Waikato ratepayers stump up $12m for Hamilton Airport debts

Air NZ's decision to stop international flights from Hamilton International Airport has hit the company hard.

Hamilton International Airport's local authority shareholders are providing $12 million to reduce its debt.

They also continue to hunt for an airline to operate international flights out of Hamilton as Air New Zealand ends its services to Australia, and are considering a longer term bid to attract investment from an airport operator.

Hamilton Mayor Bob Simcock said the city's payment of $6m into Hamilton airport as a 50 per cent shareholder was part of supporting a critically important strategic asset.

While making the payment of previously uncalled capital was not ideal, it needed to be remembered that the city had a $30m investment for which it would have contributed $7.5m following the $6m payment.

In 2004, the council had agreed to the issue of uncalled capital, instead of injecting money, said Simcock.

On the basis of that, the company was able to raise debt, which it supported with international flights and revenues it received.

"With the pullout of Air New Zealand the revenues have fallen away, the company can't sustain that debt, and so they've called up that capital."

The funds from the shareholders would be used to reduce debt, he said.

Conversations had been held with several airlines in the search for a replacement for Air New Zealand on the international routes out of Hamilton.

"There is interest. There is a market here, we've proven that over the years, but at moment, obviously, people are slow to make decisions," Simcock said.

Since Air New Zealand pulled out of its Freedom Airlines brand a year ago, replacing it with Air New Zealand flights, the market for Australians wanting to fly into Hamilton "basically collapsed".

That was thought to be because Australians had viewed Freedom as an economy airline but did not perceive Air New Zealand that way.

The market for New Zealanders flying out of Hamilton to Australia had not fallen away.

The last Air New Zealand flight between Hamilton and Australia, going to Brisbane, will made the journey late next month.

The airport has said the withdrawal of all international flights would mean a $2m reduction in revenues for the airport and its shareholders.

As well as looking for another airline for international flights, Hamilton council would in the longer term like to see investment by an airport operator that was capable of securing a more stable business for shareholders.

Shareholders had recognised that while they could, perhaps, find another airline to use Hamilton, there was a risk that airline could pull out again in another downturn, said Simcock.

"We believe that long term if we were able to find an experienced and capable operator, that's also capable of attracting long-term commitments from airlines, then we think that would be a very valuable shareholder to have."

The other shareholders in the airport - Waikato District Council, Waipa District Council, Matamata-Piako District Council and Otorohanga District Council - are to provide the further $6m of uncalled capital between them.

- NZPA