AIA 2017 Annual Meeting Chair and Chief Executive’s addresses

Published on : Thursday, October 26, 2017

auckland airport imageShareholders, it is again my pleasure to present the Chair’s report at this annual meeting.

 

The 2017 financial year was a busy one for Auckland Airport and delivered strong growth right across our business.

 

The company retained its focus on three key areas:

 

 

I want to briefly touch on each of those important areas this morning, before updating you on some governance matters.

 

Ladies and gentlemen, to help accommodate the ongoing increase in passengers and aircraft, we continued to spend more than $1 million every working day on our core airport infrastructure in FY17.

 

We also announced a plan to invest around $2 billion in aeronautical capital expenditure by the 2022 financial year.

 

An incredible 44 aeronautical projects were underway across the airport during the financial year, each in excess of $1 million.

 

Those of who you have flown overseas from Auckland in recent months, will have seen the upgrade of our international departure area – which has just started to be unveiled after many months of behind the scenes construction work.

 

Or you will have seen the equally impressive extension of Pier B – to provide two more international aircraft gates and expanded departure lounges.

 

Less obvious on your recent airport journey perhaps, but very significantly for the airport and our airlines, was the expansion of our airfield.

 

We upgraded existing and built new remote aircraft stands.

 

Indeed, we increased airfield pavement by a staggering 63,000 square metres – the equivalent of six rugby fields.

 

Yes – FY17 was a very busy 12 months for those team members focused on new infrastructure delivery.

 

And I can assure you that FY18 will be no different – to ensure we can accommodate future passenger and aircraft growth.

 

Shareholders, the 2017 financial year also saw the company continue to focus on growing and supporting tourism.

 

We worked hard to support the sustainable growth of travel markets to increase our air connectivity – something that is essential for a city and country reliant on tourism and trade for economic prosperity.

 

It is also essential for the company’s long-term performance – new airlines, new services and new capacity provide the growth that underpins Auckland Airport’s ongoing success.

 

Pleasingly, in FY17 we welcomed seven new international airlines and launched eight new international routes.

 

We also maintained our strong support for the New Zealand tourism industry, especially the operators who provide our international visitors with high-quality experiences.

 

And we joined with other industry leaders to encourage the Government to develop new and innovative ways to upgrade New Zealand’s tourism infrastructure.

 

Yes – you can all be proud of the role your company plays to grow and support tourism for our country – and I want to thank everyone on the team that invests so much time and effort on this.

 

Shareholders, as I have mentioned, the 2017 financial year also saw us remain focused on our customers.

 

We are committed to ensuring their journeys through the airport are fast and efficient – and that they have a range of options when parking, shopping or staying here.

 

From new mobile self-service check-in kiosks, to expanding our popular concierge service and progressing the development of our new hotel, we made significant investments in those things that will improve the airport experience for our customers.

 

Improving travel times and flows around the airport precinct was certainly a top priority for the company in FY17.

 

And we continued to strongly advocate to government – both local and central – the need for better public transport services, and state highway access, to and from the airport.

 

I am delighted to say that we fast-tracked a number of planned roading and transport improvements on our own network to improve traffic flows.

 

And we also announced the details of four new transport projects as part of our longer-term plan to improve travel around the airport over the next three years.

 

I want to say at this point how proud I was of Auckland Airport – and the way it supported airline customers and passengers during the recent fuel disruption.

 

The incident was not of our making and nor was it our infrastructure, but the team worked tirelessly to keep people informed and provide support where needed and where they could.

 

Upgrading infrastructure – growing and supporting tourism – providing the best possible customer experience.

 

I can assure you that the Board is focused on these important areas of our business, and I can assure you that Management is as well.

 

I am pleased to say that in FY17 we also retained our focus on improving educational, employment and environmental outcomes in our local communities.

 

We are 100% committed to contributing to South Auckland and of course the wider Auckland region.

 

It is the right thing to do and we can all be very proud of the company’s ongoing corporate social responsibility activities.

 

Let me now turn to the FY17 numbers.

 

Pleasingly, our total passenger numbers were up 10% to 19 million.

