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

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news