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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade: NZ Trade Deficit Widens To A Record In September

Oct. 27 (BusinessDesk) - New Zealand's monthly trade deficit widened to a record in September as meat exports dropped to their lowest level in more than three years. More>>


Animal Welfare: Cruel Practices Condemned By DairyNZ Chief

DairyNZ chief executive Tim Mackle says cruel and illegal practices are not in any way condoned or accepted by the industry as part of dairy farming.

Tim says the video released today by Farmwatch shows some footage of transport companies and their workers, as well as some unacceptable behaviour by farmers of dragging calves. More>>


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


International Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news