Auckland Airport flies high on profit lift

More passengers from traditional markets 'highlight' in boosting full-year guidance.

There's been strong international passenger growth for Auckland International Airport - profits at the company are up 11.7 per cent for the six months to December 31, 2013. Photo / NZ Herald
There's been strong international passenger growth for Auckland International Airport - profits at the company are up 11.7 per cent for the six months to December 31, 2013. Photo / NZ Herald

Auckland Airport has boosted full-year profit guidance and says it has renewed focus on becoming the "southern hub airport" for the Pacific Rim.

The company, which reported an 11.7 per cent lift in half-year profit to $85.9 million yesterday, expects annual profit to be in the range of $166 million to $172 million, up from previous guidance of $160 million to $170 million.

Revenue for the six months to December 31 rose 6.7 per cent to $238.5 million. Shares closed up 5c at $3.69 last night.

Chairman Sir Henry van der Heyden said strong aeronautical income, driven by higher international and domestic passenger volumes, was a "key revenue highlight" in the result, while there had also been positive growth in carparking revenue.

Total share of profit from businesses the company owns stakes in - North Queensland Airports, Queenstown Airport and Auckland Airport's Novotel hotel - rose 11.5 per cent to $4.9 million.

Chief executive Adrian Littlewood said the airport had seen strong international passenger growth across all its main markets in the six-month period.

"It was actually led by a return from traditional markets like Germany and the US, which have seen growth of 16 and 12 per cent respectively," he said. "It's been fairly broad across markets, which I think is the best news underpinning that top line result in passenger growth."

Total international passenger movements rose 4.4 per cent to 4.3 million, while domestic passengers rose 4.8 per cent to 3.5 million. The airport saw 19 per cent passenger growth from China, 4.1 per cent from Australia and Asia and 23.6 per cent from North America.

Littlewood said Auckland Airport had an opportunity to act as a southern hub in the Pacific Rim connecting fast-growing economies like China and Brazil.

"If you want to fly from South America to China you've got to fly around the world," he said. "We're saying we present an alternative path to going through Europe or one of the Middle Eastern hubs to get to China."

There's been speculation Air New Zealand may start flights to South America; chief executive Christopher Luxon has said Latin America was an obvious white space on the airline's network.

While passenger growth from European markets was improving, Littlewood said the airport was more focused on Australasia, the Americas and Asia.

"Those three regions have continued to be strong and they really are the future for tourism growth for New Zealand."

Littlewood said Chinese passenger growth had softened as a result of a new law in China which requires travel sellers in China to offer better quality, and so more expensive, group tours.

"But I think we've had some really great news with Air New Zealand increasing frequency on the Shanghai route, China Southern committing to extend their 10-a-week services into Guangzhou and China Airlines also increasing capacity over the Chinese New Year."

Littlewood said the airport expected a $454 million capital return to shareholders to be paid out in April. The company undertook the return after several years of strong financial results, which left the business with an inefficient mix of debt and equity.

So no interim dividend would be paid, Littlewood said.

- NZ Herald

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