Sydney Airport plans to raise $1.4bln to battle virus hit after H1 loss

Raising to reduce debt levels, shore up liquidity

  
A Jetstar Airways plane is seen at Kingsford Smith International Airport the morning after Australia implemented an entry ban on non-citizens and non-residents intended to curb the spread of the coronavirus disease (COVID-19) in Sydney, Australia, March 21, 2020. Image used for illustrative purpose.

A Jetstar Airways plane is seen at Kingsford Smith International Airport the morning after Australia implemented an entry ban on non-citizens and non-residents intended to curb the spread of the coronavirus disease (COVID-19) in Sydney, Australia, March 21, 2020. Image used for illustrative purpose.

Reuters/Loren Elliott

SYDNEY/BENGALURU: Sydney Airport Holdings Pty Ltd said on Tuesday it would raise A$2 billion ($1.43 billion) of equity to lower its debt levels after swinging to a half-year loss, as the COVID-19 pandemic continues to hammer travel.

In May, the operator of Australia's biggest airport said it did not foresee the need to raise equity, but that was before COVID-19 cases surged in the city of Melbourne, prompting border closures between states and further hurting travel and business.

"The outlook is very uncertain," Chief Executive Officer Geoff Culbert told analysts after the airport reported a net loss of A$53.6 million for the six months ended June 30, compared with a profit of A$17.3 million last year.

"What we are witnessing today is the most stringent restrictions on the movement of people since the second world war, and in the domestic context possibly the most stringent movement restrictions in Australia's history," Culbert said.

Domestic passenger numbers in August so far are down 94.2% from a year ago, worse than the 88.2% fall in July due to additional state border closures, while international traffic in August to date is down 96.8%, Sydney Airport said.

Freight-only flights represent 70% of take-offs and landings, compared to 2% before the pandemic, Culbert said.

A staff job guarantee for its 500 employees will not be extended beyond Sept. 30 and a review is underway that could result in job losses, he added.

Sydney Airport said its net debt position would reduce from A$9.1 billion to A$7.1 billion as at June 30 after the fund raising and it did not expect to pay a shareholder distribution in 2020.

"We think this provides ample liquidity to remove doubts on liquidity even in an uncertain recovery," RBC Capital Markets analyst James Nevin said in a note.

($1 = 1.3988 Australian dollars) ($1 = 1.5175 New Zealand dollars)

(Reporting by Jamie Freed in Sydney and Shriya Ramakrishnan in Bengaluru; Editing by Devika Syamnath and Rashmi Aich) ((Shriya.Ramakrishnan@thomsonreuters.com; +91 8061822842 ;))

More From Markets