Christchurch Airport boss Malcolm Johns says the company is only just keeping its mouth and nose above the water, but has achieved something rare in aviation – a profit for the past 12 months.
The airport is 75 per cent owned by the Christchurch City Council and 25 per cent owned by the Government and is likely to pay a dividend after reporting an underlying operating profit of $38.7 million off total income of $189m.This was helped by property revaluations.
During the year to June 30 the airport provided about $35m in customer and tenant relief.It borrowed $15m to shore up its balance sheet when the pandemic hit but has in the latest year paid off the debt.
Within the past week Auckland International Airport and Air New Zealand have reported losses.Queenstown Airport’s profit slumped 91 per cent to $1.6 million.
Although operating profit for Christchurchis slightly down on last year, and well down on the pre-Covid full year of $57m in 2019, Johns said the result was because of strategies developed after the 2011 Christchurch earthquakes.
While the airport is not profitable during the current alert level 4, he said the long-term domestic passenger focus and development of freight facilities were paying off.
“Coming out of the earthquakes we had to rethink our business and that work is a big part of being able to deliver both a positive operating profit, a respectable net profit after tax and return our balance sheet to its pre-Covid state during financial year 2021.”
During the past18 months during alert level 3 and 4, the airport made a loss, at level 2 it can tread water and at level 1 it can make money.
“We’ve been battered like everybody else is in aviation, we just managed to be battered just to the point where we can keep our nose and mouth above water.”
As part of its recovery between 2014 and 2019, most of about $600m in new capital spending was directed towards supporting freight and logistics growth at Christchurch Airport and accessing new domestic revenue opportunities.
In 2017 the airport equalised aviation charges between domestic and international passengers, meaning domestic and international passengers have been of equal value at Christchurch since then. Every domestic and international passenger each pays $10.80.
Domestic travel had exceeded pre-Covid levels in July which had greatly benefited Christchurch Airport.
”With the loss of international that’s a very significant factor on the basis of us being ablebecause we have an integrated terminal that shares lots of facilities between international and domestic operations.”
But the nationwide lockdown meant Jetstar was no longer flying and Air New Zealand was flying only a handful of flights for essential workers.
With different nationwide alert level settings Christchurch would still be hurt as 40 per cent of its traffic comes out of Auckland, which will be in lockdown longer than the rest of the country to the south.
Johns said his airport could act as more of a hub for airlines if Christchurch was at a different setting.Auckland has been the main base for Air New Zealand domestic operations.
“I think that’s definitely an option, ultimately it’s up to Air New Zealand to decide how they structure the network.What’s beenproven in the last 18 months is they’re incredibly adaptable and I’m sure as the you know once the pathways out of this for Auckland and the rest of New Zealand firm upthat they will shape the network accordingly and, you know we’ll be ready to play a role to support that.”
The earthquakes had “kicked Christchurch into a parallel valley” compared to other airports but this might be reversed with different levelsset around the country.
Snakes and ladders
Johns said it would take years for aviation to recover from the pandemic, and again the earthquakes had provided an insight into how it will play out.
“In that period of the three years after the earthquake, it was full of snakes and ladders. You’d climb up a ladder and then suddenly you’d fall down snake. This level 4 is a snake,” he said.
Scenario planning for Covid showed the same would play out.The airport spent close to seven years recovering after the earthquakes, and had one great year before the pandemic struck.
“It’s a bloody tough industry to be in at the moment.It’s probably gonna be bloody tough for a while to go, but ultimately the fundamentals of the industry remain in that people and goods are going to want to move around.”
Johns paid tribute to the frontline workers.
“I want to give a real shout out to all of the border workers, the seafarers, the watersidesthe border workers,the pilots etc, whohave continued to keepNew Zealand connected to the rest of the world over the last 18 months,” he said.
Those workers didn’t get kudos for weeks in quarantine here and overseas and don’t see their families for a really long period of time.
“The reality is we wouldn’t have fuel, we don’t have imported food on our shelves, we don’t have medical imports without those people making those sacrifices, so our ability to live in a bubble at the bottom of the world safe from Covid has really been built off the work that those people do,” Johns said.
“I havetremendous respect for the way that they’ve dealt with such a difficult situation to keep us prosperous as a country.”
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