Auckland International Airport (AIAL) has reported strong financial results for the year ending 30 June, reflecting good returns from its two competing duty free departure and arrivals shop operators, Aer Rianta International (The Loop Duty Free) and Aelia Duty Free.

 

The overall strong retail performance has also persuaded AIAL to ‘confidently’ go ahead with investing in the construction of a new international retail hub as part of its international departure upgrading project.

 

In fact, the airport is so pleased with its recent performance that it is paying a performance bonus of NZ$1,500 ($1,084) before tax to all of its permanent employees not participating in its short-term incentives scheme.

 

INTERNATIONAL PASSENGERS +8.1% TO 8.8M

This ‘generosity’ follows a 12-month period ending June 2016 where total passengers grew by 9.1% to 17.3m, with international (excluding transit pax) rising by +8.1% to 8.8m and domestic +9.8% to 7.9m.

 

At the same time, revenue grew by 12.9% to NZ$573.9m ($415m) , while expenses were up 11.8% to NZ$143.6m. Earnings before interest expense, taxation, depreciation, fair value adjustments and investments in associates (EBITDAFI) rose by 13.2% to NZ$430.3m ($311.1m).

 

Bottom line total profit after tax was up 17.4% to NZ$262.4m ($189.7m) leading to the payment of a total dividend of NZ17.5 cents per share for this financial year (+19.9%).

 

Retail was up by 19.3% to NZ$157.5m ($113.8m) as a champion performer again for Auckland, thanks to strong performances from its numerous partners, led by the major duty free operators Aelia Duty Free and Aer Rianta International. By contrast, aeronautical grew 10.3% to NZ$258.3m ($186.7m).

 

RETAIL HIGHLIGHTS

Listing the highlights, AIAL pointed to retail sales +10% across its domestic, international and off airport channels, plus good performances from Aelia and ARI as ’two new world-class duty free operators with enhanced store fit-outs and refreshed product mixes (established in early FY16).

 

Airport management said that the two flagship duty free retailers have now established their operations and are delivering improved sales performance across the core categories, including cosmetics and skincare (+40%) and confectionery (+20%).

 

AIAL adds that specialty and destination store categories have also proved popular with customers, as sales have risen by 25%, while F&B is also up 9% ‘following product improvements made in the previous financial year.

 

In particular, the airport company notes that the two ‘new’ duty free agreements are supporting its future retail performance aspirations, as rental mechanisms share the benefits of both growing passenger numbers and increased retail space.

 

 

FUTURE LOOKS PROMISING…

It was not all rosy though, with AIAL also reporting a NZ8.4m loss from its associate assets, which include its North Queensland Airports’ business.

 

Meanwhile, management says it is well positioned to take advantage of favourable market conditions, including strong international growth, driven by enhanced connectivity to established, emerging and new markets.

 

These include eight new international airlines – launched or announced – during FY16 and 15 new routes established and flight frequencies increased on existing routes.

 

It is also expecting a boost in domestic capacity growth from four new Auckland services, as a result of Jetstar’s new regional services; and increased Air New Zealand capacity – thanks to fleet growth and increased frequencies.

 

Looking forward, AIAL is also planning ’significant work’ in 2017, including the expansion of its international departure area and the commencement of construction of its Pier B extension.