Auckland Mayor Wayne Brown’s office isn’t ruling out selling the supercity’s $1.91 billion stake in Auckland International Airport Limited (AIAL) to plug a $270 million hole in his first budget.
And while a spokesperson said it wasn’t up for consideration, it remains an option to address the council’s financial shortfall, which Local Democracy Reporting understands has been driven by falling revenue because of Covid-19 and rising inflation and interest rates.
“If this became an option, it would be in the mayor’s draft budget for discussion by the public and the Governing Body,” the spokesperson said.
“Personally, the mayor does not regard an 18 per cent share in a company that isn’t paying dividends to be a strategic asset but others, including councillors, may want to make the case that it is.”
The Auckland International Airport Limited (AIAL) suspended dividend payments during the pandemic as its profits took a hit, along with the entire aviation sector.
But in August the company said international travel had made a “spirited comeback” after the country’s borders reopened and it expected its underlying business to return to profit this year after two years of losses.
The mayor’s spokesperson said the sale of any council shares or assets would be to pay off debt to reduce debt servicing costs and avoid rate rises or cuts to essential services.
Brown’s office was asked if the mayor thought he had the numbers to sell a strategic asset, but he didn’t respond, other than to say he didn’t think it qualified as a strategic asset.
Auckland Manukau ward councillor Alf Filipaina said he was opposed to selling the council’s stake in the airport as it would be "short-sighted". Photo / Ricky Wilson
But Auckland Manukau ward councillor Alf Filipaina said he was opposed to the selling the council’s stake in the airport and said it was important it held a stake in the company.
“We’ve kept the shares because of the benefits the airport brings to Manukau and Auckland,” he said.
Filipaina said the issue would have to be discussed in more detail when the councillors met for a budget workshop on Thursday.
He said with the country’s borders now open again the Auckland International Airport Limited (AIAL) would start to provide an important source of revenue to the council through dividends.
Filipaina said selling the shares now would be short-sighted.
“What’s going to happen when the airport starts making a higher profit like it did pre-pandemic? It won’t be coming back to the Auckland Council if we sell the shares.”
During last year’s budget process, council finance managers proposed selling the airport shares to help address budget pressures.
They said hanging onto the council’s 18 per cent stake in the airport was not a “best practice approach to financial investment” in an update on the council’s financial position.
But former Auckland mayor Phil Goff ruled out selling the shares and preferred to stick with a planned 3.5 per cent rate rise, while making budget cuts and savings in other areas to maintain capital expenditure.
