Auckland Airport says international travel has made a ‘spirited comeback’

Auckland International Airport says international travel has made a “spirited comeback” after the borders reopened and it expects its underlying business will return to profit this year after two years of losses.

The country’s biggest international gateway expects to post an underlying profit of $ 50 million to $ 100m in the current financial year to the end of June 2023, after posting losses of $ 11.6m in 2022 and $ 39.4m in 2021, the first in its history.

Underlying profit excludes property revaluations and is the company’s preferred metric for measuring the performance of the business.

Auckland Airport is preparing for a recovery in international travel after the country’s borders progressively opened this year. The Covid-19 pandemic brought global travel to a standstill and saw Auckland Airport defer major capital projectscancel its dividend, cut costs and raise $ 1.2 billion from shareholders.

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Chief executive Carrie Hurihanganui, who started in February, said that although Auckland Airport’s results continued to reflect the impact of the pandemic and the challenging operating conditions of the 2022 financial year, the reopening of the border to Australia in April had marked a turning point in the organization’s recovery.

“After two years of disruption, careful cost management and perseverance from the team at Auckland Airport our recovery is now well underway,” Hurihanganui said.

“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 continues to take a long-term view and we remain 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.”

Abigail Dougherty / Stuff

Emotional reunions at Auckland International Airport as borders reopen to 60 visa waiver countries. Video first published in May 2022.

In the year to June 30, passenger numbers fell 13% to 5.6 million. Domestic passengers fell 27% to 4.3 million while international passengers, including transits, rose 123% 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,” Hurihanganui said.

“With key parts of our network now reconnected and capacity returning, our sights are firmly set on the future as we progress key infrastructure projects and look to future improvements in transport, technology and operations.”

Auckland International Airport chief executive Carrie Hurihanganui says international travel has made a “spirited comeback” after the borders re-opened.

SUPPLIED

Auckland International Airport chief executive Carrie Hurihanganui says international travel has made a “spirited comeback” after the borders re-opened.

Hurihanganui said the company was in talks with airlines about the design of a new purpose-built domestic terminal to be merged into the eastern end of the existing international terminal, which was approved by the company’s board in August last year.

“When the current domestic terminal opened in the 1960s it was the dawn of the jet age. It’s now more than half a century old and while we have continued to reinvest in the facility to support growth in domestic travel and the needs of travelers, this infrastructure is now nearing the end of its life, ”she said.

“It’s vitally important for Auckland and New Zealand’s economy that we invest for the future, creating a domestic travel experience Kiwis can be proud of.”

She warned that airlines would face higher charges for the new $ 1 billion-plus combined terminal, noting they currently pay some of the lowest domestic charges in Australasia to operate at Auckland Airport due to the age of the domestic terminal and the write-down of assets .

The project would be delivered in stages in line with aviation’s recovery, and the new fees would not start until the building was commissioned, she said. Airlines supported the development of an integrated terminal, which would help meet their growth aspirations, she said.

Hurihanganui said the company’s view on the outlook for travel was more conservative than the International Air Travel Association, 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.

Auckland Airport expects to return to 70% of pre-pandemic levels by December this year, in line with Singapore’s 67% and Australia’s 72%. The Asia-Pacific region lagged behind places like the United States, Canada and the United Kingdom because they had reopened earlier, she noted.

Airline planning schedules for slots suggested the airport would be at 80% to 85% of pre-pandemic levels by the end of the current financial year, but that didn’t include Chinese airlines which could inject a lot of capacity once they loosened restrictions, she said.

The company hasn’t paid shareholders a dividend for the past three years as it conserved cash during the pandemic.

Hurihanganui said the board would look to revisit dividend payments once the company returned to a more stable footing and was back in the black. Analysts are forecasting a return to dividends for the current financial year.

The company’s net profit fell to $ 191.6m in the year to June 30, from $ 466.6m the previous year. That reflects a $ 204.4m gain in the value of its investment property in the latest period, down from a $ 527.3m gain the previous year.

Shares in Auckland Airport slipped 1.9% to $ 7.60 in late morning trading on the NZX.