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Sydney Airport posts $97m half-year loss as takeover negotiations heat up

written by Hannah Dowling | August 20, 2021

Sydney Airport has reported a $97.4 million half-year loss in the six months to 30 June 2021, as negotiations continue to secure the airport’s sale to a consortium of super funds.

The airport cited the impact of COVID-19 and the sudden shutdown of domestic borders through the second half of the reporting period, as it saw a 33 per cent drop in revenue compared with the same period last year, which was also heavily impacted by COVID.

The airport brought in $341 million in revenue between January and June 2021, down by 60 per cent from its June-December 2020 results, which notably benefited from eased border restrictions throughout that period.

While passenger traffic rebounded to 65 per cent of pre-COVID figures between January and April this year, the current Delta outbreak in Sydney, which has resulted in lockdowns and border closures across multiple states, saw traffic fall to just 3 per cent of 2019 levels in July.


According to the Bureau of Infrastructure and Transport Research Economics (BITRE) On-Time Performance report, over 30 per cent of all scheduled flights were cancelled in July, with 9,351 flights cancelled.

It nears the 9,406 flights that were cancelled in June, following the beginning of the Delta outbreak in mid-June.

Overall, passenger traffic fell by 36 per cent in the six months to June 2021, compared with the six months to June 2020 — which again was also heavily impacted by COVID-related border closures, when the country entered a nationwide lockdown in mid-March.

The airport now boasts a net debt of $7.5 billion and liquidity of $2.9 billion.

“It was a challenging six months, but we were encouraged to see passenger traffic rebound strongly every time borders were open,” Sydney Airport CEO Geoff Culbert said of the half-year results.

“We’re optimistic that this trend will repeat itself as the vaccine program gains momentum and we see a sustained easing of restrictions.”

It comes after Sydney Airport again swiftly rejected a takeover bid now worth $22.8 billion last week, arguing the revised offer “continues to undervalue” the company, and again labelled the bid as “opportunistic” in the face of the current COVID-19 downturn.

The newly upped $8.45-per-share bid, presented by Sydney Aviation Alliance Group, was up by 2.5 per cent from the investment consortium’s previous bid of $8.25 made in July.

In a statement to the ASX, the airport stated its board has again “unanimously concluded” that the revised offer undervalues the company and is “not in the best interests of securityholders”.

Similar to the previously rejected bid, the airport stated that the current COVID-19 operating environment “does not change the board’s view of the long-term value” of the airport.

Further, the board said that the airport is “strongly positioned” given Australia’s “rapid increase and acceleration” of its vaccination rollout is likely to see conditions improve and the reopening of borders.

Despite the rejection, the airport noted that it was “open to engaging” with the consortium, should the group be prepared to increase its bid.

In response to the rejection, the Sydney Aviation Alliance Group — a consortium of industry investors that includes IFM Investors, QSuper and Global Infrastructure Partners and, recently, AustralianSuper — said it is willing to walk away entirely from negotiations.

“Given Sydney Airport’s lack of engagement and immediate rejection of the revised proposal … it appears unlikely that the parties can agree a path forward and, as such, there is no assurance the revised proposal will proceed,” the group said in a strongly worded statement, released late Monday.

The consortium noted it was “surprised and disappointed” by the immediate rejection of its first bid last month, as well as the board’s “absence of engagement” in negotiations.

“At a time when Sydney Airport is facing short, medium and long-term challenges, the consortium believes the original proposal offered full value to Sydney Airport securityholders,” it said.

It again accused the airport of failing to engage in meaningful negotiations, and stated both its previous offers were already at a premium.

“While noting the limited relevance of pre-pandemic price comparisons, the revised proposal represents an offer value equivalent of AU$9.21 per stapled security when the offer enterprise value is adjusted for the impact of the 439m securities issued and AU$1,980 million net cash proceeds raised in the August 2020 equity raising,” the group said.

“This is above the highest price at which Sydney Airport’s securities have ever closed.”

On Thursday, Sydney Airport securities closed at $7.73 per share, giving it a market value just below $21 billion. However, the airport’s pre-pandemic value soared above $9 per share.

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Comment (1)

  • Darren


    So on the basis of this loss, does SAC still expect a ‘top $’ sale to the consortium?
    Good luck with that, especially if the potential buyers’ down their offer by $97mn.

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