Respond
Recover
Accelerate
Annual Report 2020
Photography – Annual Report 2020
Jordan Tan, Richard Maher, Brett Phibbs,
Ollie Dale and Auckland Airport Communications team
Respond
Unprecedented events that called for
a rapid response to best protect our travellers, our people,
precinct workers and our business.
Recover
Considered and concise decisions made
to reset our business and ensure we are best placed
to recover and manage through uncertainty.
Accelerate
Ready to accelerate when the time is right.
We’re aligning our organisation to be best placed for a rapid
restart to support New Zealand’s future prosperity.
Facing unprecedented challenges as
COVID-19 impacted aviation and tourism,
Auckland Airport took quick action to
protect people’s health and safety and to
keep New Zealand connected to the world.
Infrastructure reset
Auckland Airport moved swiftly
to re-evaluate our infrastructure
programme, cancelling or deferring
projects with a projected total
completion value of more than
$2 billion.
Looking after our retailers
Runway maintenance
Since the outset of the crisis, we have
worked closely with our retail partners
and tenants on a case-by-case basis
to provide support.
The reduction in air travel created
an opportunity to bring forward
scheduled maintenance work on
the touchdown zone at the eastern
end of the runway.
Respond
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3
Airport Emergency
Services crew
members, like
Lorna Biggam,
were on hand
to help guests
throughout the
COVID-19 outbreak
Keeping people safe
Despite a significant fall in passenger
numbers, Auckland Airport’s duty of
the care to look after staff and guests
continued to be our top priority. From
the very first days of the pandemic,
we supported public-health workers in
the international terminal and increased
cleaning in high-touch areas.
We brought in measures to encourage
social-distancing and spread key health
messaging across both terminals.
Our team played
a leadership role
in supporting 115
successful repatriation
flights to and from
New Zealand
As fleets were
grounded by border
restrictions and a
fall in passenger
demand our
operations team
supported our airline
partners in parking
planes on the airfield
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5
As the world moves past the immediate
impact of the pandemic, Auckland Airport
will have a key role in charting the path to
recovery for New Zealand’s aviation and
tourism sectors and the wider economy.
Safe and secure
Everyone travelling through Auckland
Airport has a right to do so with a sense
of safety and security. That’s why we’ve
developed a plan to create separate
zones in the international terminal for
different categories of passengers,
helping to enable future travel bubbles.
Maintaining global connections
We’ve worked hard for many years
to build a global network connecting
Auckland to the world and we
will work just as hard to rebuild it.
The airport’s role as a cargo hub
through the crisis has proved critical
to maintaining airlinks and nurturing
aviation’s recovery.
Recover
Resilient portfolio
Our strategy of diversifying into
property continues to provide resilience
and support our recovery. The new
Foodstuffs NZ headquarters is on track
for completion in January 2021, and its
office building was recently certified as
5-Star Green.
The New Zealand story
With international border restrictions
in place, Kiwis were out exploring their
own country during the July school
holidays, making Auckland Airport one
of the busiest airports in Australasia.
We’ll continue to support local tourism
and assist in the development of future
services.
5-Star
Green build – Foodstuffs NZ
Triggering infrastructure
Auckland Airport’s long-term vision
to create an airport of the future
remains. We continue to prioritise
core aeronautical projects and
ensure we are positioned strongly
for a successful restart of our
infrastructure development programme.
Safe-travel bubbles
Since the earliest days of the pandemic,
Auckland Airport has led a programme of
work to propose how New Zealand could
establish safe travel bubbles with other
countries. Our team played a key role in
co-ordinating a group of 40 experts from
airlines, government border agencies
and the Ministry of Health to develop
plans for how a safe air corridor could
be established, when the Government
decides the time is right.
See video – RNZ Checkpoint
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7
For many years Auckland Airport has
been proud to play a leading role in
New Zealand’s economic prosperity,
connecting our people and businesses
with the world. We continue to work
for New Zealand. When the time is
right we will be ready to forge ahead,
growing our country’s success in
travel, trade and tourism.
Accelerate
Airlines
Retail
Tourism
Prior to the pandemic, 29 airlines
were flying into Auckland Airport,
connecting the city to 43 international
destinations. Our team has worked
hard alongside our airline partners to
develop and promote these new routes.
As economies and airlines return to
strength, we will do so again.
As part of providing the best possible
experience for travellers, Auckland
Airport has attracted some of the
world’s leading brands to our retail
space and we have developed strong
customer relationships. We will
continue to innovate and the excellent
retail experience travellers have come
to expect will remain part of their
future journeys.
New Zealand has always been among
the most desirable destinations in the
world and we know it will continue to
be an attractive place to visit in a post
COVID-19 world.
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9
Nau mai &
welcome
Adrian Littlewood
Chief Executive
Patrick Strange
Chair
During this time of crisis,
we have worked quickly
to respond with our sights
set firmly on our future. The
long-term fundamentals of
our business remain strong
and we have taken steps to
ensure we remain resilient
and well positioned for
a recovery.
The last six months have been
the most challenging of Auckland
Airport’s 54-year history. The
world is in the grip of a global
pandemic and the extremely
difficult aviation and tourism
operating conditions we have
seen over the past six months
are far from over.
But during this time of crisis, we
have worked quickly to respond with
our sights set firmly on our future.
The long-term fundamentals of our
business remain strong and we have
taken steps to ensure we remain
resilient and well positioned for a
recovery, accelerating into growth as
demand for international travel returns.
At the outset, we would like to thank
our investors for their continuing
support as we navigate through this
crisis. We do so with the confidence
that trade will continue to flow between
New Zealand and overseas, that
our country remains an extremely
attractive place to visit and that
travel will recover.
For now, we are focused on what’s
most important in the immediate term:
the health and safety of our people,
workers and visitors to the airport
precinct, maintaining New Zealand’s
essential air connectivity to the world
and to our regions through domestic
travel. Safety and security have always
been at the heart of our operation and
throughout this time of crisis our people,
especially those on the frontline, have
worked tirelessly to keep everyone safe
and to protect New Zealand from the
spread of COVID-19. The strength of our
relationships with border agencies,
airlines and airport partners have served
us well, allowing us to collaborate and
implement changes, often at very short
notice. From additional cleaning regimes
in the terminals, to developing a
comprehensive and evolving plan to
protect our staff and airport workers we
continue to do all we can to help
everyone travel safely and with
confidence.
The emerging pandemic left Kiwis
stranded overseas and foreign visitors
unable to return home from
New Zealand. Our team played a
leadership role in supporting 115
successful repatriation flights to and from
New Zealand, transporting more than
22,700 people home across the globe
from February to the end of July. We
have also maintained our close
relationships with airlines to keep trade
links alive, ensuring the ongoing flow of
critical cargo supplies and the export of
high-value Kiwi goods.
Just as we took steps to support trade
and repatriation flights, we moved
decisively to secure the future of our
organisation as the pandemic impacted
our business:
• In April, shareholders strongly
supported us in the successful equity
raise of $1.2 billion, reinforcing our
balance sheet and ensuring we
remain well capitalised during this
period of uncertainty and are
positioned for a post-COVID-19
recovery
• We secured significant support from
our lenders, including extending the
maturity dates of our bank loans and
confirming covenant waivers from our
banking group and United States
Private Placement (USPP) lenders until
31 December 2021
• We implemented a range of measures
to manage cash flow, including
cancelling the interim dividend for the
2020 financial year and suspending all
future dividends while the debt
covenant waivers are in place. We
also reduced the remuneration of our
directors and executives to 80% and
lowered most other employees’ hours
and salaries to 80%
• We applied strong cost control and
eliminated discretionary spending
• We cancelled or deferred
infrastructure projects with a projected
total completion value of more than
$2 billion until we have more certainty
about future market conditions and
are again able to support higher
capital expenditure levels and
associated borrowings. These
projects include the second runway,
the Domestic Jet Hub, a multi-storey
car park, Park & Ride South and the
international arrivals expansion project
Prior to the pandemic we had a strong
start to the 2020 financial year with
solid passenger volumes in the six
months to 31 December 2019.
