Christchurch airport profit well ahead, $40m dividend

Tuesday, 28 August 2018

A China Southern dreamliner at Christchurch Airport.

Christchurch Airport will pay its 75 per cent owner Christchurch City Council the main share of a $40 million dividend which will offset rates rises and help pay for earthquake recovery projects.

The dividend – up from $38m last year – come at the same time as renewed calls for the city council to partly sell some assets in the face of steep rates rises.

The Memorial Bridge entrance to Christchurch Airport, designed by Warren and Mahoney.

Chief executive Malcolm Johns said the three key Tasman airport hubs into Christchurch from Melbourne, Sydney and Brisbane had gained more market share than Auckland in recent years and it continued during 2018.

Along with other income, the airport's revenue grew 10.8 per cent to $236m, leading to a net profit after tax of $89m for the year ending June, ahead by 37 per cent on the previous year.

Christchurch International Airport chief executive Malcolm Johns.

The airport recorded return on equity of 8.9 per cent over the period.

* Christchurch Airport posts a $64.6m profit thanks to tourism, freight and property development

* Christchurch airport spreads its wings past passengers and planes**

Chamber of Commerce chief executive Leeanne Watson said it was a good time for the city council to take some courageous leadership because a 55 per cent rates increase over 10 years was unsustainable.

'If they sold about 24 per cent they would still have control and receive future dividends. They will need about $500m and it has to come from somewhere,' Watson said.

The total asset base of the airport is about $1.6 billion.

A significant revenue boost came from revaluations of the airport's property holdings, of $53m compared with $35m last year, Johns reported.

'The only disappointment for us was the delay in the contractor completing construction of Novotel Christchurch Airport,' Johns said.

'We do not expect this delay to have a negative financial impact on the airport company, however the hotel is a game changer for us as we service the strong growth in early morning and late night Tasman flights which is expected to grow by more than 10 per cent over the next year.

'Our focus is on working with the contractor to complete construction so we can open the hotel and welcome visitors,' he said.

The Novotel has been dogged by construction problems, requiring internal linings to be stripped out, among other remediation.

Passenger numbers hit a record 6.87m, up from 6.57m, led by long-haul passenger numbers up 17 per cent. Trans-Tasman passenger numbers grew 5 per cent and domestic passenger numbers grew 4 per cent.

The good result came in spite of average airline charges per passenger at Christchurch falling from $12.13 per passenger to $11.11 as a result of Christchurch Airport adopting Commerce Commission guidelines.

Property income accounted for 19 per cent of the airport company's total revenue and land development continued, with Bunnings Warehouse becoming an anchor tenant for a new trade retail precinct called Harvard Park at the northern end of the airport campus. Construction will begin next year.

'All parts of the business are now showing pleasing commercial maturity in the way we are building our business, enhancing customer journeys and being great kaitiaki focused on safety and sustainability,' Johns said.

Over the past year, international visitor arrivals at Christchurch grew 8.5 per cent compared with the national growth rate of 3.9 per cent.

Australian visitors increased 7.8 per cent, Chinese 25 per cent, UK 5.2 per cent. US visitors 11.8 per cent.

The government owns the 25 per cent balance of airport company shares.

Chief executive Johns' salary consisted of a base salary of $612,000, a short-term incentive of $200,000, Kiwisaver contributions of $24,360, taking his total remuneration to $836,360.

The short-term incentive of $200,000 was comprised of $100,000 for annual performance, including commercial, safety outcomes, and environmental outcomes, plus $100,000 'relating to forward looking, long-term strategic matters, including technology based innovation, leadership and succession planning and support to South Island tourism'.