Auckland International Airport Limited (AIA)

[Snoopy]

AIA is a monopoly airport and it deserve a premium.

AIA might not be quite the monopoly international gateway you think it is Jim. Did you know that Christchurch is on a fast track plan to demolish their entire airport and rebuild it again, all within the next couple of years? The new control tower is already up, as is the new multistory parking building.

If you have been to Christchurch before and noted in particular that the international terminal was already of a good standard and is only around five years old you would be right. However, the fact that it is earmarked for demolition already should show you that we here in Christchurch mean business.

There will be no more marching between domestic and international terminals down here (or god forbid going by shuttle bus in some centres), because all facilities will be centrally located. This new centralised structure will allow CIA to charge relatively lower fees to the airlines while maintaining or even increasing profit margins.

AIA will continue to be a respectable domestic hub, to be sure. But from 2012, AIA's days as a sizeable international gateway will be over, bar the odd flight across the tasman. They just won't be able to compete. The current rather extravagant international terminal in Auckland is, fortunately for you shareholders, of sufficient height to be able to store 747s inside of it. So with cosmetic demolition of the interior, there will be enough space to mothball Air New Zealand's by then ageing gas guzzling 747s inside, giving the hapless AIA shareholder a token income on that overbuilt space.

AIA will still 'deserve a premium' even in it's reduced form, but I put it to you that AIA already has a premium now. And today's premium will have to be pricked.

I always top up my holding when it is on a dip and I have NO exit strategy.

Grabbing food out of the food trolleys as they pass down the aisle just because your own plate is getting low is, to my mind, unnecessarily uncouth behaviour. I am sorry if your food addiction has made you so large that you can no longer move in your seat. But isn't claiming that you have 'no exit strategy' a little defeatest? Could they not just sit you down the back near where the food supplies are forklifted in. Then in the event of an emergency simply roll you out of the XL sized cabin door at the back ;-P?

SNOOPY

P.S. The information that I gave you on what is happening at Christchurch Airport was no joke!

[bung5]

AIA will continue to be a respectable domestic hub, to be sure. But from 2012, AIA's days as a sizeable international gateway will be over, bar the odd flight across the tasman. They just won't be able to compete. The current rather extravagant international terminal in Auckland is, fortunately for you shareholders, of sufficient height to be able to store 747s inside of it. So with cosmetic demolition of the interior, there will be enough space to mothball Air New Zealand's by then ageing gas guzzling 747s inside, giving the hapless AIA shareholder a token income on that overbuilt space.

Snoopy you seem to forget that over 75% of the population is in the north island and 1/3 of population is in close proximity to Auckland and South Auckland / Manukau which is the fastest growing City in the country.
These people will never use Christchurch Aiport.

AIA owns truck loads of empty land that is prime property yet to be developed and leased out.

Oh yeah isnt AIA in Manukau?

[Jaa]

Snoopy you seem to forget that over 75% of the population is in the north island and 1/3 of population is in close proximity to Auckland and South Auckland / Manukau which is the fastest growing City in the country.
These people will never use Christchurch Aiport.

Auckland may be close to most of the NZ population but most of the inbound tourists want to go to the South Island and definitely not Auckland. Call it 50/50.

Wellington also has lofty international ambitions to accept direct flights from Asia. Lastly every regional centre in the country wants Trans-Tasman flights.

For now Auckland is benefiting from Air NZ consolidating on Auckland away from Hamilton and Palmerston North. It is also benefiting from what will likely be temporary three way competition between Air NZ, Pacific Blue and JetStar.

However Air NZ has cut the number and guage (plane size) of its flights drastically in the last year, as have other airlines. From the June stats:

"In June Air New Zealand carried 1.1m passengers, down 5.5% on the same month last year"
http://www.nzx.com/markets/NZSX/AIR/...-June-Op-Stats

So there you have it, roughly 5% less people are using AIA this year compared to last.

In the South, Air NZ is adding significant international capacity into Queenstown and away from Dunedin and perhaps Christchurch.

You win some, you lose some, but overall these are hard times to be in the airport business.

[ratkin]

I cant agree with most of this . The big population base will always insure its NZs premier airport.

I would of thought the temporary drop in tourist numbers has provided a great opportunity to buy a quality asset at a cheap price.

Of course if you prefer to buy something when everything appears perfect then good luck to you

[macduffy]

I'm with ratkin on this.

AIA isn't cheap, never has been but it's one of the bluest of blue chips on the NZ. Can't imagine a longterm NZ portfolio without it but that's just IMO.

[bung5]

Agree. Wellington has no plans to extend runway.
AIA bulk land banking will provide good long term growth opportunity

[Jaa]

Agree. Wellington has no plans to extend runway.

Obivously you don't live in Wellington Bung5:
http://www.stuff.co.nz/dominion-post...port-expansion

http://www.wellington-airport.co.nz/...al-growth.html

If AIA is just a property company, it's share price is very highly priced compared to other property shares.

[bung5]

Obivously you don't live in Wellington Bung5:
http://www.stuff.co.nz/dominion-post...port-expansion

http://www.wellington-airport.co.nz/...al-growth.html

If AIA is just a property company, it's share price is very highly priced compared to other property shares.

Ill eat my words on that one.

[minimoke]

Obivously you don't live in Wellington Bung5:
http://www.stuff.co.nz/dominion-post...port-expansion

http://www.wellington-airport.co.nz/...al-growth.html

From the text link: "The draft Master Plan does not include extending the runway"

[Placebo]

From the text link: "The draft Master Plan does not include extending the runway"

Wellington will never be more than a domestic hub with short-haul international flights (transTasman and Pacific). It doesn't have the population to support longer haul flights. Not to mention the impossibility of fully-laden long haul airliners getting off the ground on its 1250m-long runway. Wellington airport is banking on the imminent arrival of the 787 - but Boeing keeps delaying that project. Even if it does finally arrive, there is unlikely to be demand for flights direct to Asia.

Good luck to Christchurch. Are they not aware people now fly direct into Queenstown?

AIA has always been a land bank with an airport and retail on top of it. This is already factored into its SP. I think you guys are optimistic to say it is a `growth' stock. It is largely a utility with a solid cashflow, and near-enough monopoly status. The market already knows about the landbank and is costing this into the price. Where, then is the `growth'?

This is, and always has been, a solid defensive stock, nothing more.