However, New Zealand’s border is now
tightly restricted and passenger volumes
are currently at a fraction of what they
have been in previous years. In the 2020
financial year there was a 26.5% decline
in overall passenger numbers to
15.5 million in comparison with the
year before, with domestic passenger
numbers falling at a similar rate to
7 million during the period. With borders
closed around the world, the number
of international carriers flying scheduled
passenger services to New Zealand fell
from 29 in March to four as at 30 June
2020, contributing to a 26.4% fall in
international passenger numbers
(including transits) in the 2020 financial
year to 8.5 million. For the month
of June 2020, domestic passenger
numbers were down 71% on last year
and international passengers down 97%.
This significant fall in passenger
numbers, combined with the scaling
back of our infrastructure development
programme, meant we had to make the
difficult decision to reduce the size of
our workforce in line with our new
operating reality. While ensuring we
make no compromises on the safety
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11
Auckland Airport continues to play a
critical role in connecting New Zealand to
the world and in the time of COVID-19
this has never been more important.
We do not yet know the course
of the pandemic, but our long-term
commitment to growing New Zealand’s
success in travel, trade and tourism
remains unchanged and we remain
confident about our future.
Thank you to our community, customers
and investors for your ongoing support
during this very challenging year. Lastly,
we would like to acknowledge the
continued professionalism of our people
who have had to say goodbye to friends
and colleagues and cease working on
infrastructure projects we were all proud
to be delivering for New Zealand. It’s
been a tough year for our team and your
unrelenting hard work and commitment
are hugely appreciated.
Underlying net profit
$188.5m
31.4%
The directors and management of
Auckland Airport understand the
importance of reported profits meeting
accounting standards. Because we
comply with accounting standards,
investors know that comparisons can be
made with confidence between different
companies and that there is integrity in
our reporting approach. However, we
also believe that an underlying profit
measurement can assist investors to
understand what is happening in a
business such as Auckland Airport,
where revaluation changes can distort
financial results or where one-off
transactions, both positive and negative,
can make it difficult to compare profits
between years.
For several years, Auckland Airport has
referred to underlying profit alongside
reported results. We do so when we
report our results, but also when we
give our market guidance (where we
exclude fair value changes and other
one-off items) or when we consider
dividends and our policy to pay 100%
of underlying net profit after tax
(excluding unrealised gains and
losses arising from revaluation of
property or treasury instruments
and other one-off items). However,
dividends are temporarily suspended
while Auckland Airport has financial
covenant waivers in place with our
lenders. This dividend suspension
is expected to span the reporting
periods ending 30 June 2020 to
31 December 2021.
In referring to underlying profits, we
acknowledge our obligation to show
investors how we have derived this
result. The reconciliation between
underlying profit and reported profit
for the current reporting period can
be found on page 41.
Patrick Strange
Chair
Adrian Littlewood
Chief Executive
We also continue to
consider opportunities and
advance new developments
in investment property, an
area of the business which
has performed strongly
even during the outbreak
of COVID-19.
The EBOS Group development at The Landing Business Park
and security of our operation, as at
30 June 2020 these changes had
resulted in a 25% reduction in the
number of staff and contractors we
employ. We recognise the pandemic
has also impacted many of our business
partners and other organisations
operating at Auckland Airport, including
those in retail, aviation and construction,
with many job losses.
Despite the current challenging operating
conditions, we remain focused on the
path ahead, doing all we can to drive
the recovery of our business and assist
the industry to manage throughout
the pandemic.
Since the earliest days of the pandemic,
Auckland Airport has led the charge on
the development of a comprehensive
plan to reopen our border to other
low-risk countries when it becomes
safe. Co-ordinated via the Australia
New Zealand Leadership Forum, we
helped bring together and support a
team of 40 experts in the development
of a blueprint for the future safe
reopening of quarantine-free travel
between New Zealand and Australia,
when our respective governments
decide it is appropriate to do so.
We continue to consider systems
and approaches for the safe and
gradual reopening of borders with
other low risk countries.
With flight movements at an all-time
low, we have also taken opportunities
to advance core asset replacement,
maintenance and resilience projects
to ensure we emerge in the strongest
position possible beyond COVID-19.
We are investing in our core roading
network, upgrading the southbound
corridor of George Bolt Memorial Drive,
adding a high occupancy vehicle lane
and new underground utilities. In May,
with the support of our key airline
partners and other stakeholders, we
brought forward the planned $26 million
runway pavement replacement works,
temporarily shortening the runway by
1.1km during construction to renew
280 sections of pavement in the eastern
touchdown zone. This work was
successfully completed on budget
in August 2020.
We also continue to consider
opportunities and advance new
developments in investment property,
an area of the business which has
performed strongly even during the
outbreak of COVID-19. This resulted in
the investment property annual rent roll
increasing 4% to $104 million and the
portfolio value rising 17% to $2.04 billion
in the 2020 financial year.
Overall, Auckland Airport’s financial
results are in line with the challenging
economic conditions we currently face.
In the year to 30 June 2020, revenue
was down 23.7% to $567 million,
with earnings before interest expense,
taxation, depreciation, fair value
adjustments and investments in
associates (EBITDAFI) decreasing
53.1% to $260.4 million.
Reported profit after tax was down 63%
to $193.9 million, underlying net profit
was down 31.4% to $188.5 million and
our underlying earnings per share was
down 34.7% to 14.7 cents for the 2020
financial year. No final dividend will be
paid in line with our covenant waivers.
As we look to the 2021 financial year, we
continue to face significant uncertainty
on the timing of Auckland Airport’s
recovery. Our financial performance is
strongly linked to international arrivals
and departures, and while there is no
doubt that international travel will recover,
there is not yet any consensus how
and when that will unfold.
With so much uncertainty, we think
it prudent at this time to adopt more
conservative planning assumptions
than either the International Air Travel
Association (IATA) or Standard & Poor’s,
which are forecasting a full recovery of
international travel in approximately
three years. At this stage, we think a full
recovery could take longer. However,
we are hopeful that domestic travel will
return to normal comfortably within two
years. With Australia being our largest
international market, we are also hopeful
that short-haul Tasman and Pacific Island
travel will resume sometime in 2021, with
a full recovery of both these markets
occurring before long-haul international
travel returns to normal.
Because of the high uncertainty around
the recovery of international passenger
numbers and its strong impact on our
commercial performance, combined with
the return of nationwide restrictions on
people movement due to COVID-19,
the company has suspended underlying
earnings guidance for the 2021 financial
year. We will reassess this decision at the
October annual meeting and again at our
interim results in February 2021.
Auckland Airport’s capital investment
in the 2021 financial year will be
focused on advancing existing
roading infrastructure projects;
delivering core airfield renewals such
as slab replacement and apron works;
upgrades to the baggage system to
meet compliance requirements; and
completing pre-leased property
developments. Capital expenditure for
the 2021 financial year is expected to be
between $250 million and $300 million.
Annual Report 2020
13
Environmental
impact reductions
The below results are in
comparison with our base
year, 2012.
