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Christchurch Airport gains altitude

Embargoed until 6am Wednesday, 9 September 2015

Christchurch Airport gains altitude

Christchurch Airport (CIAL) has today announced underlying Net Profit after Tax up 110% to $37.8 million and total declared dividends up 171% to $20.6 million.

Chairman David Mackenzie says the result is a reflection of the step change that has occurred within all areas of the business over the past year. “We’ve seen strong international passenger growth, new aeronautical pricing (reflecting the investment in the new terminal) and the airport’s property development programme continuing to gather pace,” he says.

Christchurch Airport’s Net Profit before Tax of $50.2 million (up 113%), includes underlying operating profit of $36.3 million, a one-off gain on the sale of assets of $5.1 million and investment property revaluation gains of $8.8 million. Net Profit After Tax is $37.8 million (up 110%).

“The gain on sale relates to land and buildings sold to NZTA to enable it to complete the project to widen Russley Road to the east of the Airport. The Board decided this one-off gain will be fully distributed to shareholders in the form of a special dividend, so the total declared dividend for the year, of $20.6 million, is made up of $15.5 million from underlying profit after tax and $5.1 million from the gain on sale,” says Mr Mackenzie.

“The airport company expects to be in a position to significantly increase the percentage of profits paid out in respect to FY16,” he says.

The airport’s board chairman says the airport has reset strategy looking out over the next decade. The company will concentrate on growing international passenger numbers, with particular focus on Australia and Asia, as well as maintain solid progress in its property development programme.

“The past year has seen us complete Mustang Park, the new tourism transport hub to the north of the terminal, with Tourism Holdings Limited recently moving into its new campervan site there. The new retail development, the 6,100 sqm Spitfire Square, has been completed and the Countdown supermarket is open. We will see the other outlets open progressively over coming months,” he says.

There have also been 17,000 sqm of new developments in Dakota Park, the airport’s light industrial and logistics hub in the south east of the campus. Overall, the airport’s capital expenditure on new revenue generating investment property and infrastructure was $45 million during the year.

Operating revenues for the airport rose 21.9% to $159 million, driven by strong growth in aeronautical revenue - up 43% to $68.3 million - and strong growth in non-aeronautical revenues of 9.7% to $90.7 million.

Chief Executive Malcolm Johns says the past year clearly signals the airport company is looking forward and moving into the post earthquake era.

“I am extremely proud of every member of our team,” he says. “We have seen solid revenue growth off the back of some dedicated and hard work by our business development teams, both in Christchurch and on the international stage. We’ve also seen some outstanding work by our operational teams, in maintaining a top shelf customer experience for all our airport users.”

Mr Johns says passenger spend rates in the terminal rose 4.2%, despite changes to allowable amounts of some duty free items and the airport introduced a number of customer driven enhancements to increase the choice and range of cost options for airport users needing car parking.

“Our team has kept us at the top of independent customer experience surveys for airports across Australia and New Zealand, which means we’ve been there for three years in a row now, something we are all very proud of.

“We are very focused on continuing to enhance our retail offerings to our visitors and working hard to keep increasing the range of product and purchasing choices available to airport users across our whole product range. Airport visitors can expect to see us continue to innovate in this area and to see new choices announced over the next year,” he says.

The airport enjoyed strong growth in both airline seats and passenger numbers over the past year. International passenger numbers rose 7% and international freight volumes rose 9%. Passenger load factors on international flights rose 5% to an average of 86%. Key growth markets were Australia +7%, SE Asia +7%, China +53% and India +37%.

The airport estimates this growth added approximately $300 million in new visitor spending to the country, most importantly it spreads out across all the regions of the South Island when Christchurch is the entry point for those visitors. Official government statistics show that when Christchurch is the entry point visitors spend 84% of their total spend in the regions of the South Island; when Christchurch is not the entry point, this falls to less than 36%.

Mr Johns says “Last summer, China Airlines began a new service from Taiwan. It proved incredibly successful and underlined that the rising international load factors into Christchurch reflect growing international consumer demand for more direct air access to the South Island. Our airline development team has been competing hard on the international stage and has delivered the South Island an additional 550,000 international airline seats over the coming financial year. This is a step change in post-quake international air connectivity and will super charge outcomes for every region in the South Island and by default New Zealand.”

In the coming financial year, Christchurch Airport will welcome new services from China Southern Airlines between Guangzhou and the South Island; China Airlines between Taiwan and the South Island (via Sydney and Melbourne); increased capacity by Singapore Airlines with additional 777 flights over summer; increased capacity with Australia from Virgin Australia and Jetstar; and a new service by Qantas between Christchurch and Brisbane. Air New Zealand will increase domestic seats between Christchurch and Auckland by as much as 180,000 over the coming year.

“We are pleased to see our airline customers in a very healthy state, with many announcing record profits and strong growth plans. During the year we saw Air New Zealand and Singapore Airlines enter an alliance for the next four years. Singapore Airlines has been flying to Christchurch for 29 years and will celebrate a 30 year relationship with us next year. Singapore Airlines increased its 777 services to Christchurch following the earthquakes and will fly between Christchurch and Singapore 393 times over the coming year.”

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