Akld Airport profit ahead of forecast

Tony Frankham, chairman of Auckland International Airport. Photo / Martin Sykes

Auckland International Airport Ltd today delivered a better than expected result for the year ended June 30, with its underlying net profit after tax of $105.05 million being 0.8 per cent lower than the previous year.

Chairman Tony Frankham said the result was substantially ahead of the company's original guidance of $93 million-$100 million.

"Operationally, the early results from implementation of the growth strategy are well ahead of our internal plans," he said.

Revenue was down 1.4 per cent to $363.1m over the year and total dividend was unchanged at 8.2 cents per share.

Frankham said while the aviation sector still faced some uncertainty, it was in a healthier position today than it was 12 months ago, with improvement in the global economic environment and a consequent increase in demand for travel.

Auckland Airport had been transformed from a builder of infrastructure to a "sales-led engine of economic growth" and was positioned to turn travel demand growth into profit growth.

"These two factors helped Auckland Airport deliver, in tough operating conditions, a financial and operational result that is better than we initially expected and provides a firm foundation for an uplift in 2011," he said.

Auckland Airport chief executive Simon Moutter said the company had secured a large number of new or up-scaled airline services and embarked on one of New Zealand's most active property development initiatives.

"We have also invested into two strategically located airport companies to help drive more passenger volume and increase our footprint in the Australasian market," he said, referring to North Queensland and Queenstown airports.

Meanwhile, Auckland Airport has kept customer service at the heart of the business, being voted by passengers worldwide for the second year in a row as one of the world's top 10 airports, in the annual Skytrax awards.

Moutter said the marginal decline in revenue was less severe than initially expected, given the soft operating environment and the anticipated impact from the reversion to a dual duty-free operator model.

Costs were tightly managed over the year, with operating expenses reduced 2.3 per cent to $86.8m, and capital expenditure down 38 per cent to $54.3m. Operating cash-flow was $176.3m, up 3.6 percent from 2009.

International passenger volumes, excluding transits, showed resilience during the worst of the recession, growing 2.4 percent over the full year, predominantly driven by a relatively strong Australian economy, increased capacity on the trans-Tasman routes and airfare competition.

Domestic passenger volumes showed consistent strength to grow 7.8 per cent over the year, largely reflecting the impact of a full year of operations by Jetstar.

"Our additional investment in air services is really starting to pay off, with announcements from airlines to introduce new international capacity to Auckland in excess of 850,000 more seats per annum by late 2011," Moutter said.

"These announcements include two major long-haul route developments, a new Auckland to Houston connection and a second airline servicing Auckland to Singapore."

Cairns and Mackay Airports had also seen a substantial increase in capacity with over 800,000 seats added or announced from March, while Queenstown Airport was adding more air services capacity and passenger volumes than ever before.

Auckland Airport directors issued a profit guidance of between $112m and $118m for this financial year, assuming international passenger growth in the order of 5 percent, and capital expenditure to be around $85m, excluding yet to be committed property development.

- NZPA