Auckland Airport soars in toughest year

By CHRIS DANIELS

Auckland International Airport has sailed through the most tumultuous year in aviation history with a 21 per cent jump in profits.

The company yesterday announced a $71.5 million profit for the year to the end of June, coming from a 6 per cent increase in revenue.

Shareholders will share in the rewards of the bumper year as the company pays out a dividend of 7.5c a share, at the same time repaying $212 million in capital.

Seven shares in every 25 will be cancelled, with a payment of $1.80 for each cancelled share.

Revenue rose 6.2 per cent to $201 million, while operating expenses dropped slightly, from $50.2 million to $48.9 million.

This meant an increase in earnings before interest, taxation, depreciation and amortisation of $152 million, compared with $139 million the previous year.

Chief executive John Goulter said that retail would continue to be the company's major revenue stream and a significant increase was expected next year as a result of the recent re-tendering process, which confirmed the airport as one of New Zealand's premier retail locations.

Goulter said the diversified revenue streams were the core strength of the company.

In the past five years, airfield revenue as a proportion of total revenue had dropped from 33.5 per cent to 26.8 per cent.

Aircraft movements for the same period, based on the tonnage of planes, had risen by just over 10 per cent.

For the past year, passenger movements through the airport rose by 4.5 per cent to 8.8 million.

Aircraft movements were down by 3.5 per cent, but the weight of aircraft using the airport was up by 2.5 per cent, which means more money for the airport company, because charges are calculated by the weight of the plane.

Goulter said it was difficult to predict when international air travel would return to the traditional annual growth rate of 5-7 per cent. Expectations of 3-5 per cent growth seemed more realistic likely in the next year.

International growth at these levels, coupled with better returns from the renegotiated retail arrangements and continued expansion of the company's investment property portfolio should mean another strong result, he said.

The effects of the $212 million capital repayment would, however, have to be factored into next year's results since the money for the payout was borrowed.

"The proposed repayment is part of a long-term strategy focused on improving shareholder value through a more efficient capital structure which, while increasing debt levels, will result in a lower cost of capital and maximises distribution to shareholders."

The company is stressing that the repayment will not affect future dividend payouts.

Despite the increased level of debt, AIA is assuring shareholders that it will "still have enough financial flexibility to meet all ongoing capital requirements and pursue growth opportunities".

Chairman Wayne Boyd took the opportunity of yesterday's annual result to take a swing at the Commerce Commission, which last month said the airport was extracting about $4 million a year in monopoly profits from airlines and recommended that some form of regulatory control be imposed.

Boyd said the company strongly disagreed with the decision and would be making representations to the Government about it. He said the commission's decision, which was based on some flawed maths, could also warrant a judicial review.

"The company will be illustrating a number of arithmetic errors in the commission's calculations which, when corrected, would reverse the recommendation for price control," he said.

Auckland City Council is seeking a buyer for its 25.7 per cent stake in Auckland International Airport over the next three months.

The council has said the process is unlikely to be finished until after Auckland Airport's capital repayment to shareholders in October.

This would mean the council would reap around $54 million.