Auckland International Airport reports strong half-year result

Auckland Airport warned the second half of the current financial year is likely to be affected by softening demand. Photo / Azaria Howell

Auckland International Airport (AIA) reported a strong lift in earnings for the half-year to December 31, reflecting the ongoing bounceback in post-pandemic global travel combined with new, higher landing charges and strong performance in unregulated parts of its business.

The airport reported net profit after tax (Npat) for the half-year of $118.7 million, compared with just $4.8m for the same period at the end of 2022, when Covid restrictions were still in the process of being lifted around the world.

Total income of $440.5m was 53 per cent higher than for the prior period, driven by a 22 per cent increase in total passenger movements, a near-doubling of regulated aeronautical revenue to $194.8m and a 52 per cent improvement in retail revenues, at $90.3m.

Total expenses, at $130.3m, were up 32 per cent on the previous period.

The company declared a fully imputed interim dividend of 6.75 cents per share, payable on April 5 for shareholders on the register at March 19.

Tough times ahead

However, like its largest customer Air New Zealand, AIA warned the second half of the current financial year is likely to be affected by softening demand, particularly in the domestic aviation market.

However, there was no change to the airport’s full-year guidance for underlying profit after tax (excluding any fair value changes and other one-off items) of between $260m and $280m.

The underlying profit after tax measure is the airport’s preferred earnings metric.

For the six months to December 31, it recorded underlying Npat of $145.7m, an increase of 115 per cent on the $67.9m reported on that basis for the same period the previous year.

The only area of guidance change is an increase to intended capital expenditure this financial year to between $1.1 billion and $1.4b, the lower end having previously been $1.0b.

The airport and the national carrier are locked in a war of words over AIA’s multibillion-dollar facilities upgrade, with Air NZ accusing the airport of over-spending on assets that have a guaranteed, regulated rate of return.

AIA has bitten back, saying the airline just doesn’t want a bigger airport because it would create more room for competitors to take on Air NZ, which has an 86 per cent market share in the domestic market.

Chairman Patrick Strange described the result as “solid” and singled out growth in connections to North America as a highlight.

Travellers from China also showed a strong increase after the country was slower to open its borders than others as the pandemic eased, and there was strong growth from the Philippines and India.