Auckland Airport rating cut to A- by S&P

Auckland Airport rating cut to A- by S&P on aviation market

By Paul McBeth

May 29 – Auckland International Airport Ltd., the country’s largest gateway, had its credit rating cut by Standard & Poor’s, which cited a tough aviation market in the midst of the global economic slump.

The airport’s rating was cut to A- from A and its short-term rating was lowered to A-2 from A-1, S&P said. The rating outlook is ‘stable,’ reflecting the company’s natural monopoly, diverse revenue stream and strong passenger demand, which offset its credit risk and limited flexibility.

“The stable outlook reflects our expectation that AIAL's credit metrics will track around the fiscal year 2008 level for the next two-to-three years,” said credit analyst Danielle Westwater. “A sustained and significant underperformance in passenger traffic could put negative pressure on the rating, but this is considered unlikely.”

Separately today, Air New Zealand said it will cut capacity by 3% next year, eliminate some 80 jobs cabin and airport handling jobs, and lobby the government to increase marketing on tourism as demand dwindles.

The cut-backs are “in response to reducing demand as consumers tighten their belts in the face of the global economic recession,” the airline said in a statement. It has begun talks with unions on how to minimise job losses, it said.

Dwindling passenger numbers have weighed on Auckland Airport’s business, and the company last week it said its full-year profit would probably be in the low end of a NZ$100 million-to-NZ$110 million range.

The company tapped the bond market in February when it raised NZ$50 million on top of the NZ$130 million sale of fixed-securities last November. It was placed on a negative outlook in June last year.

The shares gained 0.6% to NZ$1.60 at the close of trading on the NZX 50 index today, and have retreated 1.9% in the year-to-date.

(BusinessWire)

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