Aviation rebound propels upgrade of up to $80m for Auckland Airport earnings

Auckalnd Airport has substantially revised up its earnings prospects. Photo / File

Auckland Airport said a substantial rebound in the aviation market is behind a huge upgrade in its earnings prospects for the 2023 financial year.

The company said it revised up its guidance after a stronger than expected rebound in the aviation market, with high aircraft load factors and continued strength in forward international seat capacity expected to fuel the ongoing recovery.

"Reflecting this, guidance of underlying profit after tax of between $100 million and $130m is now being provided for the 2023 financial year, an uplift on guidance provided in August of between $50m and $100m," the company said today.

Chief executive Carrie Hurihanganui said the improvement was a result of aviation's strong performance both domestically and internationally.

"During the first quarter we experienced strong demand for travel within New Zealand as well as internationally, particularly in North and South American, South Pacific and Trans-Tasman routes.

"The shape of the recovery is also consistent with what we're seeing globally, with travel significantly picking up in the United Kingdom, Europe and in the Americas following the relaxation of border controls," she said.

"While North Asia has been slower to reopen, what we're now seeing is evidence of a stronger than forecast uplift in seat capacity in the market, including to and from South Korea."

Hurihanganui said there was more certainty about market performance in the coming months, with forward capacity and reports from airlines indicating a summer peak surpassing expectations.

From early November, five airlines will be flying between Auckland and North America over the high season, offering up to 60 flights per week and direct flights to eight destinations: Honolulu, Los Angeles, San Francisco, Houston, Dallas, Chicago, New York, and Vancouver.

Capacity to North Asia had been boosted by Korean Air increasing its services, while Trans-Tasman travel has benefited from connections with China Airlines flying to Taipei via Brisbane and AirAsia X flying to Kuala Lumpur with a Sydney touchdown.

In addition, Emirates would restart daily non-stop Auckland-Dubai A380 flights from December 1.

Hurihanganui said the global aviation system still faced constraints such as crew and ground staff availability, and resourcing challenges associated with bringing fleets out of hibernation.

"Uncertainty also remains about the reopening pathway for the Chinese market," Hurihanganui said.

"However, we are increasingly confident that aviation is returning to normal, with the structure of the market becoming more balanced across inbound and outbound travel, and 'business', 'friends and family' and 'leisure' travel categories," she said.

For the full 2023 financial year, Auckland Airport anticipates international passenger numbers between 60 and 70 per cent of pre-Covid levels and domestic passenger numbers between 85 and 90 per cent.

"We have also adjusted our outlook which is now in line with International Air Travel Association's (IATA) view that the global industry will recover to pre-pandemic levels by the end of the 2024 calendar year," she said.

Auckland Airport's capital expenditure guidance for the 2023 financial year remained unchanged at between $600 and $700m.

That reflected a number of roading, airfield, and investment property projects alongside continued design and enabling works for the combined domestic and international jet terminal.