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Positive Outlook For Airport Sharholders

Positive Outlook For Airport Sharholders

Emerging tourism markets such as India and China, demand for new airline services and positive growth in passenger numbers meant a positive outlook for shareholders, retiring Auckland Airport chairman Wayne Boyd told today’s annual meeting.

"The company is focused on establishing a platform for long-term sustainable growth. We have completed a number of major expansion and security projects on time and within budget. Several more major projects have been commenced and are under way,” Mr Boyd said.

“We are also very focused on growing our commercial revenue streams. There is an improving trend in retail trading and we have committed to a number of new property developments.”

Despite a marginal fall in passenger and aircraft volumes in the three months to September, revenue for the period was $77.1 million, up 8.3 per cent on the corresponding period last year, and EBITDA was $60.8 million – an increase of 8.0 per cent. Principally as a result of the lower passenger volumes combined with higher depreciation from the company’s investment programme and higher interest costs (including additional interest costs associated with the financing of the special dividend of 12 cents per share paid in August last year), surplus after tax for the three months to September 2006 was $24.2 million, compared with $24.9 million for the previous year.

International passenger movements (excluding transits and transfers) in the first three months were down 1.1 per cent to 1,497,212, due in part to a slowing growth rate of New Zealand travellers and also last year’s higher number of travellers generated by the Lions’ rugby tour.

Domestic passenger movements in the first three months were also down by 1.4 per cent to 1,217,849 with the overall passenger numbers down 1.5 per cent to 2,779,595. Total aircraft movements were down 0.7 per cent for the three month period.

However, during September 2006, there was a 3.1 per cent rise in international passenger movements (excluding transits and transfers) and international aircraft movements were up 2.4 per cent compared with the same month in 2005. Importantly, international passenger arrivals were up 4.3 per cent over the same month last year. Mr Boyd anticipated further growth in international arrivals during the rest of the year and particularly during the high summer season.

Mr Boyd said that, while the passenger growth rate over the next 12 months was expected to remain positive, it was likely to be below the company’s long-term growth rate of around 5 per cent.

Affecting people’s travel plans in recent times had been increases in fuel prices and airfares, although these were now showing a decrease, and the slowing of the New Zealand economy.

“New services from Auckland Airport are expected to stimulate demand and we are seeing compelling signs of growth from new markets such as India and China.”

Capital expenditure (excluding property developments) for the 2007 and 2008 financial years was anticipated to be around $105 million and $135 million respectively. With most of the key projects scheduled for completion in the 2008 financial year, Mr Boyd said that capital expenditure was expected to reduce significantly in 2009.

“At that stage, Auckland Airport’s processing capacity and services will have been significantly enhanced, providing the necessary capacity for at least the next three to five years,” Mr Boyd added.

He said that the high interest rate environment and depreciation costs associated with the company’s investment programme meant directors expected the surplus after-tax result in 2007 to be similar to the 2006 result.

Mr Boyd said that the stage was set for much improved earnings, particularly when passenger growth figures reverted to the long-term trend.

“The company is strongly positioned to complete this current phase of our investment programme and to continue to deliver long-term value to our shareholders.”


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