Auckland International Airport Ltd deferred over $2 billion of capital spending yesterday, and is reviewing some more.
Chief executive Adrian Littlewood said Auckland Airport had taken steps to confirm its liquidity position and introduced measures to substantially reduce its operating costs & capital expenditures:
- Auckland Airport has unrestricted cash of $340 million & an additional $485 million of undrawn bank facilities
- The company decided yesterday to suspend selected capital expenditure projects with a completed value of more than $2 billion, until there is more certainty about future market conditions
- In its recent interim results, Auckland Airport demonstrated strong operating cost control, and in the current environment that focus is being accelerated with the elimination of all discretionary spend where possible
- These follow earlier decisions from Auckland Airport to withdraw earnings & capital expenditure guidance for the30 June 2020 financial year, and to cancel its interim dividend.
Mr Littlewood said a small number of projects were still under review, but those suspended included the second runway, the domestic jet hub, a multi-storey carpark, Park & Ride South and construction of the 146-room Mercure Hotel near the airport shopping centre.
“Our long-term plans remain the same, but until we know more about how long the market will take to rebuild & recover, it’s not possible to keep these projects open, on hold & continuing to generate significant costs.
“While some of these projects were in construction, several were about to start, so it was important that we made these decisions early before physical works began on site.
“For many years we have been working towards our ambition to build New Zealand an airport of the future, so for our partners & the team here at Auckland Airport, it is enormously difficult to see progress stall.”
Mr Littlewood said Auckland Airport remained committed to completing a number of key infrastructure projects, including construction works associated with various roading projects & upgrading the runway pavement.
“The runway pavement works have long been planned, and we are absolutely committed to this project & working through the detail of when we complete the works, while maintaining safe & reliable airfield operations.”
Mr Littlewood said the company was consulting with many of its employees around a proposal to reduce hours & salaries by 20%. Directors, Mr Littlewood himself & the leadership team had already agreed to reduce their remuneration by 20%.
Over the last week, Auckland Airport has also released about 90 fixed-term & independent contractors who were working in positions that are no longer needed, given the current circumstances. These roles don’t relate to essential airport services.
Attribution: Company release.