Pandemic prompts four-year wait for airport recovery


It could take up to four years for airports to return to their 2019 financial performance as the travel restriction caused by the pandemic hit profits.
According to Magellan infrastructure manager, Gerald Stack, there had been a sharp divide between how different categories were affected by the pandemic, with airports and toll roads sitting at the ‘pointy end’ of the market.
The five different categories of infrastructure were toll roads, airports, communication, energy and rail and the dividends of some had been affected worse than others.
Shares in Auckland Airport, Sydney Airport and Qantas were down 20%, 29% and 36% respectively since the start of the year while toll road operator Transurban had fallen by 5.3%.
“Airports have suffered the most and they have suspended or significantly reduced their dividends, tolls are very similar, they have been rebasing their dividends to reflect lower operating cashflow, rail has been able to make a reasonably quick recovery so we have not seen too much impact there,” Stack said.
“Communications is very different, these companies have done very well so there has been no impact and distributions are growing. Energy infrastructure has not been too affected either.
“But at the pointy end – airports and toll roads – we are seeing a suspension or rebasing of dividends and we expect it will be a theme for the next two to three years before we see them re-establish themselves to 2019 levels. It could be four years for airports and two to three years for toll roads and for passengers and traffic to come back and as that happens, we expect financial performance to recover and for dividends to restabilise themselves.”
According to FE Analytics, the Magellan Infrastructure fund has lost 12.6% over one year to 30 September, 2020, versus losses by the infrastructure sector of 11.8%.
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