Auckland Airport (AIAL) today reported an underlying profit of $276m, up 87% as the country’s biggest gateway had international traffic return to 91% of pre-Covid levels during the last financial year.
The result was towards the top end of its $260m to $280m guidance and analysts say it was built on better than expected revenue with one saying the company is “getting lift-off but it’s a long runway given airline industry issues”.
But reported profit after tax was down 87% to $5.5m because of tax policy changes in the year to June 30 and the company is warning it will take longer than expected for recovery of passenger numbers to reach pre-pandemic levels.
The company will pay a final dividend of 6.5c a share on October 4. Airport shares are popular with small retail investors with 30,000 shareholders with 5000 or less, although they control just 4% of the company.
Auckland Airport’s share price at June 30 this year was $7.63, an 11% decrease on the $8.55 share price a year earlier. Average annual shareholder return over the five-year period to the year was -4.3% after the company was hit hard by the pandemic.
Today shares were trading up 1c at $7.57 and analysts at Jarden have a target price of $8.13.
The cost of the new terminal building has been criticised by airlines and at the heart of a Commerce Commission review of pricing, but chief executive Carrie Hurihanganui said the airport was thinking in a multi-decade time frame.
“A lot of the works we’ve been doing has been enabling works, you know, utilities through to airfield, through to relocating power plant, et cetera. In the back half of this year, we expect to get into construction proper, and that’s going to give us a better view [of completion date].”
Overall, the terminal will require more than 6000 tonnes of steel. By way of comparison, the Eiffel Tower weighs 10,000 tonnes, the company notes in its annual report which also showed Hurihanganui’s total remuneration was up slightly – $1,938,690 from $1,925,166 last year.
Coming sooner than the new terminal though are more than 100 outlet shops at Mānawa Bay near the airport in September, with a mix of international sub-luxe brands like Coach and Kate Spade sharing retail space with local brands including Huffer, Bendon and Canterbury.
Hurihanganui said it had been 93% leased. Traffic management and new routes through the area would minimise congestion and she pushed back on criticism the airport prioritises its retail and property investment ahead of its core job – providing a place for planes to operate.
She said outlet centres were common near airports overseas and Mānawa Bay would cater for passengers wanting to do some shopping before flying and be used by some of the 20,000 people who worked in the airport campus.
“We’ve heard the criticisms but actually as far as the economic value that wider airport provides, you’ve got to meet the needs of travellers and (other) stakeholders who use it.”
The airport is in the midst of its biggest upgrade in its history and passengers would continue to notice construction work but the company was working on ways to minimise disruption as the summer peak approaches.
“Some of the supply chain constraints that everyone experienced coming out of the pandemic have improved dramatically and we are starting to see that reflected in both delivery times and lead times.”
Staffing of key airport services by the company, agencies and airlines was improving.
Figures in the annual report show queue times for international arrivals in the 2024 financial year improved by 43% at the median (50th percentile) compared to the previous year (from 31.3 minutes to 17.7 minutes), in part due to the implementation of a low-risk biosecurity arrivals pathway with the Ministry for Primary Industries in late 2023.
The pathway’s impact was evident in the final seven months of the financial year, with queue times down 28% compared to July-November 2023 when it was not in place.
When looking at queue times for the majority of travellers (the 95th percentile) during the financial year, there was a 33% reduction, the report says.
Hurihanganui said passengers would notice more building work in the international check-in area.
During the last financial year, on North American routes there was a 48% increase in available seats but the Tasman is still soft, affected by aircraft availability.
In total 27 airlines flew non-stop between Auckland and 42 international destinations, up from 25 airlines and 40 destinations in the previous financial year.
She said the airport had several years ago expected a full capacity recovery by 2025 but it was less certain about that now.
The company was cautious about the outlook for the next financial year.
Underlying earnings guidance was for between $280m and $320m reflecting anticipated domestic and international passenger numbers of about 8.6 million and 10.5 million respectively.
Capital expenditure guidance was between $1b to $1.3b in the year reflecting major investment across the airport precinct, including terminal integration.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
