AIA agrees to purchase North QLD Airports
Auckland International Airport Limited (AIA) has agreed to purchase a 24.55% stake in North Queensland Airports (“NQA”) for $132.8 million from Westpac Banking Corporation (WBC). The company said the acquisition of the Cairns and Mackay airports operator was part of its strategy to grow beyond its core business in Auckland.
AIA chairman, Tony Frankham, said it gave the company new opportunities to strengthen and grow air services connections with Cairns as a stepping-stone between New Zealand and Asia.
The company said Cairns Airport is Australia’s seventh busiest airport, with approximately 3.7 million passengers in FY09, while Mackay airport was a regional domestic airport with nearly 1 million passengers in the same period.
CEO Simon Moutter said the company had looked at a range of opportunities to drive synergies and volume for its core business and recognised that its most important value driver is growth in international passenger volumes.
“We believe that Asian tourism markets offer the greatest opportunity for volume growth and that one of the keys to growing Asian traffic is improved air services connections,” Mr Moutter said.
”Driving more travel demand out of Asia will be crucial to the future growth of both Auckland Airport and the New Zealand tourism sector."
He added that the company’s primary focus remains direct Asian connections with Auckland.
“Cairns Airport fits the bill in terms of its location, scale, focus on Asian tourism, and market diversification opportunities,” Mr Moutter said.
”Mackay offers additional diversified exposure to the booming Australian resources sector.”
Mr Moutter said the investment was modest at around 5% as a proportion of Auckland Airport’s total assets.
Auckland Airport said it believes the proposed deal to be strongly value accretive, offering an equity return on investment in the mid teens percentages.
”It will initially be financed from existing debt facilities,” the company said.
”Subsequently, the funding strategy is likely to involve a mixture of debt and equity consistent with Auckland Airport’s current capital structure.”
The company said the proposed purchase, which is due to settle on 13 January, remains conditional on NQA obtaining the consent of its financiers to the proposed transaction prior to that date.
Auckland Airport said it would become the only airport operator shareholder in NQA.
At the close of trade Friday, Auckland Airport shares were trading at $1.65, while Westpac shares were trading at $25.15.
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