S&P Global Ratings predicts Sydney Airport unlikely to develop Western Sydney Airport

S&P Global Ratings revised (17-Jan-2017) its outlook on Southern Cross Airports Corporation Holding (SCACH), parent company of Sydney Airport Corporation Limited (SACL), from stable to positive. The outlook revision reflects the view that Sydney Airport is unlikely to participate in the development of Western Sydney Airport, enabling it to continue generating strong financial metrics. S&P Global Ratings estimates the project would require an investment in excess of AUD5 billion (USD3.77 billion) to build an airport that will serve a maximum of four million passengers p/a, presenting an "extremely low" return on investment in the early years. Given the government's refusal to help fund the airport, Sydney Airport is unlikely to undertake the investment, as it will not put at risk the existing airport in developing the project. We would revise the outlook to stable if SCACH elects to respond positively to the notice of intention and exercise its Right of First Refusal in relation to Western Sydney Airport. Alternatively, a revision to a stable outlook would also occur if SCACH's parent were to pursue an aggressive growth strategy, increasing its leverage or risks for the group. [more - original PR]