Auckland Airport to build outlet mall with 100+ stores
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Auckland International Airport has posted an after-tax profit of $464.2m for the year to June 30, while also announcing plans to build a retail precinct with 100 stores that is expected to create 500 new jobs.
Although its after-tax profit was up 139 percent on the previous year’s $194m profit, the airport made an underlying loss of $41.8m, its first full year underlying loss in history. The underlying loss was in line with the guidance the airport gave at the start of the year.
The airport says underlying profit is how it measures its financial performance because it removes revaluation changes that can distort financial results or where one-off transactions, both positive and negative, can make it difficult to compare profits between years.
The airport also recorded its lowest number of international arrivals and departures since 1972, with just 600,000 passengers, including transits, down 93 percent on the previous year.
Total passenger numbers were 6.4 million, down 59 percent on the previous financial year.
Shares in Auckland Airport closed at $7.10 on Wednesday. During New Zealand’s alert level 4 lockdown at the start of the Covid-19 pandemic, they dropped to about $5 per share.
The new retail precinct would involve the development of a 23,000 square metre-plus outlet centre on undeveloped land at the north-eastern edge of the airport.
“Premium and lifestyle brands” will be sold “at often heavily discounted prices”, the company said.
The airport’s general manager of property and commercial Mark Thomson said there was a gap in the market for a purpose-built fashion outlet centre and the airport had been exploring the concept for several years.
“It will be the first of its kind in New Zealand, offering an exciting new shopping experience for Kiwis and travellers arriving at and departing from the airport,” Thomson said.
“Many New Zealanders will be familiar with visiting this type of bespoke fashion outlet shopping centre on trips overseas.”
A start date for construction was not given.
Thomson said development would be influenced by the strength of the retail market and the recovery of aviation.
Auckland Airport chief executive Adrian Littlewood said the 2021 financial year had been a year like no other for the company, and it was giving permanent staff $1500 in airport shares to thank them for their efforts over the past year.
“It will be the first of its kind in New Zealand, offering an exciting new shopping experience for Kiwis and travellers arriving at and departing from the airport,”
“Covid-19 changed our business overnight bringing constant upheaval to almost every part of our operation,” Littlewood said.
“But throughout all the uncertainty of the past 18 months, our team’s determination to get the job done and go the extra mile for New Zealand has never faltered.”
The airport had taken steps to strengthen its financial position including reducing operating expenses, repaying $425m in US private placement borrowings, and getting bank approval to renew a $700m loan, he said.
The airport last week said it would start work on a $1 billion-plus project to merge its domestic jet operations with its international terminal early next year as one of four anchor projects being advanced.
Four major projects are still on hold including its expanded international airfield and taxiway capacity, new cargo precinct, new international arrivals area and a second runway.
Auckland Airport held more conservative assumptions than those of the International Air Travel Association, which was forecasting global travel to fully recover and exceed pre-pandemic levels in 2023.
Littlewood said a full recovery may take longer.
“Our financial performance is strongly linked to passenger volumes, so our recovery will be greatly influenced by the return of domestic and international travel and changes in border settings.”
There were encouraging signs with vaccination programs ramping up in New Zealand and around the world, he said.
“But we expect to see further volatility in domestic and international travel in the short term, with the global aviation market gradually rebuilding in 2022.”
Due to uncertainty in the market, Auckland Airport would not provide underlying earnings guidance for the 2022 financial year, Littlewood said.
Investment in transport infrastructure projects and upgrades would continue and was expected to cost between $250m and $300m in the 2022 financial year.
Questions & Answers
Q.What is the primary reason Auckland Airport reports an underlying loss despite its significant after-tax profit?
What is the primary reason Auckland Airport reports an underlying loss despite its significant after-tax profit?
The airport measures financial performance using underlying profit to exclude revaluation changes or one-off transactions. These can distort results and make year-on-year comparisons difficult, leading to a reported underlying loss of $41.8m.
Q.How will the new retail precinct benefit shoppers and the airport, according to the article?
How will the new retail precinct benefit shoppers and the airport, according to the article?
The outlet centre will offer premium and lifestyle brands at discounted prices, filling a market gap for a purpose-built fashion outlet. It will provide a new shopping experience for Kiwis and travellers at the airport.
Q.What factors will determine when construction begins on the new outlet mall?
What factors will determine when construction begins on the new outlet mall?
A start date for construction was not provided. Development will be influenced by the strength of the retail market and the recovery of aviation, as stated by the airport's general manager of property and commercial.
Q.Why did Auckland Airport not provide underlying earnings guidance for the 2022 financial year?
Why did Auckland Airport not provide underlying earnings guidance for the 2022 financial year?
Auckland Airport did not provide guidance for the 2022 financial year due to uncertainty in the market. The airport expects further volatility in domestic and international travel in the short term.
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