19%
Energy use
per passenger
by 19% against our target
of 20% by 2020
39%
Waste to landfill
per passenger
by 39% against our target of
20% reduction by 2020
45%
Carbon emissions per m2
Auckland Airport
Community Trust
$351,572
Granted to community projects
by the Auckland Airport Community
Trust to support learning, literacy
and life skills in South Auckland
Direct investment into
community projects
$567,722
Invested in our local communities
(including the $351,572 granted
to the Auckland Airport Community
Trust and $216,150 granted
through other Auckland Airport
grant programmes)
2020 /
key statistics
Health and safety
72%
Employee recordable injury rate
89%
Reporting of safety
observations and hazards
5.9%
Passenger incident rate
Diversity
62.5%
Percentage of female
Board directors
41%
Female senior managers
44
Recorded ethnicities – noting
that not everyone who works
at Auckland Airport chooses
to disclose their ethnicity
12
Annual Report 2020
2020 /
key numbers
Our performance in the
12 months to 30 June 2020
15.5mPassengers
Domestic
7.0m
26.5%
International
7.7m
26.3%
International transits
0.7m
27.4%
Revenue
$567.0m
23.7%
Operating
EBITDAFI
$260.4m
53.1%
Reported profit
$193.9m
63%
Underlying profit
$188.5m
31.4%
Dividend per share
–
Interim 0.0¢ Final 0.0¢
Underlying earnings
per share
14.7 cents
34.7%
Five-year average annual
shareholder return
8.4%
Net capex additions
$370.81m
30.5%
1 Net capital expenditure additions after $62.2 million
of write-offs and impairments
14
Annual Report 2020
Our strategy
Respond
Recover
Accelerate
In March 2020, Auckland Airport launched
an immediate response to the outbreak of
COVID-19 and the impact travel and border
restrictions would have on the business.
This included a shift away from the successful
Faster, Higher, Stronger strategy we have pursued
for the past seven years. While we are confident we
will return to growth, the global downturn in aviation
and tourism will present ongoing challenges for
Auckland Airport and we need to act decisively.
Our new strategic plan is to Respond to
the pandemic and our new operating reality,
to optimise the organisation to Recover quickly
and to position ourselves to Accelerate, unlocking
opportunities once the market recovers.
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15
Arrivals
Departures
Number of international arrivals into
and departures from New Zealand
in the month of May since 1950
600
500
400
300
200
100
0
1950
Month of May
1960
1970
1980
1990
2000
2010
2020
s
0
0
0
‘
—
y
a
M
f
o
h
t
n
o
m
—
r
e
b
m
u
N
Respond
Recover
Accelerate
We worked quickly to stabilise our
organisation following the significant
impact of the pandemic and
subsequent border restrictions, while
continuing to ensure New Zealand’s
air connectivity to the world through
the ongoing safety and security of
our operation. We will do all we can
to protect the ongoing health and
safety of our people, airport workers
and travellers, and are committed to
supporting border agencies and the
government to protect New Zealand
against the spread of COVID-19.
As we emerge from our initial
response to COVID-19, we will
ensure our organisation is positioned
to advance in our new operating
reality. Collaborating with government
agency stakeholders and our aviation
partners, we will play a critical role
in helping to build the path to
recovery for New Zealand aviation
over the coming years. We will unlock
opportunities as the domestic and
international travel markets begin to
return and restore public confidence
in travel. We know that a fast, efficient
and effective airport makes journeys
better, and we will develop a trigger-
based infrastructure development
plan to identify timing for key
aeronautical projects.
In a post-COVID-19 world, we
will look to accelerate long-term
sustainable growth. We will invest
in the infrastructure New Zealand
needs to grow its success in travel,
trade and tourism, delivering on
our aspirations to build an airport
of the future.
We are working for New Zealand,
creating enduring value for
generations to come.
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17
Review
A closer look
Putting
health and
safety first
What we are doing
to keep our people,
workers and
travellers safe
People are what brings our airport
to life – the excitement, anticipation,
and even apprehension of the journey.
We have worked hard to ensure,
whatever the circumstances, everyone
feels safe and welcome when they
come to Auckland Airport.
This has never been more important
than during the outbreak of COVID-19.
Fast-changing border restrictions and
the subsequent global disruption of the
aviation industry created a challenging
environment for everyone – from the
travellers through to the airlines,
businesses, border agencies and
our own staff working at the heart
of our operation.
As ever, we have strived to deliver an
assured, reliable experience at a time
when conditions for our travellers and
our people are unpredictable, stressful
and uncertain.
In mid-March we implemented our full
Crisis Management Team to guide us
through the escalating risk of the spread
of COVID-19 to our travellers, staff and
the wider community. We worked hard
and fast alongside government border
agencies, the Ministry of Health (MOH),
the Ministry of Transport, airlines and
the wider travel and tourism industry.
Meeting daily, our collaborative cross-
agency team effort allowed us to make
rapid changes to reduce the COVID-19
risk. We introduced various layers of
protection across the terminal to keep
people safe and healthy, including
high-frequency cleaning in all areas
and widespread social distancing
messaging. We also helped foreign
embassies set up support for stranded
passengers and made the 260-room
Novotel Hotel available to the MOH to
provide managed isolation facilities for
returning New Zealanders.
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19
T H E J U I C E RY
The Juicery, the only food and
beverage operator open airside
during the COVID-19 lockdown, is a
standout example of Kiwi
hospitality and flexibility in a crisis.
In the face of one of the most
challenging situations the business
had ever been through, it adapted
to meet the new trading conditions.
While the airport was considered
an essential service and the airfield
continued to operate for domestic
and a small number of international
flights, there were strict limitations
on the types of food and beverage
that could be provided airside for
passengers under the
Government’s Alert Level system.
With less than a day’s notice The
Juicery converted its menu from
poké bowls, salads, juices and
smoothies to ready-to-eat healthy
sandwiches, fruit salad, snack bars
and bottled drinks – a food range
that complied with government
requirements for pre-prepared,
grab-and-go food only.
The company’s staff, who had
already said farewell to each other
in preparation for lockdown,
became part of a small group of
‘essential’ retail workers, providing
food and beverage options for
departing passengers. Two other
international terminal retailers, Take
Home and NZ Health & Beauty,
were also open during lockdown to
provide essential supplies to airport
workers and travellers.
Health and safety in the wider
airport community
Auckland Airport’s strong safety culture
extends to our retail and business
partners, many of whom have been
significantly impacted by COVID-19.
We included precinct stakeholders in
our communication strategy, providing
practical and up-to-date advice and
guidance to help keep them and their
workers informed. For our construction
partners, when building activity was able
to resume at Alert Level 3 we reviewed
and approved the health and safety plans
before teams returned to work.
Protecting our workplace
As an essential service, Auckland Airport
continued to operate throughout the
COVID-19 lockdown period.
Making changes to ensure the continued
health and safety of our people in the
workplace was one of our key priorities,
and we were quick to respond to
evolving operational demands and MOH
requirements. This included developing
a comprehensive and evolving Business
Response Plan to ensure our people
understood clearly how we would
operate during the pandemic and
what this meant for each of them.
We communicated frequently with staff
and created a confidential register of
vulnerable staff to help identify those
who may be at higher risk of contracting
COVID-19, while ensuring their working
arrangements were suitable to keep
them safe.
We also carried out detailed planning
to split operational staff shifts into
smaller groups during the higher alert
levels to further reduce the risk of staff
exposure, and safety equipment was
made freely available to all operational
staff. Meanwhile, remote working was
introduced for all non-frontline staff
ahead of the whole-of-country lockdown.
Auckland Airport’s strong
safety culture extends to
our retail and business
partners, many of whom
have been significantly
impacted by COVID-19.
We included precinct
stakeholders in
our communication
strategy, providing
practical and up-to-date
advice and guidance to
help keep them and their
workers informed.
T O U C H L E S S
T R AV E L
As we look to the future of aviation in a COVID-19
world, travellers will have new expectations around
how airports work to protect their health and safety.
Our airport experience needs to reflect this new
environment, providing reassurance to travellers and
guests that they should feel safe and comfortable at
all points of interaction at the airport.
The pandemic has accelerated the global trend of
contactless airport journeys, and over the past year
we have put the technology building blocks in place
to bring this to life.
The Auckland Airport app now pulls together the
complete journey from home to the gate of any flight
departing from the airport, creating a personalised
itinerary for the day of travel – from when to leave
home, to predictive estimates of the time required
to clear Customs and Aviation Security, to gate
allocations and alerts. The app puts the guest in
control and provides the basis of an end-to-end
digital journey.
