Auckland Airport reveals its $10 billion improvement plan

Auckland Airport reveals its $10 billion improvement plan

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Auckland Airport international terminal

Auckland Airport said it may need to raise capital to fund the overall spending laid out in its capital improvement plan, though the timing and scale of the equity raising was uncertain at this stage.
Photo: RNZ / Samuel Rillstone

Auckland Airport has laid out its 10-year, $10-billion capital improvement plan, which will cover the cost of an integrated domestic terminal.

The regulated spending of $2.6b for the period covering 2023 to 2027 was subject to review by the Commerce Commission, with the charges passed on to airlines and their passengers. A further $3.1b in regulated charges would follow in the next five-year period ending 2033.

While the planned spending does not cover the cost of building a second runway, money had been set aside to re-establish a contingent runway that would be used when the main runway was upgraded in 2028.

Forsyth Barr head of research Andy Bowley said there was a lot of information to digest in the airport’s planned capital spending.

“In summary, the release points to modestly higher capex over the next 10 years than we previously assumed and highlights that regulated non-priced assets will generate a very low return on capital during the pricing period (ending 2027),” Bowley said.

He said the low initial return on capital could potentially help Auckland Airport argue for an elevated aeronautical price path for regulated assets to the Commerce Commission.

A supplied image shows the planned key projects to transform Auckland International Airport.

A supplied image shows the planned key projects to transform Auckland International Airport.
Photo: Supplied / Auckland International Airport

Among the mix of the airport’s regulated and unregulated projects was a new cargo precinct, upgraded roading, an expanded international arrivals hall and expansion of the domestic airfield.

The company said it may need to raise capital to fund the overall spending, though the timing and scale of the equity raising was uncertain at this stage.

$2.6b of priced regulated investment completed and commissioned during the 2023 to 2027 pricing period included:

  • $1.5b Terminal Integration Programme
  • $1.1b in upgrades of the existing domestic terminal building, a new transport hub, airfield expansion & renewals and a new baggage system

$500 million of non-priced regulated investment completed and commissioned during the 2023 to 2027 pricing period included:

  • $100m Terminal Integration Programme
  • $200m relating to the new cargo precinct
  • $200m other upgrades and renewals

$3.1b of priced regulated investment completed and commissioned during the 2028 to 2033 pricing period included:

  • $1.7b Domestic Processor
  • $300m Terminal Integration Programme
  • $1.1b airfield expansion and renewals, contingent runway and regional solution

$500m of non-priced regulated investment completed and commissioned during the 2028 to 2033 pricing period included:

  • $100m non-priced elements of the new Domestic Processor
  • $100m relating to the new cargo precinct
  • $300m relating to fuel upgrades, the new cargo precinct and other renewals

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