Sydney Airport has warned of a “subdued” outlook for flying due to the omicron outbreak and restrictions on people moving between countries as investors scrutinise the details of a $23.6 billion takeover bid.
The airport said on Monday that international passenger numbers – its biggest source of income – were down 86 per cent in the first two weeks of December compared with same period in 2019 (before the COVID-19 outbreak) and that domestic passenger numbers were down 69 per cent over the same period.
“The outlook for passenger traffic remains subdued due to tightly controlled inbound international travel, entry requirements and restrictions into key overseas markets, and the impact of the omicron outbreak,” the airport said.
In November, some 91,000 international passengers passed through the airport, down 93 per cent on the same period in 2019, and 407,000 domestic passengers, down 83 per cent.
However, there are more local and international passengers travelling through the airport than there were a year ago, with domestic flyers up by one third and international flyers doubling compared to November 2020.
Airlines have been adding flights to all states except Western Australia – which remains closed to families but has let business executives travel in and out – after border restrictions eased.
The passenger update comes as the airport sends investors information on a proposed $23.6 billion takeover ahead of a vote to be held on February 3.
The airport has recommended investors accept a cash takeover offer of $8.75 per share, citing an independent expert report from Kroll, which has assessed the underlying value of the airport at between $7.94 and $8.86 per share.
Kroll’s valuation assumes that the airport’s domestic passenger numbers return to pre-pandemic levels by 2023, and that international passenger numbers rebound by 2024.
If investors accept the takeover, they will be selling to a consortium dominated by New York-based fund Global Infrastructure Partners (GIP) – which already owns stakes in the Port of Melbourne and rail group Pacific National – and IFM Investors.
The ownership structure of the consortium is complicated.
After the takeover occurs, GIP will have a direct 34 per cent stake while IFM Investors’ global infrastructure fund will have a 15 per cent direct stake, taking total direct ownership by foreign-domiciled funds to 49 percent.
But GIP and IFM’s global funds will also own more of the airport via the Sydney Aviation Alliance Australian Investment Trust.
This trust, which will directly own another 35.99 per cent of the airport, includes IFM’s Australian Infrastructure Fund with 41.65 per cent; Australian Super and QSuper with 20.8 per cent each; and IFM’s Global infrastructure fund and GIP with 8.34 per cent each.
The bidders argue that as GIP’s and IFM’s global infrastructure funds include some Australian investors, the airport is “anticipated to have majority indirect beneficial Australian ownership” after the takeover.
Australia’s Airport’s Act stipulates that local airports must be majority-Australian owned.
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