We have introduced 12 eGates at international
departures to scan boarding passes and allow
access to security areas. Replacing the need
to physically check a boarding pass, the eGates
provide a touchless security process focused on
self-service. Two gates are configured to include
biometric authentication to enable a future seamless
customer journey from check-in to aircraft boarding.
We are now working on technology enhancements
to further reduce the physical touchpoints in
the airport journey – from ticketless parking
and self-service baggage drops to contactless
food and beverage ordering and virtual queuing.
These touchless experiences can help with
safety and efficiency as well as providing a
better guest experience.
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21
Auckland Airport’s goal of ensuring
consistent, reliable journeys for our
travellers remains unchanged.
We began the 2020 financial year with an
ambitious infrastructure development
programme that started at the airfield,
the centre of our operation, and
stretched to the edges of the airport
precinct.
Development was well underway,
including a 250,000m2 expansion of
airfield taxiways and remote stands;
preparation work for two key terminal
expansion projects – the $1 billion-plus
Domestic Jet Hub and a new $350
million-plus international arrivals area; a
$100 million-plus upgrade to our core
roading network; and construction of an
additional Park & Ride facility. We also
made further progress in the
development of a second runway with
the Environment Court approving design
changes, including extending the
planned runway length by 833m to
2,983m, to accommodate predicted
growth in passenger numbers and
developments in aircraft technology.
• Expanding the airfield including
a new taxiway and remote stands
• Planning and design for a
second runway
• The accelerated delivery of a new
Domestic Jet Hub, a new terminal
connected to the existing
international terminal
• Plans for an upgraded pedestrian
plaza and forecourt connected to the
existing international terminal
• Building additional car parks,
including construction of the
Park & Ride South facility on Puhinui
Road and plans for a six-storey,
3,200-bay car park in front of the
international terminal
The outbreak of COVID-19 and the
swift reduction in flight and passenger
numbers meant we had no option but
to carry out an immediate re-evaluation
of our entire infrastructure programme.
Such a rapid decline in aeronautical
demand and revenue meant we needed
to act prudently and take fast action,
but in a way that preserved what we
had already achieved.
Our long-term plans remain the same
but until there is more certainty about
future market conditions projects
predicated on growing passenger
numbers have been deferred. These
deferrals include:
• Construction of the new 30,000m²
arrivals area at the international
terminal
• The full expansion of our core roading
network, including the addition of all
high-occupancy vehicle lanes to
key thoroughfares, and enhanced
pedestrian and shared pathway links
as part of the Northern Network and
Southern Network projects
Building
blocks
for the future
Recalibrating
our infrastructure
programme for a
post-COVID-19 world
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23
F U E L
P I P E L I N E
Work to create a resilient airfield
fuel network was underway when
New Zealand first went into lockdown.
Elements of the project relating
to essential safety and asset
maintenance continued through
Alert Level 4, making it one of the
only active worksites at the airport
during that time.
As New Zealand emerged from that
initial lockdown, fewer aircraft and
traffic on the airfield provided an
opportunity to enhance the sequence
of work on the fuel network, involving
4.4km of new pipeline. This was not
possible when managing construction
around activity on a busy airfield.
We took the time to evaluate each
of the remaining packages of
construction work to ensure any
deferred work was not only stopped
safely but in a way that also made it
easier and less expensive to return
to complete the works in the future.
Pipelines in place, although not yet
fully functional, have been filled with
nitrogen – an inert gas that prevents
pipeline deterioration – and are
monitored regularly.
Construction work on the pipeline,
which pumps 14,300 litres of fuel
per minute to 22 different aircraft
stands, will continue into the early
part of the 2021 financial year.
14,300
Litres of fuel per minute
Before the outbreak of COVID-19, a 250,000m2 airfield expansion (above) was underway
Preparation had begun for a new international arrivals area
Throughout the initial lockdown period
we also completed safety compliance
work on the jet-fuel pipeline network,
as well as planned replacement work on
one of the original airbridges connected
to Pier A in the international terminal.
Prioritising core projects
Despite the current market challenges,
we have continued to progress selected
capital expenditure projects focused
on essential safety, resilience and
asset maintenance.
In May, following the dramatic reduction
in flight movements, we brought forward
budgeted and planned runway pavement
replacement work. This followed two
unplanned temporary closures of the
runway in January and February 2020.
We worked with our key project partners
to reach agreement on the safety case
needed to enable us to accelerate
delivery of the project. The $26 million
replacement of 280, 36m2 concrete slabs
in the eastern touchdown zone was
successfully completed in August 2020.
Performing slab replacement work
is a normal part of maintaining safe
airfield operations and one undertaken
regularly by airports around the world.
Our runway, which was originally
constructed in 1965, has been
developed and renewed over the years
as part of a programme of work that
follows recognised standards and is
overseen by independent experts.
Triggers for future development
The impact of COVID-19 and the uncertainty around the
speed and timing of the aviation industry recovery have
required a refresh of the existing infrastructure plan.
We are taking the opportunity to reset our plans
to ensure we are ready to restart our infrastructure
programme as soon as demand justifies it.
By preserving and building on work that’s already
taken place, the refresh of our capital plan will look
at current capacity and scenarios around future
demand requirements for our airfield, terminal
and transport network, utilising the already
existing plans, infrastructure and asset information.
We are taking the
opportunity to reset
our plans to ensure
we are ready to restart
our infrastructure
programme as soon
as demand justifies it.
D I G I TA L
D O U B L E
Putting Auckland Airport in the best place
possible to quickly reignite our infrastructure
programme means digitally bringing together
earlier construction work.
Supporting the planning, design and
management of our core terminal infrastructure
has seen all key assets being developed as
digital replicas. Aligning Building Information
Modelling (BIM) with Geographical Information
Systems (GIS) enables Auckland Airport to
convert our bricks-and-mortar structures into
detailed 3D models.
Since its construction in the 1970s, the
international terminal has been renovated,
reconfigured and extended several times,
with each project generating different
architectural plans, engineering drawings,
construction detailing and maintenance
records. We are now building a complete
digital picture of our terminal – right down
to the furniture, available anywhere, anytime.
Initially tested on the redevelopment of the
international airside departures area and the
Pier B extension, the ‘Digital Twin’ approach
was fully adopted as a project tool for the
Domestic Jet Hub and international arrivals
expansion projects. The approach was used
in the design process as well as when working
with the many stakeholders involved in these
complex projects. These models will also form
the baseline data that is used to manage and
maintain the asset throughout its life cycle.
Although the outbreak of COVID-19 has seen
these big infrastructure projects deferred,
with no immediate requirement to support
the construction programme, work on refining
the model continues. This digital development
means not only will we be in a better position
when work on these projects recommences,
but this will also help us today to manage our
terminal assets and facilities in a cost-effective,
safe and efficient manner.
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25
Aviation in the
time of COVID-19
We worked hard to
grow New Zealand’s
air links to the world
and we will work just
as hard to safely
rebuild them
No industry in the world has been
hit harder by COVID-19 than aviation.
At Auckland Airport, the effects of the
pandemic were felt immediately as
border restrictions came into force,
people stopped travelling and airlines
around the world moved quickly to
scale back their services in line with
lower demand.
New Zealand closed its border to anyone
who was not a New Zealand citizen
or permanent resident at 11.59pm on
19 March 2020. The importance of
cargo and repatriation flights came
to the fore straight away, underlining
Auckland Airport’s fundamental
purpose: We serve as New Zealand’s
main air connection point with the world.
More than 80% of the high-value,
time-critical goods that are transported
by air to and from New Zealand flow
through Auckland Airport. In the earliest
days of the pandemic, as airlines’
scheduled services plummeted,
a small number of passenger services
(Air New Zealand, China Eastern and
China Southern) continued to operate
throughout the lockdown, providing an
important lifeline for the flow of critical
imports like medical supplies, and the
export of Kiwi goods such as food and
meat products to key markets.
