Moody’s Investors Service says that Sydney Airport Finance Company Pty Ltd’s Baa2 senior secured rating and stable outlook are unaffected by Sydney Airport Corporation Limited’s agreement with Qantas Airways Ltd.’s (CFR Ba1 positive) to bring forward the expiry date of the airline’s long-term lease over Terminal 3 at Sydney’s Kingsford Smith Airport.
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The number of global passengers travelling through the airport rose 2.8 per cent in the first six months of 2015.
As the so-called Flying Kangaroo nears the halfway mark, the strategy appears to be paying off. Qantas is expected to report a record full-year profit of at least A$900 million on Thursday, a far cry from the A$2.8 billion statutory loss it posted last year.
“This deal provides certainty”, Qantas chief executive Alan Joyce said. That alleviates its concerns that Sydney Airport could turn the terminal, used only by Qantas and QantasLink, into a large multi-user facility post-2019. “The lease was always going to revert after 2019”.
Ms Mather noted strong demand among passengers from India, Philippines and the United States had also underpinned growth.
Retail contributed 22% of revenues in H1, with the growth driven partly by Gebr Heinemanns new outlets, which are trading well according to the airport.
Beyond 2025, Qantas is expected to co-locate its domestic and global operations to one terminal as part of the Sydney Airport masterplan. “As Kerrie said it won’t be here in the next five years, but it will be something that’s there in the medium to long term”.
A per-passenger charge will be imposed on Qantas with effect from 1 September. “Acquiring Terminal 3 allows us to be able to achieve that”.
– SYD highlighted the formal nine month consultation period with the Australian government had finished in relation to the Western Sydney Airport.
On the other hand, the rating could be upgraded if Sydney Airport’s FFO to interest exceeds 2.3x-2.5x, and FFO to debt exceeds 8.5%-9.0% over a sustained period.
Sydney Airport and Qantas have also agreed five-year deals covering Qantas’ domestic runway charge and worldwide aeronautical charges for Qantas and Jetstar.
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Qantas will retain use “priority usage as the primary airline customer of Sydney’s Terminal 3” from 2019 to mid-2025, Joyce stressed, including access to most check-in and baggage facilities and departure gates, but from September would pay Sydney Airport Corporation a per-passenger fee, as does competitor Virgin Australia for the partial use of T2.
