AIA update on 2020 results and organisational change

Auckland Airport today provides a further update on its response to the outbreak of COVID-19 and outlines Other Significant Items that are expected to impact earnings for the financial year to 30 June 2020 and further proposed changes to the size of the organisation’s workforce.

On 16 March 2020, Auckland Airport suspended underlying earnings guidance for the current financial year due to the significant uncertainty surrounding the duration and impact of COVID-19 travel restrictions on the business.

• Auckland Airport responded quickly to the disruption of tourism and aviation markets through a comprehensive plan to bolster liquidity, reduce operating costs and suspend or terminate capital expenditure, including:
• deep cuts to discretionary expenditure;
• reviewed and suspended external consulting work;
• reduced the number of external contractors supporting the capital programme and wider business;
• staff changes across the business, including in the company’s infrastructure development programme;
• reduced remuneration of directors and executives to 80%;
• lowered most other employees’ hours/salaries to 80%;
• suspended bonuses and short-term incentives for FY20 and implemented a hiring and salary freeze;
• rationalised operations to reflect the new operating environment;
• suspended selected capital expenditure projects with a forecast completed value of more than $2 billion;
• extended bank debt maturities until calendar 2022 and 2023;
• obtained financial covenant waivers until 31 December 2021 (inclusive) for bank and United States Private Placement borrowings; and
• raised $1.2 billion of equity.

The net adverse impact of Other Significant Items on Auckland Airport’s reported profit for FY20 is expected to be between $50 million to $90 million. These Other Significant Items include: