AAP Finance

Airport boss downplays credit rating risk

By AAP Newswire

Sydney Airport boss Geoff Culbert has dismissed suggestions that pressure from credit ratings agencies prompted equity raising plans, after disastrous first half results from the coronavirus pandemic.

Management will cut costs and debt and warned jobs could be lost after the virus crisis hit its bottom line, forcing the airport into the red.

Australia's most active airport on Tuesday reported a net loss of $53.6 million for the first half of this calendar year - a dramatic turnaround from a profit of $17.3 million for the same time last year.

Part of the recovery effort is a $2 billion equity raising, which should help cut the debt bill to $7 billion.

However, Mr Culbert denied the equity raising was prompted by fears the business' credit rating could be cut.

"We weren't receiving pressure from ratings agencies," he said.

He said at May's annual general meeting that management felt optimistic about the pace of recovery.

But a second wave of infections soon followed in Victoria and a series of border closures across the country.

"We felt now is the right time for decisive action," he said of the equity decision.

However, the raising may not be enough to save the rating in the long term, Moody's vice president Nicholas Chapman says.

He said the raising would reduce short-term credit pressure, but the key drivers of the airport's credit profile were governments removing travel restrictions and consumer demand.

The outlook for these drivers remained highly uncertain, he said.

Mr Culbert also called on state and territory governments to produce criteria clarifying when borders would be open or closed.

"What we have is an absence of rules. We need clear triggers for border closures and openings," he said.

This would help travel businesses plan.

"We'd like a set of rules that are consistently applied across the country," Mr Culbert said.

First-half revenue was $511.0 million, down 35.9 per cent as cash flow from aeronautical fees, retail and parking fees declined.

While the year started well, passenger volumes slumped by 56.6 per cent to 9.4 million people as COVID-19-related restrictions on travel began to be implemented from February.

International passenger numbers are down 57.3 per cent and domestic traffic down 56.1 per cent.

"Six months into the pandemic, there remains uncertainty as to how long it will take for aviation markets to return to pre-COVID-19 levels," Mr Culbert said in a statement.

Sydney Airport said its operations would continue to be affected while domestic and international travel restrictions remained in place.

It's still aiming for a 35 per cent reduction in operating costs by April next year and again warned of potential job losses.

"The staff job guarantee will regretfully not be extended beyond 30 September 2020 and a review is currently underway to restructure the organisation," it said.

Under the guarantee, Sydney Airport earlier this year promised to retain the jobs of its 500 employees for six months.

"At this time, no distribution is expected to be declared for 2020," it said.