€22 million aviation investment still on the drawing board
A €22 million investment by a company specialising in aircraft ‘cosmetics’ announced last May has failed to materialise so far, though the Netherlands-based Aviation Cosmetics says its plans have only been delayed.
The company, which specialises in spraying commercial aircraft, is meant to move from Eindhoven to the aviation park in Safi, alongside Lufthansa Technik and SR Technics, with a specialised facility that would employ 80 people.
The investment was announced in May, during the same ceremony that officially launched the aviation cluster at Safi.
Yet since the signing, there have been few concrete developments. A local subsidiary company, Aviation Cosmetics Malta, was set up with the bare minimum of share capital and the company has so far not honoured its commitments to pay Malta Enterprise the yearly ground rent of €250,000 and a €4million guarantee, sources have told The Sunday Times.
When asked to confirm that the company had not honoured its contract, Malta Enterprise said it was not “at liberty to discuss commercially sensitive matters” but added that the corporation was “in talks” with Aviation Cosmetics about the project’s implementation.
“Since May 2012, Aviation Cosmetics has been working to ensure that the necessary guarantees are in place before Malta Enterprise authorises the commencement of the construction works,” a spokesman for Malta Enterprise said.
However, The Sunday Times is informed that the company was meant to post the rent straight away and issue the €4million guarantee within three months of the contract’s signing.
Aviation Cosmetics managing director Tom Jansen confirmed that these obligations had not been honoured so far but insisted the company remained committed to the project. According to the agreement, Aviation Cosmetics is bound to develop the 22,000 square-metre hangar in Safi. On completion, the Malta Industrial Parks will take over ownership of the hangar, reimburse the company the capital and then recoup the investment over a span of 20 years by charging Aviation Cosmetics a surcharge of about €1 million per year on top of the rent.
Mr Jansen said the project had been delayed because of technical difficulties during the research and development phase, which meant that the company was “not sure it could meet the agreed budget” of €17 million for the hangar’s development.
Samples from the soil at the site meant that the concrete base for the hangar had to be redesigned, Mr Jansen said. The company was also in the early stages of researching how to best optimise the hangar’s facilities.
“It is a very special operation and you can only make money from it if your building is completely optimised. That is what we have done now.
“We had to make sure that the building is sufficiently efficient,” Mr Jansen said, adding that the company had already spent “a couple of million euros” in the process.
Asked why the company had not conducted this research before signing the contract, Mr Jansen suggested that Government had rushed the company into signing the contract.
“It is a very complex building and at the time the Government wanted us to sign the contract... but we were not quite ready for it.”
Asked about this, Malta Enterprise was reluctant to go into specific details but said: “Both parties entered into this contract freely and with full knowledge of its contents”.
Mr Jansen said the company hoped to finalise the development proposal and budgeting this week, adding that he was confident work could start in the next couple of months. “We still hope to be operational at the beginning of 2014,” he added, which would only be a few of months later than the original date of completion.