River of dividends ahead as $188m tagged for investment

By CHRIS DANIELS aviation writer


Thick dividend streams will not be dented by an impending building programme, says Auckland International Airport.

The company yesterday announced a half-year profit up 13.8 per cent to $45.2 million, stemming from a 12.2 per cent increase in passenger movements.

An interim dividend of 10.5c a share was revealed, up nearly 11 per cent from the same period last year.

Chief executive Don Huse said the company would continue its policy of paying 80 per cent of after-tax profits as dividends with its full-year result.

The trend of record passenger and aircraft activity had continued in the first two months of this year and provided this continued throughout the second half an after-tax profit of more than $90 million was expected.

This is nearly 8 per cent up on last year's profit of $83.5 million.

Huse outlined at least $188 million of capital expenditure over the next two years, aimed at increasing capacity at the airport.

The last major tranch of investment was in 1997, said Huse, and despite a dip in 1998, there had been strong growth every year since.

"We need to consider adding capacity in a number of areas," he said. "We are reaching a point where we really have to do something about it."

Huse said that the growth would be "incremental expansion", with money spent only when needed.

Financing the projects was not expected to affect the dividend policy. Money would come from retained operating cash flows (currently more than $50 million) and increased borrowings.

The only slight negative in yesterday's results was a drop in the amount of money spent by international passengers in the airport terminal shops.

Retail income is the company's single biggest source of revenue, but it increased just 4.8 per cent, despite 9.9 per cent more international passengers.

The company said an increase in the length of time taken to process passengers, plus a Sars-related drop in traditionally big-spending Asian travellers was the likely cause of this drop in spending.

Questioned as to the intentions of new low-cost airline Pacific Blue, Huse said that the airport company had been in "ongoing dialogue" with the local arm of Virgin Blue for 12 months.

The airport company had the ability to "respond very quickly" to any decision Pacific Blue made.

"It's up to them," he said. "Do they decide to go or not?"