such skills is currently limited and in some cases non-existent in Kazakhstan.  AA intends to develop new aviation engineering competences through its aviation training school. In order to achieve that, AA will significantly expand the school’s curriculum using international best practices in order to fulfil both the Company’s and regional market demands with required engineering competences. The Project will facilitate skills transfer from abroad as AA will either invite trainers from the West or send its staff to certified European schools for obtaining required competences.

The Client

JSC Air Astana is a flag carrier of the Republic of Kazakhstan (“RK”). AA operates one of the youngest fleets in CIS that consists of 30 aircraft with an average age of 6.2 years. In 2014, revenues amounted to USD 935 million and EBITDA stood at USD 144 million. The Company’s shareholders are Samruk Kazyna (“SK”, 51 per cent) and BAE Systems PLC (“BAE”, 49 per cent).

EBRD Finance

An up to USD 18.2 million (EUR 16.5 million) senior secured corporate loan.

Project Cost

Up to USD 29.6 million.
 

Environmental and social categorisation, impact, and mitigation
 

The Project has been categorised B in accordance with the Bank’s Environmental and Social Policy 2014. An environmental and social due diligence (ESDD) has been undertaken by the Bank’s environmental and social specialists based on a review of the Company’s corporate management systems and relevant information provided by the Company. The ESDD confirmed that the Project will have limited environmental and social impacts which will be mitigated by a number of standard measures established in the Environmental and Social Action Plan.

The investigations performed as part of project appraisal concluded that construction and operation of the new technical maintenance centre of the Company in Astana International Airport to conduct routine checks and maintenance of various Boeing and Airbus aircraft will have limited site specific impacts.

The Bank’s ESDD confirmed that the Company has adequate corporate systems in place to manage their environmental, health and safety (EHS) issues and that at both the corporate and site level the Company is substantially compliant with local EHS regulatory requirements and with IATA and EASA (European Aviation Safety Agency) standards.

Potential future adverse impacts associated with the Project are related to the construction activities and include impacts to water quality, air quality, noise and vibration levels and waste management; however, the majority of these impacts are expected to be site specific, limited to construction phase only and addressed through implementation of appropriate mitigation measures. The project implementation is limited to the urban area within the boundaries of the existing airport and no sensitive ecological receptors or protected zones will be affected. In addition, it is anticipated that the Project will not have significant adverse social impacts to local communities or other project affected parties, nor will the Project require the acquisition of lands or result in involuntary resettlement or economic displacement.

An Environmental and Social Action Plan (ESAP) has been developed for the Company to structure the Project to comply with national regulations and EBRD's PRs. The ESAP, the implementation of which will be covenanted in the legal agreements, addresses the necessary improvements in the Company's E&S and HR management systems and capacity as well as improvements in managing construction activities so as to avoid, minimise and mitigate the potential adverse E&S impacts of the Project.

The Project will be monitored in terms of its environmental and social performance and implementation of the ESAP through annual E&S reports and site visits when deemed necessary.

Technical Cooperation

None.

Company Contact

Alexander Nee

Alexander.nee@airastana.com

+7 727 258-41-36

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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