Auckland Airport trims loss as international travel rebounds


Scott Tasker, Auckland Airport’s GM Customer and Aeronautical Commercial talks tourism comeback and how Auckland Airport is ready for the influx of people. Video / NZ Herald

Auckland International Airport has reported a second successive underlying loss but is clawing its way back from financial damage caused by the pandemic.

The company today reported an underlying loss of $11.9 million in the year to June 30, an improvement on the underlying loss of $39.4m last year.

Forsyth Barr had forecast a loss of around $1.4m.

Revenue was up 7 per cent to $300.3m and reported profit after tax was down 59 per cent to $191m.

Chief executive Carrie Hurihanganui said although Auckland Airport’s results continued to reflect the impact of the pandemic and the challenging operating condition, the reopening of the border to Australia in April had marked a turning point in the organisation’s recovery.

She said after two years of disruption, careful cost management and perseverance of staff recovery is now well under way.

“As aviation rebounds there continues to be some uncertainty about the shape of recovery ahead with global operational challenges, such as labor shortages, currently constraining the system’s capacity.”

However, Auckland Airport was optimistic about the future, with the strong global appetite that exists for travel alongside Auckland’s position as a key aviation hub in the South Pacific.”

Overall, there were 5.6 million international and domestic passengers at Auckland Airport in the 2022 financial year, down 13 per cent on the 2021 financial year. Domestic passenger numbers were 27 per cent down to 4.3 million while international passenger numbers (including transits) rose 123 per cent to 1.3 million.

The gradual reopening of the border between February and June saw airlines like Chile’s LATAM restore services, with 17 airlines flying to 28 destinations at Auckland Airport by June 30, up from 12 airlines and 21 destinations during the worst of the pandemic.

“International travel to and from New Zealand has made a spirited comeback in recent months as border restrictions have fallen away. With key parts of our network now reconnected and capacity returning, our sights are firmly set on the future,” said Hurihanganui, who took on the top role in February.

Auckland Airport’s investment property division continued to perform strongly, with its investment property rent roll now $127.5m (up 9 per cent year on year) and the investment portfolio is now valued at $2.9 billion, up 10 per cent year on year.

In the 2022 financial year, Auckland Airport continued to focus on climate change, developing a clear pathway to reduce scope 1 and 2 emissions to reach Net Zero by 2030.

“We are on a mission to drive down our emissions to tackle climate change. Alongside this we are working with airlines to support the decarbonisation of the wider aviation sector, ensuring the right ground infrastructure is in place to enable the adoption of future aircraft technologies and fuels as they become widely available,” said Hurihanganui.

With fewer planes in the air in the 12 months to June 30, Auckland Airport focused on core maintenance projects and infrastructure upgrades that would support the recovery: airfield maintenance, pavement renewal, roading development and jet fuel line upgrades, with $98.7 million invested in these assets during the period.

Carrie Hurihanganui, chief executive of Auckland Airport.  Photo / Supplied
Carrie Hurihanganui, chief executive of Auckland Airport. Photo / Supplied

With the gradual reopening of the border in the second half of the year, Auckland Airport focused on a range of other capital expenditure projects to take advantage of the low traffic environment, including progressing $82.4mn works to enable development of a new purpose-built domestic facility to be merged into the eastern end of the existing international terminal. The development pathway was approved by the Auckland Airport Board in August 2021.

Auckland Airport also continued to support tenants impacted by the pandemic, providing $173m in rent reductions to tenants in the international terminal in the year, making a total contribution of $358 million in retail rent abatements over the past two financial years. Retailer lease occupancy across both terminals was 94 per cent.

Support for airlines included more than $8m in relief for aircraft parking across the 2022 financial year as well as the introduction (in January 2022) of a price freeze to aeronautical charges for the 2023 financial year in response to continued uncertainty in the aviation market.

Hurihanganui said Auckland Airport is working to ensure “the best possible outcome for the next 20-plus years of travel at Auckland Airport, with an initial focus on domestic travel”.

“As we look ahead, we are entering a period of investment to transform Auckland Airport into a world-class travel experience with seamless customer journeys and improvements to domestic travel as our first priorities.”

In its outlook, Auckland Airport continues to adopt more conversation planning assumptions than the International Air Travel Association (IATA), which predicted in its most recent report that the global industry would recover to pre-pandemic levels in the 2024 calendar year, with the Asia -Pacific region to follow at a later stage.

“While we are hopeful of a strong recovery over the next 18 months, our outlook remains conservative.”

Reflecting this, Auckland Airport is providing guidance of underlying profit after tax of between $50 million and $100 million for the 2023 financial year and capital expenditure of between $600 million and $700 million.

Auckland Airport is currently consulting with airline customers for Price Setting Event 4, with a decision on aeronautical prices scheduled to be made following this consultation in June 2023. The capital investment plan is considered within the consultation on aeronautical prices and may be subject to change as consultation with airlines has been undertaken.

Auckland Airport shares open today at $7.75 and are trading up 9 per cent on a year ago. It will not pay a dividend again this year.

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