Investments in airports continue

THE September Ansett collapse and terrorist attacks have not dented the enthusiasm for investing in airports, which are reliant on airline travel for their profitability, although airports around the world are facing credit rating downgrades.

Macquarie Bank announced last week that it was embarking on Australia’s biggest float so far this year, seeking to raise $1 billion for a major airport buying exercise.

The $1 billion public float of Macquarie Airports in two instalments will be the first single-purpose airport fund.

The first $500 million instalment will be used to purchase 36.7 per cent of the existing Macquarie Airport Group, which has a 50 per cent stake in Bristol Airport and a 24 per cent exposure in Birmingham Airport.

Macquarie Airports managing director and Macquarie Bank executive director Kerrie Mather said airports had shown strong resilience to cope with shocks such as the Gulf War and were showing strong signs of recovery from the September 11 events.

“While recent events to Ansett are disappointing for the industry and particularly its staff and their families, the overseas experience in similar situations indicates that other airlines step in to fill the gap left by departing airlines because passenger demand to fly remains strong,” she said.

Westralia Airports Corporation, owner of Perth Airport, chief executive Graham Muir said the airport was recovering well from the “dark days of September and October”.

He said he was confident in the resilience and growth potential of the airport business.

But just how difficult trading conditions for airports have become has been brought to light by two recent credit downgrades of WAC since September 11.

A review of airports internationally by Moody’s Investors Service led to a downgrade of WAC from Baa1 to Baa2 in late December. This was followed two weeks ago by a profit downgrade from Standard & Poor’s from BBB- to BB+, after WAC failed to meet its total debt to EBITDA Ratio.

Mr Muir, expressed surprise at the ratings downgrade, but said he was in discussions with the corporation’s bankers to look at the possibility of waiving mandatory repayments depending on the recovery in the first and second quarter of this year.

WAC is also under the Australian Competition and Consumer Commission spotlight over claims that WAC failed to reduce aeronautical charges over the past four years in line with its purchase agreement from the Federal Government – a charge that Mr Muir vehemently denies.

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