Auckland Airport cranks up profit forecast on strength of air travel recovery

Auckland International Airport is seeing signs of a recovery in travel demand and has raised its full- year profit forecast.

Its half-year net profit rose 4.7 per cent to $54 million, when effects of previous property valuation changes are excluded, as passenger numbers rose. Total revenue dropped 0.6 per cent to $182.9 million in the six months to December, compared with a year earlier, largely as a result of a fall in retail revenue.

The airport has also announced plans to build a budget hotel which it will fund to the tune of $15 million to $20 million. Accor will manage and market the Formule 1 brand hotel.

Chief executive Simon Moutter said there was a strong demand for short-stay accommodation near the airport.

"It seems an obvious thing for us to do. We're confident a good proposition will win us market share - we'll build as many hotels as the market can take," he said.

The 2-star 125-room hotel should be built in time for next year's Rugby World Cup. A site for the hotel has not yet been finalised. Moutter said it would complement the 4-star plus Novotel Auckland Airport, which will also be ready for the world cup.

For the full 2009-10 financial year the company now expected net profit after tax, excluding any fair value changes and other one-off items, to be in the range of $100m to $105m.

International passenger numbers were up 1.4 per cent for the half year, reflecting competitive airfares and increased availability of seats. Trans-tasman growth was offset by pressure on long-haul travel, affected by the global economic downturn and the legacy of swine flu concerns earlier in 2009.

Domestic passengers increased 6.1 per cent to 3,046,882, driven by strong competition from Jetstar.

The October-December quarter in particular showed consistent growth.

The company last month bought a 24.55 per cent share of Cairns and Mackay airports in Queensland. Auckland Airport will pay an unchanged fully imputed dividend of 3.75c per share. Its share price closed steady at $1.86.