Stock Rise: Auckland International Airport Leaps Over 5%

 

The share price for Auckland International Airport Limited [NZX:AIA] has jumped 5.41% in a bullish round of trading today.

Auckland Airport is the main gateway into New Zealand and acts as the country’s biggest transportation hub. Prior to the COVID-19 crisis, it used to serve over 20 million passengers annually. It has a strong presence on the New Zealand Stock Exchange, as well as the Australian Securities Exchange.

Auckland Airport’s share price is currently $5.94, and it has a market capitalisation of $8.06 billion.

 

Why has the [NZX:AIA] share price risen?

 

The COVID-19 lockdown has had a significant impact on the aviation industry, hitting Auckland Airport hard. International arrivals for the year have plunged by 95%. Revenue has been slashed dramatically. The company is only operating at 10% of its previous capacity.

This has encouraged Auckland Airport to commit to a radical turnaround plan to strengthen and reinvigorate its balance sheet.

Here are the key highlights:

  • Auckland Airport has completed its $1.2 billion capital raise at $4.66 per share. This has attracted much interest from institutional and existing retail shareholders. It has likely been oversubscribed.
  • There is now more certainty over the direction of company. CEO Adrian Littlewood has declared the business will shift its focus to a smaller, domestic-focused operation.
  • In light of this, staff reductions are being carried out. A 20% pay cut has been enforced for existing staff. And large-scale capital projects such as a second runaway have been suspended.

This lean-and-mean approach is clear and decisive. It represents a possible rejuvenation of Auckland Airport’s financial position. This sentiment has sent an encouraging signal to the market, creating a measure of confidence. Watchful investors have responded favourably.

 

Where could [NZX:AIA] go from here?

 

Could redemption for the aviation industry be on the horizon?

As New Zealand emerges from Level 4 lockdown and transitions to Level 3, there are some hints now that green shoots are emerging.

Singapore-based think tank OAG has revealed that scheduled capacity for international travel has increased for the first time in 10 weeks. Some regions appear to be bouncing back — albeit in small percentage increases of 1% to 2%.

This is promising, but a full recovery is likely to be lengthy, given the global impact on tourism.

It could be a while yet before Auckland Airport experiences a major resumption of international air travel.

 

Regards,

John Ling

Contributor, WealthMorning.com

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John is the Chief Marketing Officer at Wealth Morning. His responsibilities include marketing, customer service, and compliance. He is an experienced investor and portfolio manager, trading both on his own account and assisting with high net-worth clients. In addition to contributing financial and geopolitical articles to this site, John is a bestselling author in his own right. His international thrillers have appeared on the USA Today and Amazon bestseller lists. John is a shareholder of Wealth Morning.


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