We saw other carriers follow suit,
adding further cargo capacity to
normal scheduled freight services.
Airlines such as Air Canada, Emirates
and China Airlines moved quickly to
repurpose passenger services to
airfreight only. Some airlines stored
cargo in the seating areas of aircraft as
well as in the belly hold, with the rise in
cargo capacity supported and enabled
by the New Zealand Government’s
International Air Freight Capacity (IAFC)
Scheme. This initiative has provided
financial support to carriers and airfreight
businesses to ensure New Zealand’s
critical freight routes remain open.
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27
Domestic travel
While international passenger numbers
fell 53% in the six months to 30 June
2020 compared with the previous half
year, domestic services have continued
to play a part in connecting Kiwi families,
enabling key business travel, and
supporting our local tourism industry.
Despite domestic capacity and demand
falling sharply during lockdown, it
rebounded at Alert Level 2. Jetstar
resumed its domestic services from
Auckland in July and was operating at
about 54% of its normal schedule as at
the end of July, while Air New Zealand
was operating at around 63% of its
usual domestic seat capacity, prior
to Auckland’s return to Alert Level 3
on 12 August.
Future of international travel
In the short term, the recovery of our
aeronautical business is dependent on
how the pandemic progresses and on
New Zealand’s ability to open up safe
corridors with other countries that have
had success in battling COVID-19, with
likely early candidates including the
Pacific Islands, Australia and several
countries in Asia. In the medium term,
the recovery of our aeronautical business
is dependent on the pathway to a wider
reopening of borders and Auckland
Airport continues to play a role in
supporting government officials in
planning for reopening when the
Government decides it is safe to do so.
According to the International Air
Transport Association (IATA), airlines are
expected to lose $130 billion this year.
We continue to work closely with our
airline partners, ensuring we are well
positioned to help them rebuild their
connections to and from New Zealand
as the market begins to recover.
Our outlook for the long term remains
strong. New Zealand continues to be an
attractive place to visit, do business,
study and live, and our reputation as a
safe, secure country will endure. Longer
term, Asia’s fast-emerging middle class,
particularly in China, India and several
countries in South East Asia, represents
significant opportunities for New Zealand
tourism as well.
Our history shows what’s possible
To look to the future, we only need to
reflect on how far we have come in
growing New Zealand’s air connectivity
to the world.
Auckland Airport experienced more than
50 years of passenger growth before
COVID-19. It took 48 years to reach
15 million annual passengers at Auckland
Airport, and only another four years
(2014 – 2018) to exceed 20 million annual
passengers, flying to 50 destinations
around the globe. We added 13 new
airlines and 22 new international routes
between 2015 and 2019, adding capacity
and unlocking new markets in South
Korea, Canada, eastern United States
and the Middle East.
We worked hard to build these
connections and we are committed
to rebuilding them when it’s appropriate
to do so.
KEY STATS:
International cargo capacity
Second half of the financial year
224,031 tonnes
-27% YoY
Dedicated freighter
movements
977
+27% YoY
Belly-hold
aircraft capacity
166,945 tonnes
-34% YoY
Passenger aircraft
freighter movements
1,435
S A F E B O R D E R
G R O U P
From the outset of the COVID-19
crisis, Auckland Airport has led a
programme of work to consider how
safe passenger connections could
be created between New Zealand
and other low-risk countries.
Recognising that safe passenger
travel would be crucial for both our
business and the national recovery,
Auckland Airport and the Australia
New Zealand Leadership Forum
(ANZLF) worked to bring together
health experts and airline, airport
and border agencies from both
sides of the Tasman to develop
new guidelines and protocols.
The Safe Border Group united
40 business and government
representatives. Its recommendations
for safely reopening the air border
have since been presented to the
governments of both countries to
support their decision making.
A safe air corridor between two
countries does away with the need
for a 14-day quarantine between
nations with similar COVID-19
infection rates and management
systems, boosting business, leisure
and tourism travel.
R E PAT R I AT I O N
F L I G H T S
As borders closed around the
world and scheduled flight services
were cancelled following COVID-19
lockdowns, the team at Auckland
Airport quickly switched focus into
supporting repatriation flights.
Our core role remained the same:
helping Kiwis get home and helping
other travellers get where they
need to be. But timelines for
supporting repatriation flights were
greatly contracted – while
preparing for a new airline service
into Auckland can typically take up
to a year, some repatriations were
arranged within days.
We are proud to have supported
airlines such as Air India, Swiss Air
Lines, Vietnam Airlines and
Austrian Airlines, which had either
never flown to New Zealand before,
or not operated regular scheduled
services here. In total, more than
22,700 travellers flew home via
Auckland Airport between February
and the end of July 2020.
Several airlines including Lufthansa
memorably acknowledged the
efforts of Auckland Airport and the
people of Auckland with flyovers of
the central city. A French Air Force
Airbus A400M paid a visit also,
repatriating citizens to Tahiti and
paying tribute to Auckland with a
low-level salute.
22,700+
travellers flown home via
Auckland Airport between
February and end July 2020
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29
Working
hard for our
commercial
partners
Unlocking
value in
property
Our strategy of
diversifying into
investment property
provides resilience
We are pleased to report the 2020
financial year was an exceptional
12 months for Auckland Airport’s
investment property business. Our
annual rent roll has increased 4% to
$104 million and the portfolio value
has increased 17% to $2.04 billion.
The weighted average lease term (WALT)
for the portfolio is 9.3 years and remains
one of the longest WALTs in Australasia
for portfolios of this type.
Despite the challenges brought by
COVID-19, three new pre-leased building
commitments were secured, and all
projects within our $300 million-plus
development programme continue
to track within budget and ahead of
schedule. This sets a solid platform
for another strong contribution from
the investment property business in
the year to 30 June 2021.
Auckland Airport’s investment
property portfolio remains weighted
towards the industrial and logistics
sectors. Our assets are typically
modern, efficient buildings that are
leased to high-covenant tenants
on long-term leases with fixed rent
growth mechanisms in place.
When the developments currently
underway have been completed,
more than 70% of portfolio revenue
will be derived from assets less than
10 years old. Portfolio income is
diversified across a variety of industry
sectors (see diagram 1), adding
further resilience should economic
conditions further decline.
Image: Percy café opened at The Landing in January
30
Annual Report 2020
Sector composition
of porfolio income
Logistics
FMCG
Aeronautical
Hotels
Government
Distribution
Manufacturing
Car Rental
Services
24%
19%
16%
13%
8%
7%
7%
4%
2%
Supporting
our retail
customers
Sustaining the
long-term future of
our retail business
Annual Report 2020
31
These are:
16,000m2
A 16,000m² purpose-built facility for
Hellmann Worldwide Logistics – the
second development for Hellmann
in The Landing Business Park
8,000m2
An 8,000m² expansion for DHL Supply
Chain at The Landing Business Park –
DHL will increase the current footprint
to 20,000m², and extend its term to
10 years. This is our third development
for DHL Group at the airport in the
past six years
4,000m²
A new state-of-the-art 4,000m² facility
for Interwaste, which provides critical
waste collection, treatment and
disposal solutions for Auckland Airport,
Ports of Auckland, Port of Tauranga
and District Health Boards around the
North Island. This is located in our
eastern land holdings
85,000m2
The 85,000m² Foodstuffs NZ
development, also situated within The
Landing Business Park, continues to
progress well and remains on track to be
completed in January 2021, with the office
building recently certified as 5-Star Green.
In partnership with Tainui Group
Holdings, the Novotel Hotel has provided
dedicated accommodation for travellers
arriving in New Zealand and serving their
14-day quarantine period.
