Building momentum in a new era of development

23 August 2018

FY18 Annual Results: Building momentum in a new era of development

Auckland Airport today announced its financial results for the 12 months ended 30 June 2018.

Sir Henry van der Heyden, Auckland Airport’s Chair, says, “In the past year we built further momentum in delivering on our infrastructure plans and in reshaping our business to match the needs of our new development era and changing travel and trade markets. The sale of our stake in North Queensland Airports, the investment in new transport projects and the roll out of new operations and service initiatives have reinforced our focus on business in New Zealand and on taking care of customers during our $2 billion aeronautical infrastructure development programme – one of the most significant in the country.”

Sir Henry adds “We were also pleased that our objective of sharing the benefits of our investment programme with our local community continued to gather momentum with hundreds of new jobs created. Our jobs and skills hub, ‘Ara’, has provided valuable training and employment opportunities for local people, placing 215 people into new jobs. In 2018 we also received recognition for our efforts over the past decade to minimise our impact on the environment and we became the first company in Oceania and the first airport in the world to set a publicly disclosed carbon reduction target based on the UN-supported Science Based Targets initiative. We were also recognised by Enviro-Mark as one of NZ’s top carbon reducers in the past year.”

“During 2018, Auckland Airport reached some important milestones in its core aeronautical and infrastructure development programme. We completed the first stage of our new international Pier B extension ahead of the 2017 summer peak travel period and fully completed the project in March 2018. We also reached 90% completion of our multi-stage redevelopment of the international terminal departure zone – which will be largely completed by the end of the calendar year – and completed a wide range of new transport projects to improve the flow of traffic around the airport precinct and support the growth in public transport connectivity to the airport”.

“We are already starting to see the benefit of these projects on operational and service performance and customers are also benefiting from the changes through upgraded facilities, improved airport processes and a wider range of retail choices while at the airport. In 2018 we sustained our customer satisfaction levels with an average customer satisfaction rating score of just above four out of five at both terminals based on the independent and globally recognised Airport Service Quality survey. Auckland Airport will continue to work hard on delivering its upgrade programme and remains committed to taking care of customers during this period of significant change.” notes Sir Henry.

Sir Henry says it was also pleasing to see another year of solid growth in travel and trade markets given the significant growth in the prior two years with many new carriers and new routes servicing both domestic and international markets out of Auckland. In the year to 30 June 2018, the total number of passengers using Auckland Airport increased by 5.7% to 20.5 million with international passengers reaching 11.2 million (up 4.1% on FY17) and domestic passengers lifting 7.7% to 9.3 million.

2018 also saw good growth in international passenger markets with Chinese arrivals continuing to grow, up 10.9% in the year, and routes into the US and European markets also growing through the use of larger, next-generation aircraft such as Boeing 787 Dreamliner and Airbus A350.

Sir Henry says, “The aviation market continues to be dynamic with many changes throughout 2018 as airline alliances and network plans evolved. Following the success of its Dubai direct service, in March 2018 Emirates withdrew its A380 services from the Tasman market and added a new service to Dubai via Bali. At the same time existing Tasman carriers including Air New Zealand, Qantas and Virgin announced new services replacing much of the Tasman seat capacity lost by Emirates. Auckland Airport has responded well to these changes and it highlights the importance to Auckland Airport in maintaining a long-term view on infrastructure requirements rather than simply reflecting the airline alliances and business models of today.”

Performance highlights for 2018 include:

· Total number of passengers increased by 5.7% to 20.5 million.

· International and domestic MCTOW increased by 3.4% (up to 5,798,018 tonnes) and 4.6% (up to 2,341,699) respectively.

· Operating EBITDAFI up by 7% to $506.4 million.

· Total profit after tax rose 95.3% to $650.1 million (including the sale of North Queensland Airport holding).

· Underlying profit after tax was up 6.2% to $263.1 million.

· Underlying earnings per share rose 5.8% to 22.0 cents.

· Final dividend increased 4.8% to 11.00 cents per share.

· Proceeds from the AUD$370 million sale of North Queensland Airport holding used to reinvest in core aeronautical infrastructure as well as retire debt.

· Strong growth in total passenger numbers at Queenstown Airport which increased by 13.1% (or 248,226 passengers) in 2018.

Auckland Airport continued to roll out new projects to improve operational and service performance throughout 2018, including:

· Completing the $120 million, 12,240m2 extension of the international terminal Pier B adding critical new aircraft stand and pier capacity.

· Completing 90% of the international departures processing project.

· Investing in new roads, access ways and dynamic management systems across our airport precinct to optimise the flow of traffic and transport around Auckland Airport.

· Working with NZTA and AT on upgrades to their own transport systems to improve the critical network for connections to Auckland Airport including plans for mass public rapid transit and state highway 20A and 20B upgrades .

· Expanded the capability of our mobile check-in kiosks to improve customer experience and passenger processing efficiency. Our kiosks were used by more than one million passengers in the last year.

· Launching Ava, Auckland Airport’s first online artificial intelligence customer service tool.

· Developing and launching our online virtual retail store ‘The Mall’ enabling passengers to conveniently choose from over 2,300 products across the international terminal duty and tax free stores. The Mall’s online platform is one of the most advanced of its type available at any airport in the world.

· Building a new Strata Lounge for customers who want to choose a premium airport lounge experience.

· Introducing a new fleet of airport buses and mobile air bridges to provide flexible aircraft service and a quality customer experience on remote aircraft stand

· Improving the coverage and performance of our public Wi-Fi network enabling the extension of free Wi-Fi access for passengers.

“Turning to the year ahead, we look forward to welcoming Dr Patrick Strange into the Chair role we will no doubt benefit from his deep experience in complex infrastructure businesses – and we would also like to thank all of our people, communities and customers for their patience and understanding during this next period of transformation. We look forward with confidence to the coming year as we continue to deliver the airport of the future,” concludes Sir Henry.

ENDS

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