Sydney Airport will ask shareholders to tip in $2 billion through equity raising in a bid to reduce its $9 billion debt and increase its liquidity.
The announcement came as the business revealed a half-year loss of $54 million – with passenger numbers down 96.6 per cent in the second half of 2020.
Chief executive Geoff Culbert said, “Six months into the pandemic, there remains uncertainty as to how long it will take for aviation markets to return to pre-COVID-19 levels.”
Earlier this year, Australian Aviation reported that the airport acquired $850 million of bank debt facilities and said that “given the strength of our balance sheet and liquidity position, at this time we do not see the need to raise equity”.
However, today’s reversal means the business will now indeed seek to raise $2 billion through a ‘pro-rata accelerated renounceable entitlement offer’, which will in part help increase its liquidity from $2.6 billion to $4.6 billion.
The business said the “further decisive action” will help it “meet the challenges presented by an uncertain COVID-19 operating environment”.
The announcement led to a trading halt on the ASX on Tuesday morning.
Alongside the financial results, the business also reported dire passenger numbers due to the pandemic, with passenger numbers for the half-year down 56.6 per cent.
However, this loss was almost entirely caused by lower traffic in the second quarter, with just 400,000 travelling through.
The airport is already using the shortest of its three runways to store grounded aircraft – the east-way runway has doubled its capacity to accommodate 50 planes.
“As an organisation we have adapted rapidly to a new environment and worked hard to tightly manage our costs, strengthen our balance sheet, reach fair and equitable outcomes with our tenants and aviation partners, and implement COVID-safe protocols to protect our passengers and staff,” said Culbert.
The position hasn’t been helped by recent hardenings of state borders as Victoria endures a ‘second wave’ of coronavirus and isolated clusters have been detected in Sydney.
In the last week, for instance, Queensland has shifted to effectively shut its border with NSW and the ACT, despite the latter having no active COVID-19 cases.
“We’ve seen that Victoria is not getting better and we’re not going to wait for NSW to get worse,” said Premier Annastacia Palaszczuk. “We cannot risk a second wave, we have to act decisively.”
The decision means that, from 1am on Saturday, 8 August, only residents from these areas are allowed to return to Queensland, and those that do will have to quarantine at a government facility for 14 days. The move came a week after Premier Palaszczuk shut the border to Greater Sydney.