KEY POINTS:
Dubai Aerospace Enterprise will argue it can significantly boost tourist numbers to New Zealand as it makes the case for the Overseas Investment Office to approve its purchase of Auckland International Airport.
Using case studies of airports in Cancun, Mexico, and Newcastle, England - which DAE executives have
previously managed - they will suggest that passenger numbers could be more than doubled, adding millions to the local economy.
Doubts about DAE's chances of getting approval were raised this week as Trade Minister Phil Goff expressed disapproval of the sale.
The comments knocked more than $200 million off Auckland Airport's value - as the market downgraded the chances of DAE's bid succeeding.
Goff later indicated the comments represented a Labour Party view, not the Government's view. But the share price has not recovered. The shares closed at $3.15 yesterday - well short of the $3.80 a share offer DAE has made to buy up to 60 per cent of the airport.
Both Cancun and Newcastle Airports were run by Copenhagen Airports during the time it was managed by DAE chief executive Kjeld Binger and his team. Binger and nine Copenhagen executives shifted to DAE at the start of this year.
Ironically, Copenhagen is majority-owned by Macquarie Airports.
Macquarie Airports' parent company - Macquarie Bank - is understood to be still investigating its own bid for Auckland Airport, mostly as part of a consortium of buyers.
The investment office application is confidential but a document which DAE has supplied to key shareholders, such as Auckland and Manukau City Councils, highlights the increase in passenger numbers under Binger.
Binger has previously suggested that by introducing a dedicated route development team at Auckland Airport his management team could boost passenger numbers. An increase of just 0.5 per cent could generate an additional $80 million a year for the New Zealand economy, he said.
But the Cancun and Newcastle case studies indicate that DAE is likely to suggest 0.5 per cent growth is a very conservative estimate.
DAE says that at Cancun, passenger numbers rose 6 per cent a year - from 7.7 million in 2002 to 9.7 million in 2006 - after the introduction of route development teams.
That was achieved despite the impact of Hurricane Wilma, which resulted in a one-off decrease of 7 per cent in 2005.
The growth rate compares to just 3.5 per cent from 1999 to 2002.
By comparison, Auckland Airport dealt with 11.5 million passengers in 2006 - 1.8 per cent up on the previous financial year.
Copenhagen Airports became involved in managing Newcastle in 2001 and passenger numbers increased 60 per cent- a compounded annual growth rate of 13 per cent.
As well as securing investment approval, DAE needs to convince 75 per cent of shareholders that it is a good deal despite the public outcry over the potential sale. Auckland City owns 12.5 per cent of the shares and Manukau City owns 10.5 per cent.
The offer
$3.80 a share in cash, scrip and dividends:
* Cash: $2.34.
* A stapled security worth $1.39 - consisting of a share in a new holding company which will own up to 60 per cent of Auckland International Airports plus a debt instrument.
* A fully imputed dividend of 7c a share.
