Yesterday, Auckland Airport held their 2023 annual meeting and outlined an overview of the current state of the aviation industry an outlook ahead.
Auckland Airport’s chair, Patrick Strange outlined:
Strong Recovery
15.9 million passengers passed through the airport in the past year, a growth of 184% from the prior year but still shy of the 21 million in 2019.
Key financial results:
Revenue: Up by 108% to $626 million.
Operating EBITDAFI: Increased by 175% to $397 million.
Reported profit after tax: Decreased by 77% to $43.2 million mainly due to non-cash asset revaluations from rising interest rates.
Earnings per share: Declined 78% to 2.9 cents.
Underlying net profit after tax: Stood at $148 million with a per-share value of 10.1 cents.
The company paid its first dividend in three years and reintroduced the dividend reinvestment plan with 33.4% of shareholders participating.
As of June 2023, passenger numbers were at 88% of June 2019 figures.
Domestic passengers grew by 90% to 8.1 million, and international passengers increased over four-fold to 7.2 million.
Customer Experience:
Challenges included global aviation staffing shortages, baggage issues, Auckland’s January floods, and delays clearing international passengers.
Efforts are being made to improve the customer experience, and gratitude was expressed to understanding customers.
Building for the Future
The strategy is centered around the replacement of the ageing domestic terminal.
Some challenges include increased worldwide infrastructure costs and delayed support from airlines like Air New Zealand.
The company is committed to efficient and effective redevelopment.
Aeronautical Pricing
New pricing became effective from 1 July 2023, following a consultation with airlines and a 12-month price freeze.
The charges are under review by New Zealand’s Commerce Commission, and changes are anticipated in 2028 depending on various factors.
Concerns have been raised with the Commerce Commission regarding certain preliminary proposals.
A Thriving Precinct
250 businesses currently operate within the airport precinct.
Strong recovery noted in retail business, transitioning to a single duty-free operator, and strong performance of two hotels.
Construction and leasing progress has been observed in new retail destinations like Mānawa Bay and the $300 million transport hub.
Safety
Safety is a paramount focus, especially with ongoing construction. An executive position, Chief Safety & Risk Officer, was introduced for this.
Senior leaders actively participate in safety evaluations across the precinct. Reduced employee injury rates and enhanced safety measures were observed.
Sustainability Goals
Auckland Airport aims to achieve Net Zero carbon emissions by 2030 with a targeted 90% reduction in scope 1 and 2 emissions from the 2019 baseline.
In FY23, a 27% reduction against the 2019 baseline was achieved.
Auckland Airport chief executive Carrie Hurihanganui outlined:
Travel Recovery:
Despite cautious projections for 2023, domestic and international travel rebounded strongly. International seat capacity reached 90% of pre-pandemic levels by June; domestic was at 89%.
International freight capacity restored to 95%.
Staff shortages and construction in the arrivals hall have caused challenges.
The airport increased customer experience staff by 103% in six months, bringing the total to 41% more than 2019 levels.
Separate lanes for Australian and NZ passport holders have been established, and baggage system improvements are underway.
Increased flight capacity forecasted for Nov 2023 to Mar 2024 is 29% higher than pre-pandemic levels.
Flight connectivity with China and trans-Tasman routes is recovering robustly.
Business Growth:
In 2023, 25 airlines connected Auckland to 40 destinations, nearly double from the pandemic’s peak.
North American routes expanded, with direct connections to multiple U.S. cities.
Recovery in routes to/from China is evident with capacity nearing pre-pandemic levels.
Trans-Tasman connectivity stands at 91% of pre-pandemic levels.
Infrastructure Investments:
Investment in terminals, transport hubs, and airfields is underway to enhance capacity and resilience.
The new domestic terminal, set to open in 2028/29, will offer an improved customer experience.
A $300 million Transport Hub is being built, aiming for a streamlined experience by March 2024.
The airfield is expanding to accommodate larger aircraft and provide more services.
Sustainability Efforts:
Aiming for Net Zero Scope 1 and 2 emissions by 2030.
A 27% reduction from 2019 levels in Scope 1 and 2 carbon emissions achieved this financial year.
Ongoing initiatives like electrification of the air conditioning system and solar arrays contribute to sustainability goals.
Collaboration with airlines to support low-carbon aircraft technology.
Commercial Developments:
Retail outlets in terminals are reviving with passenger return.
Aelia Duty Free is the new duty-free operator till mid-2025.
Mānawa Bay premium outlet shopping is set to open by the end of 2024, with big brands pre-committing.
New facilities for companies like IKEA, DHL, and Reece Group are being developed.
A new 5-star hotel, Te Arikinui Pullman Auckland Airport Hotel, will open in mid-December.
Team Updates:
Several new executive appointments have been made over the past year.
Outlook for the Future:
A positive recovery trajectory for the aviation industry is anticipated.
Underlying profit forecast for 2024 is between $260-$280 million, with a capital expenditure of $1-1.4 billion.
International passenger numbers for 2024 are expected to be 92% of pre-COVID-19 levels; domestic at 89%.
Major reinvestments in Auckland Airport’s infrastructure are ongoing to improve traveller experience and reduce carbon emissions.
Carrie says “As travellers continue to return in substantial numbers, we are reinventing the traveller experience and working hard to achieve ambitious reductions in carbon emissions.”
“Most of all, we are strongly committed to delivering a new, connected national gateway that does justice to our beautiful city of Auckland and the expectations of our global visitors when they come to Aotearoa New Zealand.
E mahi ana mātou mō Aotearoa. We are working for New Zealand.”
