Wellington International Airport is in discussions with its banks on funding for the business and may seek equity support from owners Infratil and Wellington City Council.
The airport, operating on only about 5 per cent of its usual domestic capacity, is expecting minimal revenue this year and has sought more flexibility from its lenders to keep the operation running and to repay maturing debt.
Chair Tim Brown told investors that discussions with the airport's banks had been very positive and additional equity support was not expected to be needed this financial year, based on current forecasts.
But he said that support "if required further down the track" could take a range of forms, including a loan guarantee similar to what the government provided Air New Zealand. Other options could include a convertible loan or an equity underwrite.
The airport, 34 per cent-owned by the city council, was Infratil's third-biggest investment by earnings and value prior to the investment group's purchase of Vodafone NZ last year.
Infratil chief executive Marko Bogoievski said the airport is "seriously challenged" in the current environment of restricted global and domestic travel.
Modelling is difficult, but the company is assuming traffic may be back to 66 per cent of pre-crisis levels in a year's time and 85 per cent, two years out.
How individual airports fare globally will depend on how travel patterns develop and how many of the airlines they hosted survive, he said.
Brown said the airport was fortunate given its heavy bias to domestic flights, with 15 per cent of traffic devoted to short-haul international services.
The company had "a degree of confidence" in the recovery of those short-haul services, with progress on a return to trans-Tasman services possible later this calendar year.
Bogoievski said Infratil is prepared to underwrite "whatever is appropriate in the circumstances."
The airport had performed well until the pandemic and the business would recover, he said.
Infratil shares rose almost 5 per cent to $4.215, trimming their loss so far this year to 15 per cent.
The Wellington-based infrastructure portfolio investor estimated its operating earnings for the year ended March 31 at between $550 million and $560m, down from the $575m to $615m previously forecast.
But it said the bulk of that difference – more than $30m – was due to the accounting treatment of a series of partial asset sales of its US-based Longroad Energy business.
Infratil's share of those gains would be between US$30m ($$50.4m) and US$43m, but they would not be reported in the income statement. Cash dividends and capital returns from Longroad were estimated at US$21.3m.
The rest of the difference reflected lower guidance already provided by subsidiary businesses Trustpower and Vodafone NZ. The contribution from Wellington Airport would also be down about $2m due to loss of traffic in March, Infratil said.
The company didn't provide guidance for the current year and signalled the final dividend may also not be the 11 cents per share earlier signaled.
Bogoievski said much of the firm's portfolio, including Canberra Data Centres, Longroad and Tilt Renewables, was well-placed to ride out the pandemic and will be completing assets that will generate income in the current year.
Infratil also has plenty of liquidity, including the A$169m ($174m) it will receive from the capital return announced by Tilt today.
That said, Bogoievski said it was prudent to wait until the full-year result in May to determine whether the full dividend should be paid.
"Knowing what we know today, I would expect to still pay out a substantial portion of that."