Construction continues on our two hotel
developments – the 146-room Mercure
Hotel and the 311-room luxury Te Arikinui
Pullman Auckland Airport Hotel, the latter
in partnership with Tainui Group
Holdings. Post COVID-19 we have
adjusted our approach and our plan to
deliver these projects in a staged
development approach by first
completing the structure and façade of
the buildings while deferring fitout and
other construction works until market
conditions improve.
The impact of COVID-19 has been
significant for our retail partners at
Auckland Airport, including those inside
our terminals.
When our terminals were fully operational,
we had 108 businesses open employing
around 2,500 people, creating a busy,
dynamic environment for our travellers.
All of this changed almost overnight as
the pandemic began to take hold.
Under the COVID-19 Alert Level 4
restrictions while operating at less than
10% of capacity, there were just three
retail businesses open at the international
terminal providing valuable travel
essentials and grab-and-go food
services to travellers and essential staff.
With some retail businesses reopening
as lockdown restrictions have started
to lift and others remaining closed until
international borders reopen, we have
worked alongside each of our retail
tenants to provide relief on a case-by-
case basis.
New Zealanders began booking
domestic flights again as travel
restrictions eased, giving many of our
domestic terminal retailers and service
operators the confidence to restart.
There were more than 275,000 domestic
passengers during the July school
holiday period, around 60% of July 2019
volumes, prior to Auckland’s recent
return to Alert Level 3.
Looking ahead
While the outlook for the immediate
future is uncertain, the past year has
included highlights that will ensure
we are in the best place possible to
enable us to accelerate growth once
international air travel resumes.
Since 2018, we have complemented
our terminal retail investment with an
innovative online shopping platform, The
Mall, and our online loyalty programme,
the Strata Club. With six major retailers
now on board, The Mall is a growing
retail channel with sales growth of 827%
for the first half of the 2020 financial year
compared to the previous period.
In the 2020 financial year, The Mall was
recognised at The Moodies – the
international airport and travel retail
digital, social media and marketing
awards. At the forefront of travel retail
innovation worldwide, The Mall won
the Best E-Commerce and Mobile
Commerce category.
We also advanced our e-commerce
offering with our targeted WeChat
mini store. Again, this places Auckland
Airport at the leading edge of travel retail
innovation, and through leveraging the
trust of our brand, the WeChat mini store
experienced 58% growth between the
first and second quarters of the 2020
financial year.
While the international travel restrictions
mean The Mall has temporarily ceased
processing orders, we have seen
consumer shopping behaviour
increasingly shift to online following the
outbreak of COVID-19. Auckland Airport’s
investment in e-commerce and loyalty
means we are well placed to respond
when international travel resumes.
The initial COVID-19 lockdown was
an unprecedented event felt differently
across the airport precinct. While some
tenants remained closed throughout
the period, others continued to
operate. We have worked hard to
support customers most affected
by this crisis, providing relief on a
case-by-case basis – in particular to
our smaller tenants within the retail,
service and hospitality sectors.
Despite these challenges, the
performance and outlook for our
investment property business
remains strong and continues to be
underpinned by development activity.
During the 2020 financial year, we
completed new developments leased
to ASX-listed Bapcor, Tempur Group
and Airways Corporation, and we
completed ‘Percy’, a landmark café
in The Landing Business Park. We
also secured three new development
commitments which are expected
to contribute a further $85 million
to the portfolio once completed.
The award-winning EBOS Group development
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33
Being a
sustainable
business
matters
We are purpose led
and values based
Auckland Airport’s resilience has been
put to the test in the 2020 financial
year, but our commitment to making a
positive contribution socially, culturally,
environmentally and economically has
not faltered.
We know that many diverse groups
share a stake in Auckland Airport and
its future and that’s why we strive to
do better every day, recognising that
sustainability must be embedded across
our activities if we are to create and
share value.
In the 2020 financial year we made good
progress on achieving our sustainability
targets but the outbreak of COVID-19
has prompted a review of our approach
to sustainability. The pandemic has
had a significant impact across our
organisation and we are working to
re-evaluate our priorities, while ensuring
sustainability remains at the heart of
our business strategy.
Because of this, we have chosen to
take more time to develop our refreshed
sustainability strategy and are looking
forward to providing an update on
our new strategy and targets when
we release our interim results for the
2021 financial year.
Our people
It has been an extremely challenging
year for our team at Auckland Airport,
as we have shifted away from delivering
transformational infrastructure to
managing through a pandemic.
The outbreak of COVID-19 had a sudden
impact on our operation, and in the
space of a few short months we had to
make changes that would have seemed
unimaginable in January: shutting down
key projects; reducing the size of our
workforce; lowering employee hours
and salaries; and disrupting the growth,
progress and development our team
was proud to be leading.
These are among the toughest things
any business can experience.
Throughout this time of uncertainty,
we have put the health and safety of
our team first (see page 17) and we are
enormously proud of the professionalism,
grace and determination they have shown.
While many of our workers remained on
the frontline, more than 300 staff worked
remotely during lockdown. We were able
to quickly scale up our use of technology
to ensure we could meet, call and
collaborate in one virtual space – ways
of working that have now become a firm
fixture within our workplace culture.
G U E S T P R O M I S E
Our people are the face of Auckland
Airport and we have worked to
assist our staff in ensuring everyone
coming to the airport experiences
manaakitanga – a warm and uniquely
New Zealand hospitality.
This year we introduced the guest
promise and supporting training
modules for our staff to ensure we
deliver on our promise: we make
sure every guest leaves wanting
to come back.
Four service principles guide the
behaviour of our staff in delivering
on our guest promise: treating every
guest like they’re our only guest;
making it feel like a walk in the park;
making relaxation our guests’
destination; and helping our guests
enjoy their time, their way. In the 2020
financial year 172 people took part in
training across our operations, guest
services, engineering and support
office teams.
The symbol representing Auckland Airport’s new guest promise
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35
During the initial lockdown period,
we faced the difficult task of beginning
to reshape our organisation in line
with fewer flights arriving and the
deferral of a significant part of our
infrastructure development programme.
As at 30 June 2020, we had reduced
our workforce by 25% to 527 full-time
staff members. In June, we also began
consultation with our people on further
staff changes impacting our operations
and infrastructure teams, with additional
job losses following our balance date.
Throughout this difficult time, our
approach has been guided by our
values of being respectful, collaborative,
exceptional, acting with integrity and
demonstrating that we care.
As an organisation, we also believe
strongly in the benefits of diversity and
inclusiveness. In the 2020 financial year,
we advanced diverse leadership with
female representation on the Board
increasing from 50% to 62.5%. The
percentage of females in the leadership
team increased from 22% to 25%, while
senior leaders increased from 33% to
41%. We still have further progress to
make as an organisation in achieving
our diversity target objectives and this
will continue to be a focus.
We are committed
to ensuring that our
actions continue to
reflect these values,
and at the moment this
is centred around open
communication about the
challenges we face and
the changes we need to
make in the future.
O U R VA L U E S
Respectful
Collaborative
Exceptional
Integrity
We care
Auckland Airport’s
approach to
sustainability is
focused on our
commitment to
empower the people
and community of
South Auckland
and across wider
Auckland.
Ara job expo
Our programme of community support
included a number of highlights in the
2020 financial year, including:
• Nine year 13 school leavers were
awarded an Auckland Airport
Education Scholarship, including a
financial grant, laptop and the help
of a mentor from the airport team
to kick-start their university careers
• We supported several local
organisations and events through our
sponsorship programme, including
the Counties Manukau Life Education
Trust, Firefighter Sky Tower Stair
Challenge (Leukaemia & Blood
Cancer New Zealand) and the Lakes
District Air Rescue Trust. These
sponsorships amounted to $83,468.
