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The largest single shareholder in Auckland International Airport has issued a challenge to the board after the failed partial takeover bid by the Canadian pension fund.
Auckland City Council holds a 12.7 per cent shareholding in the airport and mayor John Banks said more expertise was required on the board to maximise returns in the absence of a major new stakeholder and significant restructuring.
"I'm not at all sure this board has the ability to turn this into a high-quality strategic asset.
"The jury is out - there has been so much time-wasting. I really think the time now is to get cracking and working on fundamentals of the business."
Banks said the Canada Pension Plan Investment Board was attracted to the airport because it saw a poorly performing strategic asset.
"I'm going to hold their feet to the fire and expect from them high levels of quality governance and a much better rate of return."
The council expects a return of around 4 per cent for this year.
The airport board has room for two more directors and has previously said bringing on more expertise was an option.
On Friday board chairman Tony Frankham said directors would re-consider the issues of the company's capital structure and the prospects for introducing a new cornerstone shareholder that could add strategic value.
Manukau City Council - which holds just over 10 per cent - said it would work with the board to investigate options that foster continued growth.
Mayor Len Brown said the airport company would need to expand its enterprise.
"We are mindful that the airport company might still require an equity partner. That partner should have significant experience in airport development and operations. We are looking for further capital investment in the airport, but not to the degree proposed by CPPIB."
Meanwhile, Standard & Poor's has kept its A/A-1 credit rating for the airport company on credit watch with negative implications, following the veto of the Canadian bid.
The question mark over the ratings was because of concerns about the potential impact of the airport company's capital expenditure and related increase in debt on its balance sheet.
"Any deferral of AIAL's capital-spending projects could provide some short-term respite, but it is unlikely the airport will be able to recoup credit metrics commensurate with the current rating through the execution of the proposed capital-expenditure projects over the next two-to-three years," said S&P credit analyst Tammy Garay.
AIA opened a $135 million new international arrival area last week, but said it was delaying a decision about the next $200 million airport upgrade.
- additional reporting NZPA
