Auckland Airport annual meeting

30 October 2008

Auckland Airport chairman, Tony Frankham, announced at today's annual meeting that the company had delivered a solid financial performance over the 12 months to 30 June 2008 with continued growth in revenue and earnings.

Mr Frankham noted that, while the airport has a strong balance sheet and solid fundamentals in its revenue streams, it is not immune to the heightened effects of a global recession.

Mr Frankham advised that the current environment could well see a reduction, in the near-term, in international passenger volumes particularly from some of the traditional long-haul markets such as the United States and the United Kingdom. However, the commencement of services by Pacific Blue and the announcement of new flights by Jetstar will provide some support in aircraft movements and passenger volumes in the international short-haul market.

Auckland Airport has reviewed forecasts in light of these changes and, based on the latest information available, we forecast earnings, consistent with the previous guidance of $100-110 million surplus after tax (excluding fair value changes for property) for the full year, albeit at the lower end," said Mr Frankham. This view is subject to any further deterioration in global markets or regional economies as well as material adverse events, significant one-off expenses, or other unforeseeable events.

Mr Frankham said the board and management would remain focused on tightly managing the core business, with the management of discretionary costs a key priority. This focus includes positively addressing the current market and regulatory issues and taking a prudent approach to protect and promote shareholder value in less certain times.

Mr Frankham reported at the meeting on the unaudited results for the first three months of this financial year. International passenger movements (excluding transits and transfers) were down 1.8 per cent, compared to the previous corresponding period, to 1.537 million. The impact of the financial crisis on the world economic outlook has affected international passenger volume growth.

Domestic passenger movements increased strongly, up by 8.7 per cent to 1.428 million.

Total aircraft movements were up 3.9 per cent for the three-month period. The growth in aircraft movements has occurred in both the international and domestic markets.

Reflecting the overall increase in passenger volumes and aircraft movements, along with recent aeronautical and commercial pricing resets, revenue for the three month period increased 5.5 per cent on the corresponding period last year to $87.2 million. This revenue growth has flowed to operating earnings before interest, tax and depreciation (Operating EBITDA) which for the three months was $66.6 million, also an increase of 5.8 per cent over the previous year.

Surplus after tax for the three months to September 2008 was $24.2 million, compared with $23.8 million for the previous year. This small increase reflects the increase in revenues offset by the on-going depreciation and interest costs being incurred by the company in connection with the recently completed growth aeronautical investment programme.

Mr Frankham also acknowledged that, for the greater part of the financial year, ownership issues dominated the headlines and intense debate raged amongst shareholders, media, politicians and the public on the merits of each option. The company's directors were engaged in frequent, thorough and searching discussion throughout.

Mr Frankham said, "Our present focus is on getting the best from the business as it stands, while we put the new management team in place to develop and execute business strategies for the next phase of the company's growth. As a board, we are committed to increasing the clarity of our strategic communications with shareholders in order to confirm their continued commitment to the company."