Auckland Airport has also been a
committed financial supporter of ASB
Polyfest, and while the 2020 event
had to be cancelled in response to
COVID-19, we contributed $17,500
to cover costs
• We granted $80,000 to community
groups across Auckland, comprising
$50,000 in He Tangata Grants to
10 community groups in Ōtara,
Māngere, Papatoetoe, Ōtāhuhu,
Manurewa and Papakura, and a
further $30,000 to 30 community
groups across Auckland
• We also granted $351,572 to the
Auckland Airport Community Trust,
which distributes these funds to
residents, schools, community
groups and organisations,
targeting projects and initiatives
that support learning, literacy and
life skills in South Auckland
• Auckland Airport also redistributed
$144,000 of donations made by
generous travellers into charity
globes in our terminals to 12 charities,
celebrating the 12th year of our annual
12 Days of Christmas programme
• Auckland Airport is in the final stages
of establishing a new permanent fund
for the benefit of local iwi groups
(Te Ākitai Waiohua, Te Kawerau ā
Maki and Te Ahiwaru). A total of
$50,000 will be available per year
through this programme (increasing
with inflation over time) for the
purpose of education scholarships
and vocational training relating to
travel, trade, tourism, sport, aviation,
engineering, construction and
environmental planning. Applications
for the first round of grants will be
called for in the 2021 financial year
Supporting our
community
Auckland Airport’s approach to
sustainability is focused on our
commitment to empower the people
and community of South Auckland
and across wider Auckland.
Ara, our Auckland Airport Jobs and
Skills hub, has continued to play a
leading role in this, connecting local
people with training and employment
opportunities prior to the outbreak of
COVID-19, as part of a joint initiative
with government agencies, training
providers and employers.
During the 2020 financial year, we built
a strong partnership with the Ministry
of Social Development (MSD) and jointly
hosted two job expos at the new
headquarters of Ara, located at the
refurbished clubhouse of the former
Aviation Golf Course. One expo focused
on the hospitality industry and another
on construction, with more than 60
businesses and 940 job seekers
collectively attending the expos.
In the 2021 financial year, the MSD
and the Auckland Business Chamber
will manage the provision of services
and Ara’s name will change to Ara,
the Business and Employment Hub.
With Auckland Airport’s support,
Ara will stay in its current location at
the heart of the airport precinct and
continue to connect local people
with work and training opportunities
in and around Auckland Airport.
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37
Supporting strong
communities and
partnerships
We know that we are stronger at
Auckland Airport when we work as a
team and this extends beyond our
organisation.
The successful, safe and reliable
operation of our business relies on our
many and diverse stakeholders, and in
the 2020 financial year we placed great
emphasis on building an environment
focused on trust, shared interests and
open communication and collaboration.
Stay in the know
As work began on a series of major
infrastructure projects in the 2020
financial year, we launched a multi-
channel communications campaign
built around the idea that travellers,
local businesses and workers
could “stay in the know” on airport
infrastructure projects and how
they might impact their journey.
Runway pavement replacement
Work to replace and renew the pavement
in the runway touchdown zone is a key
part of our continuous programme of
ensuring a safe and reliable airfield.
Strong collaboration with our
stakeholders and agreement
on the significant benefits of an
early start allowed the work to be
brought forward and completed
without compromising safety.
Sistema Aotearoa
SPOTLIGHT ON THE
AUCKLAND AIRPORT
COMMUNITY TRUST
The Auckland Airport Community
Trust provides financial assistance
to a wide range of community
groups in the Manukau area.
Since its establishment in 2003, the
Trust has distributed over $4 million
in grants for community benefit,
focusing on improving education
outcomes. The core focus of these
grants has been to support
learning, literacy and life skills,
although that focus has widened in
recent years to benefit a greater
range of people and activities.
In the 2019/2020 funding round,
18 groups received community
grants to support a wide variety
of activities, including youth
support, artistic activities,
sporting facility development,
environmental improvement
and conservation initiatives,
volunteering programmes, and
programmes targeted to help
elderly and disabled people within
our communities. Some of the
very worthy recipients of these
grants include Garden to Table,
an organisation which teaches
essential food skills to children,
and Sistema Aotearoa, an Ōtara-
based organisation working to
bring about social change through
orchestral music-making.
Stay in the know campaign image
K E Y S TAT I S T I C S
Health and safety
89%
Reporting of safety
observations and hazards
72%
Employee recordable injury rate
5.9%
Passenger incident rate
Ara – Airport Jobs and Skills Hub
940
job seekers attended two job expos
60
businesses took part
Auckland Airport
Community Trust
$351,572
granted to community projects by
the Auckland Airport Community
Trust to support learning, literacy
and life skills in South Auckland
Non-financial disclosure
In the 2020 financial year we
continued in our proud history
of voluntary disclosure of our
sustainability performance,
including featuring in the Dow Jones
Sustainability Index and FTSE4Good.
Auckland Airport introduced health and safety contractor forums
in the 2020 financial year and took part in exercises with contractors
External recognition for online
interactive consultation tool
In April 2020, Auckland Airport won the
New Zealand Planning Institute’s Best
Practice – Consultation Participation
Strategies and Processes award
for the development and use of an
online interactive tool to help property
owners understand the potential
impact of the planned second
runway on their property. There
were 146,682 views within the first
month of the map being launched.
Health and safety partnership
Our drive for better health and safety
outcomes and commitment to zero
harm means we continually seek to
improve our processes.
We introduced new Health and Safety
Contractor forums in the 2020 financial
year where Auckland Airport,
contractors and industry experts shared
ideas, initiatives and knowledge across
all areas of health and safety. We also
reviewed and consolidated our key
critical health and safety risks.
The proactive attitudes and increased
engagement relating to safety were
reflected in the number of safety
observations and hazards reported,
and the decline in employee injury
and passenger incident rates.
Reducing our environmental footprint
This financial year we have continued to reduce energy use, waste and carbon
across our operations.
While good progress has been maintained our results have been influenced by
the significant reduction in overall passenger numbers during the second half
of the 2020 financial year because our environmental impact reductions are
calculated on a per-passenger basis.
The following results are in comparison with our base year, 2012.
Energy use per passenger
Waste to landfill per passenger
CO2-e emissions per m2
of terminal area
Unit
%
%
%
FY17
-34%
-46%
-29%
FY18
-35%
-46%
-34%
FY19
-38%
-47%
-40%
FY20
-19%
-39%
-45%
The 2020 financial year marks the end of many of our environmental impact
reduction targets which were set in 2013. Work is underway to develop our
refreshed sustainability strategy and we are looking forward to providing an
update on our new strategy and targets when we release our interim results
for the 2021 financial year.
38
Annual Report 2020
Annual Report 2020
39
Governance
and leadership
Seated – from left
Patrick Strange
Michelle Kong
Justine Smyth
Dean Hamilton
Standing – from left
Tania Simpson
Julia Hoare
Liz Savage
Christine Spring
Mark Binns
New director
Liz Savage
Liz Savage became a director of
the company after the 2019 annual
meeting. She has worked for 20 years
in senior leadership roles in Australia
and Europe, including as Chief
Commercial Officer of Virgin Australia
during the early transformation of the
airline, and Business Development
Director of easyJet during the
airline’s first 10 years of growth.
Liz is currently a director of Intrepid
Group, North Queensland Airports,
and People Infrastructure. She is also
a board member of Brisbane Marketing.
Retired director
Brett Godfrey
Brett Godfrey became a director of the
company in 2010. Brett officially retired
from the Board at the 2019 annual
meeting. We would like to thank Brett
for all his hard work and many years
of commitment to Auckland Airport
Future director
Michelle Kong
Michelle Kong was selected to
participate in the Future Director
Programme in January 2019 and her
term ended in June 2020. We would like
to thank Michelle for her valuable
contribution.
Company officer changes
Richard Barker
General Manager Retail and Commercial
In June 2020, it was announced
that General Manager Retail and
Commercial Richard Barker would
be leaving the company.
