Global Opportunities Beyond the Radar

Why the Auckland International Airport Share Price Is Up 5.75% Today

Stock Market Trends


The share price for Auckland International Airport Limited [NZX:AIA] has jumped 5.75% this afternoon after coming off a trading halt.

Auckland Airport is the main gateway into New Zealand and acts as the country’s biggest transportation hub.

It previously served over 20 million passengers annually. It has a strong presence on the New Zealand Stock Exchange, as well as the Australian Securities Exchange.

The company’s share price is currently $5.33, and it has a market capitalisation of $6.12 billion.


Why has the Auckland Airport share price risen?


The coronavirus has had most significant impact on two large New Zealand businesses — Air New Zealand [NZX:AIR] and Auckland Airport. With large-scale capital projects in the pipeline, there’s been much concern over the airport’s balance sheet.

To allay these concerns and provide strengthened capital to get through the crisis, the company announced on Monday the strengthening of its balance sheet with an equity raise.

Today the company announced successful completion of the first tranche to institutional investors. The $1 billion raise saw strong global demand. The placement was fully subscribed at the book-build price of $4.66 per share.

There is still the Share Purchase Plan to retail investors to come, allowing many shareholders to increase their share or retain it without dilution.


Here are the key details of the overall raise for [NZX:AIA]



Where could [NZX:AIA] go from here?


It depends on the resumption of air travel, both domestic and international.

Key customer Air New Zealand has been given a lifeline in the form of a government loan. However, the airline has indicated mass lay-offs and its likely re-emergence as a smaller, more domestic-focused carrier after the shock.

This could present a golden opportunity to acquire airport shares at a much-discounted price. Before the coronavirus hit, AIA was trading above $9.

Yet, this crisis has rocked the notion that it is bulletproof market infrastructure. And a full recovery is likely to take a long time, given the global impact on travel and tourism.



Simon Angelo


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