Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Auckland Airport says $2.5 bln expansion to be debt funded

Auckland Airport will fund $2.5 billion, 30 year expansion through debt, says Littlewood

By Suze Metherell

March 31 (BusinessDesk) –Auckland International Airport, which expects to treble passenger numbers over the next 30 years, plans to use debt to fund a $2.5 billion, 30-year expansion that includes a second runway, says chief executive Adrian Littlewood.

Work on the long slated second runway began in 2007 but was halted when the global financial crisis sapped demand for air travel. The company now expects to complete the work by 2025, according to a strategy paper. The first stage of the plan is a merged domestic and international terminal with more car parking, to be built by 2022 at an estimated cost of $150 million.

“It will have no impact on dividends and no call on equity, this will be purely debt funded,” Littlewood told BusinessDesk. “Based on our very high-level estimates, and these are very high level, it’s about $2.5 billion in today’s dollars.”

“But the reality is that number won’t be known until we go through every project as it unfolds and is delivered and priced,” he said.

Last October, the airport company announced plans to return $454 million of capital to shareholders, saying it wanted a more “efficient” mix of debt and equity and would still have sufficient flexibility on its balance sheet to fund expansion plans.

Debt to debt plus equity was 31.3 percent as at Dec. 31, down from 32.4 percent a year earlier. In February, the company arranged $440 million of bank bridge facilities to fund the capital return.

The second runway already has approval but the airport said it will probably need to lengthen it by 2044 to cope with bigger planes and increased demand, pushing the tarmac across the existing motorway that links the airport to the city.

The company has asked Auckland City to include the expansion in its long-term unitary plan. It sees total annual passengers rising to 44 million by 2044 and expects to almost double the number of flights by then.

Auckland Airport shares dropped 0.4 percent to $3.855 on the NZX today, the first opportunity investors had to react to the proposal that was released late on Friday night. The stock has gained 31 percent in the past year, outperforming the NZX 50 Index’s 17 percent rise. It had an average recommendation of ‘hold’ according to 10 analysts surveyed by Reuters, with a median price target of $3.57.

“The most interesting question is whether the passenger uplift drives will be sufficient, or whether there will be a significant increase in the fee that’s paid by passengers to pay for this plan,” said Matthew Goodson, who helps manage $650 million in equities at Salt Fund Management. “There is probably incentive to push the button a little early, given they can pass the cost on to all the airlines and to the customers using the airports.”

The airport is partially regulated by the Commerce Commission, and is required to disclose price setting methodology, financial statements and business plans. The disclosure regime is to limit excessive profits at companies that have monopoly characteristics and to promote long-term consumer benefits.

In a review the commission found Auckland Airport was within its target profit range.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news