By any measurement, Sydney Airport is a cash cow of growing
proportions. No wonder the Macquarie Bank-backed organisation wants to
expand its operations deeper into retail and office blocks. The third
quarter and nine months results released this morning shows it’s in a
class of its own.

Sydney Airport revealed
a 16.3% increase in earnings before interest, tax, depreciation and
amortisation to $129.59 million and a 15.2% lift in the nine months to
the end of March to $325.75 million. Results like that will mean more
money for Macquarie by way of performance fees. The airport is earning
more than $17 per passenger in gross profit, which is rising, hitting
$18 in the March quarter.

So where did the money come from. Airlines paid $67.54 million in
the quarter and $196.79 million in the nine months. No wonder Geoff
Dixon at Qantas and Chris Corrigan at Virgin Blue are not big fans of
Sydney Airport. They’re up against a skilled and formidable opponent
running this monopoly and a government that gave them a free hand to go
for their lives after $5.6 billion was handed over three years ago.

“Aeronautical security recovery” amounted to $10.15 million in the
quarter (up 18.8%) and $27.52 million in the nine months (up 13%).
Retail contributed $39.15 million in the quarter and nearly $113
million for the nine months and both were up more than 13%, which is
approaching Woolworths’ class!

Property generated $20.34 million in the quarter and almost $60
million in the nine months. How soon before we see a property trust
rolled out of this in the usual Macquarie fee-making way? “Commercial
trading” generated almost as much as property, $19.6 million for the
quarter and more than $59 million for the nine months. And did they do
it with any more staff? Seems not. Labour costs in the quarter fell
6.4% to just over $8 million and 9% in the nine months to just over $24
million. Sydney Airport CEO and noted infrastructure expert Max
Moore-Wilton isn’t known as ‘Max the Axe’ for nothing.

All costs amounted to just $31.4 million for the quarter and $94.3
million for the nine months, meaning gross profit margins are close to
80%, although the fixed cost of building the airport obviously runs
into the billions.

No wonder the airport’s value has now risen from $5.6 billion to
almost $7 billion. Macquarie Airports units rose 4c to $3.17,
capitalising the business at $4.7 billion, although it remains below
its peak of almost $3.60 earlier this year. It might be a wonderful
asset for Sydney, as Max Moore-Wilton argues, but it’s an even more
glistening one for Macquarie Airports and those at the Millionaires’
Factory.

Peter Fray

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