AIRPORT GROUP OBJECTIVES

Investment Management Objectives

Morrison & Co’s depth of knowledge and commercial capability regarding airports and major infrastructure projects is extensive and an enables Infratil to be a strong and capable partner guiding the future growth and development of the airports it invests in.

Specifically, Morrison & Co is able to assist airports and their owners to:

  • build a strong and successful business;
  • expand the market base of airports including developing their scheduled and charter passenger business and air freight;
  • significantly lift the airport’s retail and trading performance;
  • maximise property development opportunities;
  • create the capacity for new investment in infrastructure/expanded capacity when needed;
  • manage master planning and airport expansion programmes to ensure cost effective provision of modern, attractive and operationally efficient facilities;
  • develop efficient capital structures and gain access to equity and debt capital required meet the airport’s current and future funding needs; and
  • integrate the airport operations and development activities with those of the surrounding community to maximise the airport’s contribution to the regional economy.

Effective application of these skills has created significant value uplift for Infratil through its majority shareholdings in both Wellington International Airport and Glasgow Prestwick International Airport.

Wellington International Airport (66% Infratil-owned)

Since Infratil took ownership of Wellington International Airport in 1998, a new NZ$120 million passenger terminal has been completed and non-aeronautical revenues per passenger have increased by 110%.

Although the airport is mature in terms of traffic volumes, Wellington International Airport’s strong cash-flow growth is illustrated by its Earnings before Interest, Depreciation and Amortisation (EBITDA) growing by 58% since acquisition.

The relationship with Wellington City Council, Infratil’s public sector co-shareholder in Wellington International Airport, is a very strong and co-operative one.

Glasgow Prestwick International Airport (100% Infratil-owned)

At Glasgow Prestwick International Airport, a successful relationship with Ryanair has seen traffic volumes virtually double over the last two years, with total passenger numbers projected to reach 1.5 million in the 2003 financial year.

Glasgow Prestwick International Airport has also been successful in attracting charter and freight traffic, with charter passengers increasing by more than 50% in the 2002 financial year alone with strong future growth predicted.

Morrison & Co has project managed a retail and commercial redevelopment programme at Glasgow Prestwick that has already seen non aviation income per passenger increase by 50% - maximisation of non aviation revenue being so critical when trying to cope with the low aeronautical fee expectations of low cost carriers.

Investment Strategy

Infratil and Morrison & Co manage long term shareholdings in infrastructure companies and public utilities. The investment strategy can be summarised as follows:

  • Being a long term investor that requires no pre-defined exit mechanism;
  • Adding value as an active and internationally experienced investor with significant operational expertise;
  • Seeking out Public-Private Partnership opportunities, recognising the strengths of working with public sector shareholders;
  • Being a supportive partner that provides its co-investors with its expertise and long term development capital;
  • Seeking to provide this expertise though Board representation and not through expensive management contracts;
  • Seeking investments that provide dividend growth and increases in capital value.

Working in Partnership

Infratil and Morrison & Co recognise the importance of an airport as a regional gateway and economic engine and the mutual interdependence between airport and the economic prosperity of the surrounding community.

Infratil and Morrison & Co also have considerable experience in public-private partnerships investing alongside government entities.

Our proven track record in New Zealand, Australia and Europe includes entering into contractual relationships with city councils and other public sector bodies, going well beyond the scope of normal shareholders’ agreements.

From the perspective of our public sector partners, this means:

Wellington Mayor Mark Blumsky (2000):

“In 1998 when the Crown sold its majority stake in Wellington International Airport there was a natural level of concern within Council as to how relations would develop with the new private sector majority owner.

Since then Wellington City has had very positive experiences with its co-shareholder and with its investment in the Airport. In the last year we received $5.8 million from our investment in WIAL which is more than what had been received by the City in the preceding nine years combined.

Infratil’s willingness to consult with Council on important decisions such as last year’s capital restructure of WIAL has also been appreciated. From the perspective of the WIAL Board the City can be confident that WIAL is being well managed and enjoys an international calibre of expertise.”

Tauranga Mayor Jan Beange (2002):

“We are fortunate to have Infratil as a key shareholder in the City’s two major companies, TrustPower and Port of Tauranga. Infratil’s desire for improved shareholder returns and healthy wealth creation have helped shape the economic and social success of these businesses in our region.”