18 Feb 2021
Pandemic not panic reflected in Christchurch Airport financial result
Christchurch Airport is citing lessons learnt from the quakes, extensive changes it made to its business across 2015-2019 and its preparation for events like a pandemic, for its ability to pivot to a domestic operating model that can essentially break even while the pandemic’s impact on the borders evolves.
Net Profit after Tax (NPAT) for the first half of financial year 2021 (FY21) - July to December 2020 - was $1.2m. Total operating revenue was $66m, down 31% compared to the same period last year. Rates and insurances rose by 12% (or $680,000), all other core operating costs were compressed. EBITDAF was $34.3m. Passenger numbers were down 51%. There was strong growth in dedicated freight flights from Christchurch during the six months (up 22%) and ecommerce driven parcel freight volumes increased circa 25%. Noting the same period last year had no COVID-19 impact with open borders and essentially no contribution from the Novotel Christchurch Airport.
“Though our NPAT has been materially impacted short term with borders closed, it is a credible result to pivot to a domestic only model and get our business to break even while also keeping our capital and strategic projects progressing”, says Christchurch International Airport Limited (CIAL) Chief Executive Malcolm Johns.
“The lessons we learnt and the hard work and changes we made post quakes are at the core of this. Among the lessons learned were revenue diversification, operating cost flexibility and building leadership deep into our team. The benefit of the changes made between 2015-2019 can be seen in the growth and resilience of our property portfolio, more flexibility of core operating costs and the addition of the Novotel Christchurch Airport (currently operating as a Managed Isolation Facility currently)”.
Board Chair Catherine Drayton says investing in people talent and leadership development of airport staff has really paid off.
“Our leadership and wider team worked incredibly hard post-quakes to change our business, address our risks, build resilience across the business and prepare us for an event like a pandemic. In these events you are confronted with many things beyond your control and leadership makes the difference. We wanted to ensure we could navigate such an event with a philosophy of stakeholder equity and fairness - balancing the needs of our customers and our staff and our shareholders - without having to revert quickly to shareholders for new equity or to rapid staff reduction to compress operating costs quickly. Our team has so far achieved this with an enormous amount of effort and hard work", she says.
"The Board is very pleased and very proud of our people across our whole team. Our focus over coming months is to ensure we keep our talent as other sectors around us who aren’t as affected look to bolster their talent pools. This will ensure the airport can emerge quickly and strongly to make the most of opportunities on offer as borders re-open."
- Catherine Drayton, CIAL Board Chair
During the first half of this financial year the Christchurch Airport team also notched up some key achievements.
World First: Christchurch became the first airport in the world to achieve Level 4 decarbonisation accreditation by the world’s airport council (ACI). It achieved this by demonstrating reduction of its carbon footprint through three specific projects. CIAL is on track to remove around 90% of direct carbon emissions from the business, compared to 2015 levels.
“This was a world class achievement, reinforced by a call from the New York City Ports Authority (which operates John F Kennedy, LaGuardia and Newark airports) to ask me if our team would be prepared to brief their teams on what we’d done and how we’d done it. About 100 of their team attended to hear our story. For an airport at the bottom of the world, that’s pretty cool!” says Malcolm Johns.
Awards: During this half year CIAL was recognised as an ‘Employer of Choice’ in the HRD (Human Resources Director) Awards, reflecting the way it had supported its staff during the pandemic. The airport was also named a finalist in the New Zealand energy awards, Low Carbon Future category.
“We weren’t expecting it, but had prepared for an event like COVID-19. We knew how we wanted to navigate such events by balancing the needs of, and being fair to, our customers, staff and shareholders. For about a year now we have balanced our approach to business between the needs of our customers, maintaining our people’s employment and working conditions while focusing on preserving shareholder value. The reality is we are going to keep doing this for the near term, while also ensuring our strategic projects keep progressing and we position the business to take advantage of the post COVID-19 opportunities”, Johns says.
No decision on dividends will be made until full year trading is known and more information around vaccinations and future of borders is known.