FY20 Annual Results: Business stabilisation plan implemented in response to COVID-19

The financial year started with a solid performance as reported in QAC's interim results in February. However, the outbreak of the COVID-19 global pandemic in the second half of FY20 and the lockdown period in the fourth quarter presented unprecedented challenges for the business, airport community and district. As a result, QAC's performance was impacted by the extended closedown of Queenstown and Wanaka airports and subsequent downturn in international and domestic travel.

QAC Chairperson, Adrienne Young-Cooper said: "In response to COVID-19 and its ongoing impacts, QAC's overarching mission has been safeguarding the company's core capability to operate vital airport infrastructure for the district and to support its recovery,"

"We took immediate and decisive steps and implemented a series of initiatives designed to respond to and mitigate the immediate impact of the pandemic on our business and on the wider airport communities at Queenstown and Wanaka, including the removal of all discretionary operational expenditure and the suspension of all non-essential capital expenditure,"

"To ensure the resilience of the broad-based commercial activities across the airports, QAC also provided extensive relief packages to commercial operators at both Queenstown and Wanaka airports," said Mrs Young-Cooper.

Total income for the financial year was $46.7 million, representing a decrease of $3.0 million (6%) compared to the previous financial year. Profit for the year was $18.0 million, up $1.4 million (8%) compared to the last financial year. Operating earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) decreased by $3 million, or 9%, to $31.3 million.

QAC declared an interim dividend of $1.0 million to its two shareholders Queenstown Lakes District Council (75.01%) and Auckland International Airport (24.99%) in line with the Company's dividend policy. For majority shareholder Queenstown Lakes District Council, this was a dividend of $750,100.00. A final dividend was not declared for FY20 due to the impact of COVID-19.

The Company's investment in airfield and terminal infrastructure resulted in an increase in the cost of depreciation and funding costs. New capital investment during the financial year included implementation of the common-use self-serve (CUSS) check-in technology, runway maintenance works, seismic improvement works, noise mitigation activities and ongoing terminal improvements.

The total assets at both Queenstown and Wanaka airports, including property, plant and equipment were $399 million as at the reporting date.

A total of 1,870,619 passenger movements (arrivals and departures) were recorded at Queenstown Airport in FY20, a 19% decrease on the previous year, with international passenger movements down 11% to 583,219 and domestic passenger movements down 23% to 1,287,400. While there was a small growth in passenger numbers in the first half of the financial year compared with the previous year, the impact of COVID-19 in the second half of the financial year saw a major decline in passengers.

General aviation (fixed wing and helicopter) movements at Queenstown Airport were down 26% on the same period last year, while private jet movements reduced by 16%. At Wanaka Airport, general aviation movements (fixed wing and helicopter) were down 36% on last year.

Chief Executive, Colin Keel said: "As part of our response to COVID-19 we, like many other businesses, made the extremely difficult decision to undertake a company-wide organisational restructure. The past several months have been challenging for our team and I have appreciated the high level of professionalism and empathy they've shown through a tough time,"

"While we were able to take advantage of the Government's wage subsidy programme and retain all permanent staff to the end of FY20 on higher than the wage subsidy level we have recently farewelled some very dedicated and talented people who made a significant contribution to QAC and to the community in their time with the airports," said Mr Keel.

The Southern Lakes region has been one of the hardest hit in New Zealand by COVID-19. Mr Keel said: "The next phase of our response is to ensure that the business is stabilised over the financial year to 30 June 2021 by focusing on the wellbeing of our people and underlying business performance, working closely with our airline customers, and supporting the recovery of the district and its communities."

Mrs Young-Cooper said: "One of the silver linings that ripples right through QAC and the wider community is the opportunity this gives us to reset our future, be innovative, collaborative and considered. The board of directors is confident that the local community has the assets and capability required, through QAC, to provide the air transport infrastructure the region needs now and into the future,"

"QAC went into FY20 with a strong balance sheet. While COVID-19 changed the aviation and tourism sectors virtually overnight and will continue to create uncertainty for the foreseeable future, we have taken a measured approach in our response. As we enter FY21 the fundamentals of the business remain strong and we are well positioned to navigate through the COVID-19 environment," said Mrs Young-Cooper.