Sydney airport sale raises record $3.2B


Sydney Airport is easily the largest in Australia, accounting for 50 percent of international traffic

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- A consortium led by Australia's Macquarie Bank has bought Sydney Airport for almost $3.2 billion in what is claimed to be the world's largest airport trade sale.

The sale is well above initial price estimates of $2.5 billion to $2.85 billion.

Sydney Airport is easily Australia's biggest international gateway. It handles about 50 percent of all international traffic and 26 percent of domestic airline traffic.

The sale was announced Tuesday morning by the Australian government, which said the price of Aust. $5.588 billion reflected "fair value". It said it will use the proceeds to pay down government debt.

The price represents a multiple of 14.3 times the airport's forecast earnings for the 2002-03 financial year, before interest, tax, depreciation and amortization (EBITDA).

Qantas profit


Ansett, once the No. 2 carrier in Australia, stopped operating in March this year

The airport deal includes A$192 million for the terminal owned by the now-defunct Ansett Airlines, once the No.2 Australian carrier. It fell into difficulties last September and finally ceased flying in March(Full Story).

The government's announcement comes just one day after Qantas Airways, the airport's bigger user and the dominant carrier in Australia, said it was lifting its pre-tax profit forecast for the year ending on June 30 to more than A$605 million.

Qantas said the better result reflected in part a faster recovery in the international aviation market.

The winning consortium for Sydney, Southern Cross Airports Corporation, is led by Macquarie Bank and includes German airport operator Hochtief AirPort and the Commonwealth Bank of Australia.

It beat bids by two other groups: the Sydney Gateway consortium led by Australian insurance and funds management giant AMP, partnered with Deutsche Bank and Hong Kong's Cheung Kong Infrastructure; and the Connect consortium led by ABN Amro, partnered with Europe's Frankfurt Airport and Schipol Group.

Largest shareholder

In a statement Tuesday after the government's announcement, Macquarie Bank's Macquarie Airports Management Ltd (MAp) said it would be the largest shareholder with a 40 percent stake in the winning consortium.

Other key investors include Hochtief AirPort with 15 percent, Spanish constructor Ferrovial Aeropuertos with 20 percent and the Macquarie Airports Group (MAG) with 12 percent.

Shares in Macquarie Bank closed 3.1 percent higher Tuesday at A$31.00.

In 2000, Sydney airport ranked 36th in the world with 23.6 million passengers. It also handled more than 560,000 metric tons of air cargo.

The International Air Transport Association (IATA) predicts 63 million passengers, including 23 million international travellers, will be using Sydney Airport by 2020.

IATA also said last week its latest airport survey showed passengers rated Sydney among the top airports in the world. Sydney ranked sixth in passenger satisfaction, behind Dubai, Singapore, Copenhagen, Incheon (Seoul) and Helsinki(Full Story).

Australia's Minister for Finance and Administration, Senator Nick Minchin, said the deal was the biggest government trade sale in Australian history.

The $3.2 billion price-tag for Sydney exceeds the total amount raised from Australia's 17 other airport privatisations. The biggest of those was Brisbane Airport, sold in 1997 for A$1.4 billion, and Melbourne Airport, sold in the same year for A$1.3 billion.

Perth Airport raised $643 million in 1997, while Adelaide and neighboring Parafield airports were sold in 1998 for about A$364 million.

The Sydney sale was to have gone ahead last year, but it was delayed after business and tourism confidence faltered in the wake of the September 11 terror attacks in the United States.

Meanwhile in Japan, sources say that Hokkaido International Airline, known as Air Do, plans to file for bankruptcy, seven years after its inception(Full Story).