Sydney Airport is talking about buying back the lease to Terminal 3.Sydney Airport has not budgeted for the prospect of shared domestic and international terminals over the next five years despite failing to reach an agreement with Qantas to buy back the airline’s lease over Terminal 3 and its jet base.
The airport operator unveiled plans to spend $1.2 billion on improvements, including to roads, over the next five years alongside the release of its full-year results. Sydney Airport’s earnings before interest, tax, depreciation and amortisation increased by 7.3 per cent to $910 million, outpacing a 4.1 per cent rise in international passenger growth.
The company also forecast it would increase distributions to shareholders to 23.5¢ this year compared with 22.5¢ last year, all of which was covered by operating receipts.
Sydney Airport has been in talks with Qantas about buying back the lease over Terminal 3, which expires in 2019 and the airline’s jet base, which expires in 2020. The federal government last week approved a plan to create integrated domestic and international terminals.
But Sydney Airport chief executive Kerrie Mather said the timing of the move depended on access to the Qantas terminal and jet base, along with overall airline demand and it therefore was not part of the five-year budget.
”We’re in an ongoing dialogue with Qantas in relation to the terminal but also in relation to a whole range of other opportunities,” she said. ”There is no agreement necessary until 2019.”
The airport so far has also failed to reach an agreement with Virgin about its placement within an integrated terminal area because the airline opposed an initial plan for it to move to the present international terminal, which is further from the CBD.
Sydney Airport shares rose 11¢ to $4.05 after the airport’s results on Wednesday, having increased in value by 29 per cent over the 12 months, compared with a 8.7 per cent rise in the benchmark S&P/ASX200 index during that period.
Ms Mather said the Chinese market was performing strongly, with more demand than the air capacity rights available under bilateral air services agreements. Chinese travellers also tended to be among the highest retail spenders, so any increase in flights helped drive the airport’s income.
Ms Mather said any international route cuts that Qantas might announce on Thursday probably would be offset by increased growth from other carriers. Sydney Airport receives 70 to 75 per cent of its revenue from international flights, which is a more important business than the domestic market. Ms Mather said the domestic market outlook was ”subdued”.
”The domestic market has seen lower capacity growth over the last year as a result of the airlines focusing increasingly on yield,” she said.