Auckland International Airport Limited · NZX:AIA
Auckland International Airport — Merger or Acquisition (January 2010)
33 slides from Auckland International Airport's merger presentation, Jan 11, 2010
Slide 1: Investment in North Queensland Airports
Investment in North Queensland Airports 11 January 2010
Slide 2: Contents
Contents • Transaction Overview • Investment Profile • Fit with Growth Strategy • North Queensland Airports Overview • Investment Attractions – Shared tourism objectives – Upside potential – Opportunity to add value – Low future capital expenditure requirements – Synergies with Auckland – Risk diver
Slide 3: Transaction Overview
Transaction Overview • Purchase of 24.55% stake in North Queensland Airports (NQA), the operator of Cairns and Mackay Airports, for A$132.8m (NZ$166m) • To settle on 13 January 2010, timing driven by vendor requirements • Subject to NQA financier consents prior to settlement • Initially funded from
Slide 4: Overview: Cairns and Mackay locations
Overview: Cairns and Mackay locations 4
Slide 5: Attractive Investment Profile
Attractive Investment Profile • Expected equity internal rate of return on Auckland Airport‟s investment in North Queensland Airports in the mid-teen percentages • Purchase price slightly above price paid to State a year ago in the depths of the global financial crisis, and since then: – The A$200m
Slide 6: Fits with our step-out strategy
Fits with our step-out strategy • Our highest value growth step-out option is to invest in other airports through which we can drive synergies with and volume for our core business at Auckland • Our main value driver is growth in international passenger volumes through Auckland Airport • Asian touri
Slide 7: North Queensland Airports Overview
North Queensland Airports Overview • Operator of Cairns and Mackay Airports • Privatised by Queensland Government approximately 12 months ago • Shareholders: – Auckland Airport 24.55% (acquired from Westpac Bank) – JP Morgan Infrastructure Investments Fund (advised by JP Morgan Asset Management) 49.
Slide 8: Cairns Airport Overview
Cairns Airport Overview • Represents around ¾ of the purchase price • Australia‟s seventh busiest airport with 680,000 international pax, 3.0m domestic pax in FY09 • Gateway to Tropical North Queensland, a major Australian leisure destination: – Two World Heritage listed attractions (Great Barrier R
Slide 9: Mackay Airport Overview
Mackay Airport Overview • Represents around ¼ of the purchase price • An important regional airport, benefiting from the strong resources industry and location close to the Whitsunday Islands • Access point to Bowen Basin, one of largest coal-mining regions in the world containing over 70% of known
Slide 10: Routes
Byis p G Qantaslink Weontioe soon Ww Tiger Airways === = Major Domestic Flights game International Routes yey Auckland Airport 10
Slide 11: Investment Attractions
Investment Attractions • Shared tourism goals • Good upside potential for investment • Opportunity to add value • Low future capex requirements • Synergies with Auckland • Risk diversification • Influential and compatible co- investors 11
Slide 12: Shared tourism goals
Shared tourism goals • Shared objective to drive passenger Forecast Asian Visitor Arrivals to Australia volume growth from high growth Asian 17.0% 16.0% markets 15.0% 14.0% • Air services development is a major 13.0% 12.0% focus 11.0% 2009-2018 CAGR 10.0% • Australia has higher growth targets for 9.
Slide 13: Good Upside Potential for Investment
Good Upside Potential for Investment • Opportunity to re-generate leisure traffic by targeting Australian and Asian low cost carriers • The Australian Government announced in December 2009 a package of air services development initiatives • Tourism marketing commitments (in excess of A$45m over 3 ye
Slide 14: Opportunity to Add Value
Opportunity to Add Value • Auckland Airport will be the only shareholder of Cairns/Mackay which is an airport operator • Auckland Airport‟s support will be required for major decisions including changes to the business plan • North Queensland Airports management welcome Auckland Airport‟s involvemen
Slide 15: Low Future Capex Requirements
Low Future Capex Requirements • A$200m domestic terminal redevelopment at Cairns is close to completion with no substantial capital expenditure expected for a number of years thereafter • Direct international passenger volumes are currently ~50% of what they were at their peak, so substantial capaci
Slide 16: Synergies with Auckland
Synergies with Auckland • While North Queensland Airports has been valued as a stand-alone investment we believe there is significant synergy potential • Air services development: encourage airlines to use Cairns as a „stepping stone‟ to strengthen connections between Auckland and Asia • Currently 1
Slide 17: Risk Diversification
Risk Diversification • Whilst the investment represents only 5% of Auckland Airport‟s total assets it does provide an element of risk diversification by: • exposure to the higher growth Australian tourist and Queensland resources economies • North Queensland Airport‟s revenue is 100% unregulated (c.
