Sydney Airport says it plans to have a decision on whether to take up its right to build and operate the proposed airport at Badgerys Creek by early May.
In December, the federal government issued Sydney Airport a Notice of Intention (NOI), effectively a sales contract, that outlined the formal contractual terms for the project.
At the time, the government gave Sydney Airport four months to consider the offer, with the deadline on making a decision set for May 8.
While Sydney Airport has objected to the four-month deadline and continues to argue it should have nine months to consider the NOI, the company said on Thursday it would work towards the May 8 timetable.
“We remain of the view that we are entitled to a nine-month consideration period but will be endeavouring to meet the Commonwealth’s timetable,” Sydney Airport chief executive Kerrie Mather said during the company’s calendar 2016 full year results presentation.
“As soon as we have adequate information to make an informed decision, we will do so.”
The company booked $21 million in expenses, including $16 million in external costs, in its calendar 2016 accounts towards the proposed Badgerys Creek Airport.
“We are continuing to adopt our rigorous approach to the evaluation process, applying our disciplined investment criteria including consideration of rates of return, cash flow, growth potential, downside protections and the impact on Sydney Airport,” Mather said.
“Confidential and detailed market soundings with the contractor market are in progress to further inform our view of the construction costs.”
Mather reiterated the airport company’s view that Badgerys Creek would be a challenging investment proposition, given the NOI said Sydney Airport would be responsible for all of the costs of building and operating the airport.
“Given the significant challenges the project will face, Sydney Airport has consistently expressed its opinion that the Western Sydney Airport project would require material support from the Commonwealth to make it commercially viable,” Mather said.
“However, the Commonwealth delivered a NOI that does not feature any material support including previously contemplated procurement protections or Commonwealth funding which makes WSA a challenging investment proposition.”
The government said in December there would be no direct financial support from the Commonwealth towards building and operating the proposed airport at Badgerys Creek. The cost of construction was estimated to be between $5 billion and $6 billion.
When the Commonwealth sold Sydney Airport in 2002 it included a 30-year first right of refusal to build and operate any airport within 100km of the existing terminals at Mascot.
Minister for Urban Infrastructure Paul Fletcher said in December the government could choose to build and operate the airport itself or offer the opportunity to private sector companies should Sydney Airport decide not to exercise the right of first refusal.
The final Western Sydney Airport Plan showed Stage 1 of the airport would feature a terminal capable of handling up to 10 million domestic and international passengers a year, with a single 3,700m long by 60m wide runway on a 05/23 orientation.
The design of the facility would allow for a second parallel runway and expansion of the terminals to cater for 37 million passengers a year by 2050 and 82 million a year by about 2063.
The terminal design would feature swing gates capable of handling both domestic and international flights, which would increase the efficiency of transfers and increase the use of contact gates equipped with aerobridges.
Meanwhile, jet fuel supply was expected to be delivered by road tanker in a similar way to other airports operating on this scale, such as Canberra and Gold Coast airports.
And the Airport Plan said flightpaths had not been finalised, noting the draft flightpaths shown in the draft Airport Plan were a “conceptual model for aircraft arrivals”.
On the financial results, Sydney Airport reported net profit for the 12 months to December 31 2016 of $320.9 million, up 13.4 per cent from $283 million in the prior corresponding period.
Total revenue was 11 per cent higher at $1.365 billion, the airport said in a regulatory filing to the Australian Securities Exchange on Thursday.
Aeronautical charges, which made up 45 per cent of the airport’s total revenue and comprise payments from airport users for terminal and airfield infrastructure use, rose 17.4 per cent to $614.2 million.
Revenue per passenger increased 5.2 per cent in calendar 2016 to $32.60 per passenger, compared with $31 per passenger in the prior corresponding period.
Sydney Airport declared a final distribution of 16 cents per stapled security, bringing total distributions for calendar 2016 to 31 cents per stapled security. The company has guided the market to an increase in distributions to 33.5 cents per stapled security for calendar 2017.
Passenger numbers through its domestic and international terminals were up 5.6 per cent at 41.9 million.
“We are committed to maintaining a disciplined and focused approach to delivery on our strategy, which is positioning Sydney Airport well for future success,” Mather said in a statement accompanying the financial results.
“Our confidence in the outlook for the business supports the guidance for a distribution increase in 2017.”
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