Airport battles for travellers
Christchurch Airport has reported a 6.2 per cent decline in annual bottom line earnings to $18.4 million on fewer passengers
About 500,000 fewer passengers used the airport than before the earthquakes.
Annual passenger numbers totalled 5.5m, down 51,000 on 2012.
The Christchurch City Council-controlled company is fighting back against the lower domestic and international passenger numbers related to the 2011 earthquakes. It is seeking new trans-Tasman and international services with China and the United States two of its target markets.
In 2010, the last full year before the quakes, more than six million passengers went through the airport. In 2011, that fell to 5.77 million.
Airport chief executive Jim Boult said it was a satisfactory result for the business, which was "very much fixed cost".
The cost of running the airfield and terminal did not materially reduce with lower passenger numbers.
Recent trends showed some recovery of passenger traffic. "[But] full recovery is not expected until the city's major facilities are rebuilt, in particular the convention centre and associated hotels," he said.
During the financial year the company completed a $237m domestic terminal and car park replacement project.
The financial side of the terminal build was largely funded through bank debt and a $75m bond issue that runs through to December 2019.
The airport would spend $15m on three new developments at Dakota Park in the next year. It would likely commence a $25m Spitfire Square retail development in the near future.
Boult and chief financial officer Tim May said they were now considering a further bond issue with an eight year maturity term to bring back the airport's reliance on shorter term bank debt.
The issue could be for $50m with room for a further $25m of oversubscriptions.
"We're just getting away from short-term [debt] cycles. Getting it on a long term tenor, so we can feel confident about having seven or eight years of money without having to go back [for future lending]," May said.
At June 30 the company had $305m of debt, and the bank capacity to increase that lending to $380m. Total assets now stood at $1.086 billion up $50m from a year ago.
Boult said the bottom line included a net after tax gain on the revaluation of investment properties of $5.2m.
Excluding revaluation of investment properties and earthquake costs, the airport achieved earnings before interest, tax, depreciation and amortisation of $64.9m up from $63.9m in the 2012 financial year.
Boult said the reliance on business park rents, car parking the Antarctic centre continued to be a profitable part of airport business. Since 2008, a 50/50 split between aeronautical and commercial revenue has shifted toward the commercial side. In 2012 commercial revenue accounted for 63 per cent of all revenue.
But chairman David Mackenzie said there was for now a real focus on aeronautical revenues, by a growing team that travelled overseas to talk to airlines.
"China and the USA are our prime targets for direct services. They have been for some time . . . we remain the only longhaul capable airport in the South Island, that isn't going to change . . ," Boult said.
"More capacity on, say, a Brisbane route or a Melbourne route, are also priorities for us."
The airport intends to pay its shareholders $7.35m in dividends. In 2012 it paid its owners $8.73m.
Total capital expenditure for the year was $47m, of which $26.7m related to the final stages of the new terminal development. May said there would be a similar level of spending in fiscal 2014.
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