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Auckland Airport should be on a winner buying into Cairns and Mackay Airports. Who's next?

14-Jan-2010

New Zealand's Auckland International Airport (AIAL) has agreed to purchase a 24.55% stake from Westpac Bank in North Queensland Airports (NQA), the operator of Cairns Airport and Mackay Airport, for NZD166.5 million (AUD133.5 million, USD123.4 million). AIAL’s CEO, Simon Moutter stated he is bullish about the future performance of Cairns and Mackay airports, due to the growing number of LCCs operating from those airports. He added the primary motive for the purchase was to increase passenger traffic to Auckland, particularly through Asia, as the Queensland airports continue to push for traffic from Asia. He is hopeful the stake will boost passenger numbers through Auckland Airport by 100,000 a year within the next five years. Was it a high price to pay for additional feed at Auckland? Industry change and tourism authority cooperation could make this model work. [2677 words]

Unlock the following content in this report:

Subheadings:

  • “The right deal at the right time”
  • Rare opportunity
  • A similar approach to that of YVRAS?
  • Did Auckland pay too much?
  • RoI “in the percentage mid teens” - but expected ancillary benefits add to the equation
  • International traffic has been collapsing at Cairns
  • Auckland bets on Jetstar (and others) driving expansion at Cairns
  • Mackay mines some sweet revenues
  • A bet on better times and industry change

Graphs and data:

  • Main Queensland cities
  • Table: Comparison of Cairns and Mackay airports EBITDA multiple variations
  • Cairns Airport domestic, international, regional and total passenger number growth: FY1998-99 to FY2008-09
  • Chart 2: Mackay Airport passenger number growth: FY1998-99 to FY2008-09
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