Airport weathers storm

Chairman says it has enough cash in reserve to survive crisis

SYDNEY Airport has the cash to sustain its operations through the coronavirus crisis for an extended period of time, its chairman said.

Chairman Trevor Gerber (pictured) told shareholders at the company’s annual general meeting yesterday that he expected the airport to remain compliant with its debt covenants and did not foresee the need to raise additional equity.

“We will, however, continue to reflect on our capital structure and test our assumptions as we work through the recovery phase,” he said at the virtual meeting.

The airport has already raised $850 million more in bank debt to weather the coronavirus crisis, which Mr Gerber likened to two or three historical shocks rolled into one.

The airport has $1.5 billion in debt maturing in 2020 and 2021, but its $2.7 billion in liquidity “will comfortably cover these maturities if necessary” as well as its operating costs for some time, Mr Gerber said.

The airport said that in the first 18 days of May, its international traffic was down 97.9 per cent and domestic traffic down 97.4 per cent, compared to a year ago.

The airport has cut its capital expenditure in half, to $150 million to $200 million for the 12 months to April, deferring some projects while taking advantage of the mostly dormant airport to remodel the duty-free area and some of the ageing baggage infrastructure.

Chief executive Geoff Culbert told shareholders that the airport was actively working with government and industry leaders to work to develop the “Trans-Tasman bubble” to allow flights back and forth to New Zealand.

Each week that Australia’s international borders remain shut is costing the tourism industry and the economy close to $1 billion a week, Mr Culbert said.

“Unfortunately we don’t have a crystal ball that can tell you when domestic and international travel will start up.”

At 11.23am yesterday, Sydney Airport shares were up 2.3 per cent to $5.72.

At the close of trading on the ASX yesterday they were at $5.70.