 

International passengers were up 11%.

 

International transit passengers were up 17%.

 

And, domestic passengers were up 9%.

 

The benefit to the company from this increasing number of passengers was seen in our financial results.

 

In FY17 our revenue was up 10%.

 

Operating EBITDAFI was up 10%.

 

Total profit was up 27%.

 

And underlying profit was up 16.5% to almost $248 million.

 

These positive results enabled us to provide you the shareholders with a total dividend of 20.5 cents per share – up 17% on the previous financial year.

 

Underlying earnings per share increased 16% to 20.8 cents in FY17.

 

And our five-year average total shareholder return was 26%.

 

The FY17 financial results speak for themselves.

 

However, I do want to make a point of thanking everyone on the team who helped deliver them.

 

Shareholders, I would like to conclude by making a few governance comments.

 

Throughout FY17 the Board retained its increased oversight of aeronautical pricing.

 

The ad-hoc Board sub-committee met regularly to provide governance oversight of this important task – which assisted the company in the development of its aeronautical charges for the financial years 2018 to 2022.

 

Our modest price changes for that period and our
$2 billion infrastructure investment plan will deliver significant benefits for passengers.

 

The new pricing and capital expenditure programme balances the needs of passengers, the airport community, the tourism industry, our investors and the airlines.

 

And it ensures Auckland Airport has the infrastructure it needs to continue connecting Auckland with New Zealand and New Zealand with the world.

 

My sincere thanks to James Miller who chaired the sub-committee, supported in his role by directors: Justine Smyth; Christine Spring and Patrick Strange.

 

In April this year the Board met in Sydney.

 

This was part of our ongoing commitment to excellence, learning from other successful companies and being engaged in regional aeronautical developments.

 

We visited Sydney Airport, which welcomes more than 40 million passengers every year, and discussed infrastructure development, trans-Tasman tourism and health and safety.

 

We received a briefing from Facebook and discussed its travel and tourism activities.

 

We met with Qantas to discuss airline infrastructure requirements and alliances.

 

And we met with Boeing to discuss its view on the future of travel.

 

We also met with the New South Wales Government to discuss the development of Sydney’s new airport at Badgerys Creek.

 

The intelligence we gathered from this visit was invaluable and is helping us to fulfil our governance mandate.

 

Shareholders, you may have seen that we amended the FY17 annual report to ensure it incorporated the NZX’s new corporate governance reporting principles.

 

The key amendments made are outlined in the annual report and I draw your attention to them.

 

Lastly on governance – during FY17 the Board elected to reinstate our dividend reinvestment plan.

 

It enables shareholders to elect to purchase shares at a 2.5% discount to market price, instead of receiving the dividend as cash.

 

The plan provides funding flexibility to support our investment in new infrastructure and growth opportunities.

 

Can I conclude this address with a few thank yous.

 

I want to firstly acknowledge the hard work and dedication of everyone who works for the company, led by Adrian and his leadership team.

 

I thank you all today, on behalf of shareholders, for the contribution you make to Auckland Airport.

 

Secondly, I want to thank my fellow directors – you all make an outstanding contribution to the company and our shareholders are well served by your diligence and focus.

 

I especially want to thank our Future Director – Kiriwaitingi Rei. Our Board is better for having you around the table and we hope you too are benefiting from this important programme which develops new Kiwi governance talent.

 

I also want to thank two directors in particular.

 

Michelle Guthrie and Richard Didsbury – for whom this is their last annual meeting as directors of the company.

 

We all thank them for their contributions over many years.

 

Shareholders, as usual I finish my Chair’s address by confirming that we expect FY18 underlying profit after tax to be between $248 million and $257 million.

 

This guidance would deliver underlying earnings per share growth of up to 3.7% compared with FY17 – and reflects the impact of our new aeronautical prices commencing in FY18.

 

This guidance is also, of course, subject to the usual caveats as noted in the annual report.

 

Ladies and gentlemen – my final words are to you – thank for your ongoing support for Auckland Airport.

 

There are many companies in which you can choose to invest – thank you for selecting our company.

 

 

Source:- Auckland Airport

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