Goff: Airport still ‘strategic investment’

Supercity Mayor Phil Goff says Auckland Airport is entitled to launch a major share issue even if it dilutes the council's own shareholding in a strategic asset

Auckland Council will see its shareholding in the city's international airport diluted during a $1.2b equity raising initiative.

Auckland International Airport shares traded at $7.20 per share on January 3, 2019. Their value rose almost 30 percent to hit $9.18 per share a year later.

Four months on, Auckland Council is watching from the sidelines as new shares are offered up at just $4.50 each in an initiative that will see the council's shareholding fall below 20 percent.

Mayor Phil Goff expressed no regrets about holding onto the shares and not selling a small portion of them earlier. He said the airport had delivered, on average, $16 million in dividends to council annually.

"Hindsight's a wonderful tool. You could have told me six months ago that we'd have a pandemic that would totally close our borders I probably would have thought you'd been drinking," Goff said. 

"We could have sold it 10 years ago like the other councils did - and for a much lower value - without the quite impressive dividends that the company's been paying over that intervening period," he said. 

"The mistake was that most councils decided to get rid of their shareholding."

Goff said it was in everybody's interest that Auckland Airport survive the crisis. 

He said Auckland Council could have maintained its shareholding by stumping up hundreds of millions of dollars for the new shares, but it was facing revenue losses of its own.

"When you're an undertaking as big as Auckland International Airport Limited and suddenly your revenue dries up, which it has, then you need to respond," Goff said.

"They had different paths they could have gone down. They could have looked at a deal with Government with maybe a contingency loan. Or they could have tried to raise the extra equity themselves and they chose to do that," he said.

Auckland Council and BlackRock are the airport's two largest shareholders.

Goff said he still saw the airport as a "strategic investment" for Auckland Council. 

"Right now, during the lowest period of revenue that the company will ever see in its history, it wouldn't make sense to sell the shares," Goff said.

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