Auckland Airport plunges to first loss since sharemarket listing

Author
Grant Bradley, NZ Herald,
Publish Date
Thu, 19 Aug 2021, 10:04AM
Auckland Airport has plans to build a new domestic jet hub when travel recovers. (Image / Supplied)
Auckland Airport has plans to build a new domestic jet hub when travel recovers. (Image / Supplied)

Auckland Airport plunges to first loss since sharemarket listing

Author
Grant Bradley, NZ Herald,
Publish Date
Thu, 19 Aug 2021, 10:04AM

Auckland International Airport's underlying profit has plunged by $230 million to a loss of $41.8m.

Revenue for the 12 months to June 30 was down 50.4 per cent to $281m.

The reporting period was the first full year of operating in the Covid-19 pandemic and the company fell to its first loss since listing on the sharemarket in 1998.

Chief executive Adrian Littlewood said the 2021 financial year had been a year like
no other for Auckland Airport, with the lowest number of international arrivals and
departures since 1972.

He said the recovery of domestic travel had continued in the 2021 financial year, with domestic passenger numbers reaching 5.8 million, 17 per cent down on the previous year.

Due to uncertainty in the market, Auckland Airport was currently unable to provide underlying earnings guidance for the 2022 financial year.

"Our financial performance is strongly linked to passenger volumes, so our recovery will be greatly influenced by the return of domestic and international travel and changes in border settings,'' said Littlewood.

There were ''encouraging'' signs with vaccination programmes now ramping up in New Zealand and around the world but the airport expected to see further volatility in domestic and international travel in the short term, with the global aviation market gradually rebuilding in 2022.

Overall, total domestic and international travel was down 58 per cent in the 2021 financial year on the previous period, with 6.4 million passengers.

International traffic remained low with 0.6 million international passengers including transits at Auckland Airport in the 12 months to 30 June 2021, down 93 per cent year on year.

Auckland Airport will give permanent employees $1500 in airport shares to thank them for their efforts over the past year.

"I'm really proud of our team and their work to keep Kiwis connected to each other
and the world," Littlewood said.

Adrian Littlewood, Auckland International Airport's chief executive.  Photo / Alex Burton

Adrian Littlewood, Auckland International Airport's chief executive. (Photo / Alex Burton)

The company had gone further to control costs and reset the business in the 2021 financial year to ensure it reflected the new operating environment, including:

  • Scaling back operating activity resulting in a significant reduction in
    operating expenses
  • Repaying the remaining $425 million US Private Placement (USPP) borrowings. This, in addition to closing out a number of interest rate and currency hedges, is expected to reduce Auckland Airport's 2022 financial year interest expense by more than $10 million

This month banks supported Auckland Airport's request to renew nearly $700 million of debt facilities due to mature between January and April 2022.

From January 2022, Auckland Airport has agreed that the interest cover covenant currently waived by lenders will convert from an EBIT-based measure to a new EBITDA-based measure.

Littlewood said taking these steps had renewed Auckland Airport's confidence
in its ability to fund the planned infrastructure programme for the 2022 financial
year and beyond.

A reset infrastructure programme, including a domestic jet hub integrated with the international terminal, would be aligned to the recovery of international travel.

The company also unveiled plans to develop a fashion outlet centre on the
edge of the airport precinct, generating more than 500 new jobs across more than
100 stores and food outlets.

General manager of property and commercial, Mark Thomson said there was a
significant gap in the market for a purpose-built fashion outlet centre and the airport
had been exploring the concept for several years.

"There's still work to do in order to bring this project to life, but we have an
extraordinary site and design, the investment fundamentals are strong, and the
support from retailers and consumers for this concept has been very encouraging.''

Its share price recovered from $5 last March as the pandemic struck and closed yesterday at $7.10.