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"Australian airports will continue to grow: Moody's"

Monday, May 30, 2005

Airports will continue to grow: Moody's
The Australian Associated Press

Australian airports will grow strongly in the next few years as the
facilities exploit their monopoly-like nature and continue to diversify,
according to a ratings service.

Aeronautical fees are becoming a larger and larger part of airport revenue,
reducing their reliance on passenger throughput, Moody's Investors Service

The agency's report comes after Patrick Corp Ltd chief Chris Corrigan this
month accused airports of "gouging" airlines on costs and that the
travelling public would end up paying through higher airfares.

Mr Corrigan, who also chairs discount airline Virgin Blue, is calling for
the government to regulate airports and review their pricing structures,
arguing that prices have gone up by 50 to 200 per cent in the past three

Moody's said aeronautical revenue - comprising landing fees, common user
terminal charges and government-mandated security charges - now account for
39 to 50 per cent of total airport revenue.

And this revenue "will continue increasing as a significant contributor to
earnings" it said.

At the same time airports were working hard to diversify revenue streams to
reduce exposure to aviation market upsets.

"The airports are aggressively developing their property portfolios to
include non-aeronautical activities, such as retail outlets, offices and
warehouses," said Moody's senior analyst David Howell.

"Such property revenues, which are independent of passenger throughput,
improve cash flow stability."

Sydney Airport, which is majority owned by Macquarie Airports Management
Ltd, says airport charges are an insignificant component of airfares.

Mr Howell said in the report that the agency's rating outlook of Australian
airports is largely stable.

"The situation reflects their strong performance over the past 18 months,
the expectation of continued solid growth over the next three to five years
and the success of strategies to diversify revenue sources," he said.

Moody's said airports remained highly geared on a debt to equity ratio

But this was not a concern as debt levels were "manageable" within current
ratings and because of the "monopoly-like nature" of airports.

Securities in Macquarie Airports Management rose one cent to $3.66 while
Australian Infrastructure Fund, which has an interest in Melbourne Airport
operator Australia Pacific Airports Corp, was up three cents at $2.53.

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