Richard has been responsible for
developing Auckland Airport’s retailing
businesses, including duty free, specialty
retail, and food and beverage, as well as
overseeing passenger experience and
car-parking. Under his leadership, in
2019 Auckland Airport’s refurbished
departure terminal and dining precinct
was named the global Airport Food &
Beverage Offer of the Year, while The
Mall won Best E-commerce Platform
at the 2020 Moodies travel journey
digital awards.
Richard’s leadership and commitment
to delivering an exceptional customer
experience means Auckland Airport’s
retail business will be in an excellent
position to rebuild quickly once the
market begins to recover.
Responsibility for Richard’s business
portfolios has been shared between
other members of the executive team.
40
Annual Report 2020
Annual Report 2020
41
Financial
summary
Underlying earnings
per share
34.7%
14.7 cents per share
The 2020 financial year was one of
contrasting halves. The first half of
the year saw the company embark
on a historic period of infrastructure-
related transformation, while the
second half of the financial year
was significantly impacted by the
global travel restrictions put in place
following the outbreak of COVID-19.
Our reported profit after taxation for the
2020 financial year was $193.9 million –
a decrease of 63% on the prior year’s
reported profit of $523.5 million.
Underlying profit after taxation for the
2020 financial year was $188.5 million,
a decrease of 31.4% on the prior year’s
underlying profit of $274.7 million.
Revenue decreased 23.7% to $567.0
million reflecting subdued passenger
flows in the second half of the year driven
by the introduction of travel restrictions
associated with the COVID-19 outbreak.
Total aeronautical income for the 2020
financial year fell 25.3% on the prior
year as a result of substantially lower
aeronautical activity. In the three months
to June 2020, passenger numbers at
Auckland Airport were down 92.6%.
In response to the reduced aeronautical
activity, Auckland Airport undertook
a cost reduction programme that
has generated significant savings in
discretionary and activity based
operating expenditure in the second
half of the year. However, operating
expenses for the year increased
62.6% to $306.6 million as additional
COVID-related costs were incurred
including capital expenditure project
write-offs, impairments, contractor
termination expenses, redundancies
and provisions for expected credit
losses. As a result, earnings before
interest expense, taxation, depreciation,
fair value adjustments and investments
in associates (EBITDAFI) in the year to
30 June 2020 decreased 53.1% to
$260.4 million.
Auckland Airport’s share of underlying
profit from associates was $9.2 million
for the 2020 financial year, an increase
of $1.0 million on the prior year reflecting
profit of $4.5 million from Queenstown
Airport and a 14.6% increase in Auckland
Airport’s share of underlying profit from
the Novotel Hotel to $4.7 million.
The unparalleled trading environment
driven by the COVID-19 outbreak
resulted in earnings per share
decreasing by 64.5% to 15.2 cents.
Underlying earnings per share also
decreased by 34.7% to 14.7 cents.
The Board has resolved not to pay
a final dividend in 2020 owing to the
impacts of the COVID-19 pandemic.
Under the terms of the financial
covenant waivers in place from June
2020 until December 2021 granted
by Auckland Airport’s banking group
and USPP noteholders, dividend
payments are suspended until
the covenant waivers expire.
The table above shows the reconciliation
between reported profit after tax and
underlying profit after tax for the years
ended 30 June 2020 and 30 June 2019.
EBITDAFI per Income Statement1
Investment property fair value increase
Property, plant and equipment revaluation
Fixed asset write-offs, impairments and
termination costs
Derivative fair value movement
Share of profit of associates and
joint ventures
Impairment of investment in joint venture
Depreciation
Interest expense and other finance costs
Taxation expense
Profit after tax
2020
2019
Reported
profit
$M
Adjustments
$M
260.4
168.6
(45.9)
–
(1.9)
8.4
(7.7)
(112.7)
(71.8)
(3.5)
193.9
–
(168.6)
45.9
117.5
1.9
0.8
–
–
–
(2.9)
(5.4)
Underlying
profit
Reported
profit
$M
260.4
–
–
117.5
–
9.2
(7.7)
(112.7)
(71.8)
(6.4)
188.5
$M
554.8
254.0
(3.8)
–
(0.6)
8.2
–
(102.2)
(78.5)
(108.4)
523.5
Adjustments
$M
–
(254.0)
3.8
–
0.6
–
–
–
–
0.8
(248.8)
Underlying
profit
$M
554.8
–
–
–
–
8.2
–
(102.2)
(78.5)
(107.6)
274.7
• In addition, we have adjusted the
share of profit of associates and
joint ventures in 2020 to reverse out
the impacts on those profits from
revaluations of investment property
and financial derivatives
• We have also reversed out the
taxation impacts of the above
movements in both the 2020
and 2019 financial years
1. EBITDAFI includes $117.5 million relating to fixed asset project write-offs, impairments and termination costs
We have made the following adjustments
to show underlying profit after tax for
the years ended 30 June 2020 and
30 June 2019:
• We have reversed out the impact of
revaluations of investment property
in 2020 and 2019. An investor should
monitor changes in investment
property over time as a measure of
growing value. However, a change
in one particular year is too short to
measure long-term performance.
Changes between years can be
volatile and, consequently, will impact
comparisons. Finally, the revaluation
is unrealised and, therefore, is not
considered when determining
dividends in accordance with the
dividend policy
• Consistent with the approach to
revaluations of investment property,
we have also reversed out the
revaluation of the land, infrastructure,
and runways, taxiways and aprons
classes of assets within property,
plant and equipment for the 2020
financial year and the building and
services class of assets within
property, plant and equipment
for the 2019 financial year. The fair
value changes in property, plant and
equipment are less frequent than are
investment property revaluations,
which also makes comparisons
between years difficult
• We have reversed out the impact
of fixed asset project write-offs,
impairments and termination costs
for the 2020 financial year. In
response to the COVID-19 outbreak,
some capital expenditure projects
were abandoned and fully written off
and others were suspended. Some
of these abandoned or suspended
projects incurred contractor
termination costs. The abandonment
or suspension of live capital
expenditure projects is extremely
rare and is the direct consequence
of COVID-19. These fixed asset
write-off costs, impairments and
termination costs are not considered
to be an element of the group’s
normal business activities and on
this basis have been excluded from
underlying profit
• We have also reversed out the impact
of derivative fair value movements.
These are unrealised and relate
to basis swaps that do not qualify
for hedge accounting on foreign
exchange hedges, as well as any
ineffective valuation movements in
other financial derivatives. The group
holds its derivatives to maturity,
so any fair value movements are
expected to reverse out over their
remaining lives. Further information
is included in note 18(b) of the
financial statements
Share registrar
Link Market Services Limited
Level 11, Deloitte Centre
80 Queen Street, Auckland 1010
New Zealand
PO Box 91976, Auckland 1142
New Zealand
Email: enquiries@linkmarketservices.com
Website: www.linkmarketservices.co.nz
New Zealand telephone: +64 9 375 5998
New Zealand facsimile: +64 9 375 5990
Australia telephone: +61 1300 554 474
Annual Report 2020
This annual report covers the performance of
Auckland International Airport Limited for the
period from 1 July 2019 to 30 June 2020.
This volume contains overview information
and a summary of our performance against
financial and non-financial targets for the
2020 financial year. Our audited financial
statements for the period from 1 July 2019
to 30 June 2020 are contained in a separate
volume, which may be accessed at
report.aucklandairport.co.nz
2020 Financial Statements
The 2020 Financial Statements are available
on our website report.aucklandairport.co.nz
or you may elect to have a copy sent to you
by contacting our investor relations team.
Electronic shareholder
communication
If you would like to receive all investor
communications electronically, including
interim and annual shareholder reports,
please visit the Link Market Services website
www.linkmarketservices.co.nz or contact
them directly (details above).
Investor relations
PO Box 73020, Auckland Airport
Manukau 2150, New Zealand
Email: investors@aucklandairport.co.nz
Website: www.aucklandairport.co.nz
aucklandairport.co.nz
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