Auckland Airport pours back cash as travel totals take off

Awash with cash from a boom in air travel, Auckland International Airport is embarking on its second capital return in three years, with up to $300 million coming back to shareholders.

With the share price continuing to probe record highs, the company said yesterday it would also split the shares 4-for-1, which it hoped would make them appear less expensive and so more attractive to small investors.

Profits have soared in the latest six months with revenue up 10 per cent and after-tax profits jumping more than 20 per cent.

The gains follow record passenger numbers, flying in and out, parking their cars and buying duty free goods. The airport also expects full-year profits to increase from $94.3 million to $105 million.

Its shares first rose as high as $8.70 in early trading yesterday, but ended the day down 1c at $8.37.

However, Standard & Poor's warned the payout could weaken the airport's balance sheet, potentially leading to a debt rating downgrade of two notches. It has the company on credit watch.

Details of the payout, which will be between $100 million and $300 million, will be given before the end of the financial year in June.

Chief executive Don Huse said the exact amount of payout would not be known until the board had studied the impact on its credit rating, cost of capital and imputation credits.

And if the capital return is not enough, dividends from the airport company are also rising, soon to account for 90 per cent of after-tax profits.

The number of New Zealanders travelling overseas jumped nearly 20 per cent in the half year. Overall, the number of international travellers was up 9.6 per cent. Those flying domestically increased 5.3 per cent.

Revenue from the company's carparks jumped 29.3 per cent to $11.7 million for the half year, while money earned from retailers in the terminals increased 5.9 per cent.

The airport earns just under half its revenue from aeronautical charges while the rest - $77.8 million for the past six months - comes from rentals, shopping and car parking.