CIAL profit, revenue, passenger numbers fall in FY20

28th September 2020 By Paul Yandall | paul@tourismticker.com | @tourismticker

Christchurch International Airport Limited has reported a net profit after tax of $47.83m for the year to 30 June 2020, down 16.8% on the previous period.

The company said underlying net profit for FY20, which took into account one-offs such as gains from disposals and goodwill impairments, was $24.93m, down 48%.

Total revenue was $179.29m, down 10.6%, operating revenue was $165.7m, down 11.6%, and EBITDAF was $96.8m, down 22.9%.

CIAL said the fall in operating revenue all occurred in the fourth quarter of FY20, due to the impacts of lockdowns and border closures to combat the spread of Covid-19.

An interim dividend of $20m, or 35 cents per share, was paid to shareholders during the year, equating to around 90% of the distributable profit, but there was no final dividend and it appeared unlikely there would be any paid in FY21.

Domestic passenger numbers for the year fell 24.7% to 3.89 million and international passenger numbers dropped 25.9% to 1.31 million. Passenger numbers for Q4 of FY20 were down 86% on the same period last year.

“The past financial year has been ultimately defined by Covid-19, although it did not affect the whole year,” CIAL said.

“From July 2019 to January 2020, CIAL was operating in a normal environment with a continuation of the positive outcomes of the last few years. Covid-19 materially changed the operating environment from February 2020 onwards.”

The company said inbound tourism had been hit hard by the closure of New Zealand’s borders and it was “likely this situation [would] persist out into at least 2022”.

“The tourism situation can only change when the health situation does. We simply do not currently have enough hard facts about vaccines, therapies and/or future health management strategies.

“We must work from first principles and change our outlook as and when the health facts change.”

To cope with the impacts, CIAL had suspended dividends, rationalised operations, suspended or cancelled capex, asked all staff to accept wage and salary freezes for 18 months, and frozen recruitment.

The company received $1.6m from the Government Covid-19 wage subsidy during the financial period, and $980,000 post balance date.

It had also obtained new bank facilities totalling $145m since April for additional liquidity, as well as extensions on all bank debt maturing before 31 December 2020. That saw its debt to EBITDAF ratio increase to 6:1 during the period, up from 3.7:1 for FY19. Debt rose 25% from $472m in FY19 to $590m. Separate bond funding totalled $200m.

CIAL said its Novotel Christchurch Airport was now being used as a Government managed isolation and quarantine facility “providing a certainty of revenue stream until the end of the current contract in December 2020”.

Despite the downturn, the airport said the world’s desire to visit New Zealand had increased since the pandemic struck and the country would “remain a highly desirable and attractive destination for international visitors”.

CIAL said it believed its $45m purchase of 750ha of farmland at Tarras, Central Otago, for a new regional airport “would keep future generations of South Island residents and businesses connected to the rest of the world”.

“Our top priority is talking to the Central Otago community, especially people who live close to the site,” CIAL chief executive Malcolm Johns said.

“We have begun one-on-one discussions with community members to understand their thoughts, concerns and questions, no matter what they think of our idea, and gather all the information we can to shape any case for a new airport.”

The airport wanted to build a 2.2km, jet-capable runway and a small terminal building but there was “unlikely to be any construction on-site for at least five years, or maybe longer”.

Christchurch City Holdings Limited (CCHL), a wholly-owned subsidiary of the Christchurch City Council, owned 75% of CIAL and the New Zealand Government owned 25%.

CCHL reported on Friday that its total operating revenue for the group was $1.03bn in the year to 30 June 2020, down 4% on FY19.

“The main impact on this result was due to a drop in revenue by Christchurch International Airport Ltd of $22m in the fourth quarter of FY20, as a direct result of the Government’s decision to impose lockdowns and close borders in response to Covid-19 and the resulting impact on aeronautical and terminal lease revenue.”