Despite a challenging year, Hawke’s Bay Airport Limited has weathered the storm and is well positioned for recovery.
Today, HBAL released its Annual Report for 2020, a year during which the company was forced to reset its terminal expansion plans following the voluntary administration of lead contractor, Arrow International Limited, JetStar ceased its regional services, the Covid-19 pandemic closed borders and Airways announce its intention to withdraw staff from Hawke’s Bay’s control tower.
Hawke’s Bay Airport Limited’s Chair, Wendie Harvey, admits that to say it has been a tough year is an understatement, but she has seen the team stand up to each and every challenge.
“We were already going through significant change, but we were faced with unprecedented challenges on top of that. While we are not out of the woods yet, I am proud of how we’ve managed risk responsibly and remained committed to creating long term value for our shareholders and community,” Mrs Harvey says.
Financial Results for FY2020
Just prior to the Level 4 lockdown, HBAL was on track for an annual profit of more than $1m.
Accounting adjustments for an asset write-down of the demolished terminal and reversal of earlier impairment of business park land impacted the overall NPAT result, as did some restructuring costs incurred by streamlining operations in response to the pandemic.
Excluding these items, the trading impact of Covid-19 to the bottom line was around $1.2m.
At the start of lockdown, the company was close to finalising new debt facilities to allow it to progress its long-term capital plans, including the terminal expansion.
However, lockdown saw this halted and the HBAL turned to its shareholders, Napier City Council, Hastings District Council, and the Crown. They provided a $9 million loan facility (inclusive of a $2 million contingency) to give the company the headroom it needed to continue the terminal construction and working capital to support the business through the Covid-19 recovery period.
Fortunately, HBAL has not needed to draw down against the loan to date due to the faster than expected recovery. If trading continues on the current trajectory, then HBAL may not need to draw down on the loan at all.
Four Months to October 2020
Despite the impacts of closed borders on visitor numbers, NPAT is ahead of recast budgets at lockdown, with a YTD loss of just $134,000 versus a budgeted loss of $677,000. That bounce-back can be put down to a number of key factors.
Airline seat capacity was forecast to be approximately 50 percent of pre-Covid-19 budgets by November, however HBAL saw a quicker return of airline capacity which, as of today, sits around 70 percent of previous capacity.
Passenger numbers are also better than expected at 45 percent more than budget and have contributed to the faster recovery YTD of both aviation and commercial revenue streams.
Capex and operating expenditure continue to be closely managed, as HBAL works toward full recovery. Despite having to establish a new contractor model mid-way through construction and lockdown putting a stop to work for several months, terminal expansion costs are currently forecast to be less than 3% above the approved 2018 project cost of $22.4m – which is well within budget expectations.
Looking forward to 2021
Hawke’s Bay Airport chief executive, Stuart Ainslie is cautiously optimistic. Leading up to the pandemic, HBAL was seeing unprecedented growth. Despite the set-backs of 2020, Mr Ainslie is confident that, on the back of greater interest in domestic tourism and the resumption of international travel, HBAL will swiftly climb back to its pre-pandemic growth curve and passenger numbers. In the near future, HBAL has a lot planned.
“In early 2021, we’ll be opening a new terminal offering our passengers a range of new spaces and services with a distinct Hawke’s Bay flavour. We are certain that the opening will deliver a step change in capacity, amenity and ambience.”
‘’We acknowledge that the new terminal has been delivered at a challenging time, and truly appreciate the community’s patience - but we believe the wait will be worth it. The new build will invoke a sense of local pride and represent great value for money to our shareholders,” Mr Ainslie
HBAL Chair, Wendie Harvey, says the focus for HBAL going forward will be on resilience and diversification of revenue streams.
“We have progressive plans in the property and renewable energy space, we are finalising our master plan, progressing work on the next stage in our property development and advancing our sustainability framework. We are positive about HBAL’s future,” Mrs Harvey says.
About Hawke’s Bay Airport Limited
Hawke’s Bay Airport is New Zealand’s third busiest airport in the North Island. It plays a key role in connecting the region’s people and produce with national and international markets. HBAL is owned by three shareholders Napier City Council (26%), Hastings District Council (24%) and the Crown (50%). It is governed by a Board of Directors, consisting of two council shareholder appointed directors and two Crown appointed directors.
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