Slide 18: Influential and Compatible Co-investors
Influential and Compatible Co-investors • We are investing alongside two experienced long-term investors: • Hastings is the leading Australian multi airports investor. Hastings- managed funds have significant investments in other Australian airports – Perth, Gold Coast, Darwin and Melbourne - which
Slide 19: Appendix A Background to Cairns Airport
Appendix A Background to Cairns Airport 19
Slide 20: Additional Information on Cairns Airport
Additional Information on Cairns Airport • Cairns Airport is located approximately 7 km from the Cairns CBD • The key driver of passengers is tourism, with a smaller secondary driver of mining/business • Cairns Airport is the closest airport on Australia‟s east coast to a number of rapidly growing A
Slide 21: Cairns Airport Facilities
Cairns Airport Facilities • Cairns Airport has a main north-south runway (3,196m) and a smaller cross runway (925m) for general aviation • The international terminal is a 3 level building with a total floor area of 25,419m2 • A major A$200 million redevelopment of the domestic terminal (which will b
Slide 22: Recent Developments for Cairns Airport
Recent Developments for Cairns Airport • Jetstar increased services; – Reintroduction of 4 flights a week between Cairns and Osaka, commencing in April 2010 – Addition of 18 additional flights a week between Cairns and Sydney, Melbourne, Perth and Adelaide • Pacific Blue have announced they will be
Slide 23: Cairns Airport Passenger Numbers
Cairns Airport Passenger Numbers • Overall passenger numbers declined 4.0% in 2009 to 3.7 million due to a decline in international passengers, particularly from Japan • Overall CAGR between 2003 and 2009 of 3.0%, driven by strong growth in domestic passengers offsetting a decline in international p
Slide 24: Cairns Historical Financials
Cairns Historical Financials A$m, financial year to June FY06 FY07 FY08 FY09 CAGR FY06-09 Revenue 61.3 63.0 66.4 57.6 (2.1%) Expenses* (14.2) (15.7) (18.2) (20.5) 13.0% EBITDA* 47.1 47.3 48.2 37.0 (7.7%) FY09 Revenue Breakdown Property Non- Rentals Retail and Aeronautical 28% Advertising 40% Aeronau
Slide 25: Appendix B Background to Mackay Airport
Appendix B Background to Mackay Airport 25
Slide 26: Additional Information on Mackay Airport
Additional Information on Mackay Airport • Mackay is an important regional centre in North Queensland and has a population of around 90,000 • Mackay Airport is located approximately 5 km from the Mackay CBD and served approximately 946,000 passengers in FY09 • The key driver of passengers is coal mi
Slide 27: Mackay Airport Facilities
Mackay Airport Facilities • Mackay Airport has a main runway (1,981m) and a smaller cross runway (1,344m) for general aviation • The terminal is generally single storey and contains a 500m2 concourse area, a 815m2 departure level and a 450m2 outdoor seating area • 13 check-in desks and 6 car rental
Slide 28: Mackay Airport Passenger Numbers
Mackay Airport Passenger Numbers • Passenger numbers at Mackay increased 13.0% in 2009 to 940,000 passengers • Overall CAGR between 2003 and 2009 of 17.1%, driven by the development of the Bowen Basin coal fields and the associated impact of the “fly in – fly out” workforce 1.0 m 0.8 2003-09 CAGR %
Slide 29: Mackay Historical Financials
Mackay Historical Financials A$m, financial year to June FY06 FY07 FY08 FY09 CAGR FY06-09 Revenue 9.9 12.0 14.1 16.2 17.8% Expenses (4.1) (4.7) (4.8) (5.0) 6.8% EBITDA 5.8 7.3 9.3 11.2 24.5% FY09 Revenue Breakdown Property Retail and Rentals Advertising 10% 10% Non- Aeronautical 30% Aeronautical 70%
Slide 30: Appendix C Background to Tropical North Queensland
Appendix C Background to Tropical North Queensland 30
Slide 31: Overview of Tropical North Queensland
Overview of Tropical North Queensland • The Tropical North Queensland region (covering approximately 270,000 km2) is internationally recognised as a premier tourist destination • Tropical North Queensland has an estimated population of approximately 262,000 and attracted more than 2.2 million overni
Slide 32: TNQ tourism market
TNQ tourism market • In 2008/09, around 24% of holiday visitors to Approximate FY09 Breakdown of Visitors Australia had a stopover at Tropical North to Tropical North Queensland by Country of Residence Queensland during their time in Australia, ranking third behind Sydney and Melbourne • The region
Slide 33: Australia has higher ambitions than NZ for Asian tourism growth
Australia has higher ambitions than NZ for Asian tourism growth Asia NZ Asia Aus Sources: Tourism New Zealand and Tourism Australia figures and forecasts 3,060,000 2,893,000 2,702,000 2,524,000 2,348,000 2,236,000 2,210,000 2,231,000 2,124,000 2,117,000 2,159,000 2,078,000 2,042,000 2,021,000 2,018,
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