Sydney Airport traffic plunges 97pc in first 16 days of April

Sydney Airport will borrow $850m and scrap its half-year dividend after warning of more passenger falls to come.

A driver waits for arrivals at Sydney International Airport on Friday 27 March 2020. Picture: Nikki Short

Australia’s biggest gateway, Sydney Airport, will borrow $850m and scrap its half-year dividend after recording a 97 per cent fall in passenger numbers this month, and warning of more of the same to come.

But in a surprising move, the airport has given its employees a “six month job guarantee” promising to preserve all jobs on full pay until October 1.

Domestic passengers plunged 97.4 per cent and international travellers were down 96.1 per cent in the first 16 days of April compared to the same period last year.

The extraordinary decreases were recorded in an update to the ASX, announcing the airport would scrap the half-year dividend for shareholders and borrow $850m to see it through the coronavirus crisis.

The report warned the dramatic drop in passenger numbers experienced in April, including the normally busy Easter period, was expected to be replayed in the months ahead “as current restrictions on travel remained in place”.

“The extent and duration of the downturn in traffic will continue to be dependent to a large extent on the measures taken by governments in response to COVID-19,” the update said.

In March passenger numbers were down 45 per cent compared to the same month last year, after a 70 per cent in visitors from China, a 64 per cent drop-off in Japanese travellers and 49.4 per cent decline in Americans.

CEO Geoff Culbert said the entire industry was hurting but “they were all in this together”.

“We are working closely with our airline and commercial partners to make sure everyone has the best shot of making it through to the other side while continuing to operate the airport as an essential service,” Mr Culbert said.

“We remain confident in the strength of our balance sheet and liquidity position but we will continue to tightly manage liquidity and operating and capital expenditure to reflect the significant reduction in passenger traffic at the airport.”

All permanent, part-time and fixed term workers employed by the airport have been given a “six month job guarantee” by Mr Culbert, valid from April 1.

In addition those directly or indirectly affected by COVID-19 would have access to unlimited personal, carers and sick leave.

“People who work at airports are on the frontline of this crisis and the support we are providing reflects that,” said Mr Culbert.

“We are fighting hard to preserve every single job at the airport.”

The update also revealed Sydney Airport had obtained $850m of additional bank debt facilities to increase its liquidity to $2.8bn, in the form of $450m cash, $1.75bn in undrawn bank facilities and $600m of new bond market debt.

The $2.8bn was “comfortably in excess” of the $1.3bn in debt maturing over the next 12-months and expected capital expenditure of between $150m and $200m.

There would be no interim dividend for shareholders for the half year ending June 30, 2020 and directors would reduce their fees by 20 per cent for the period from April 1 to June 30.

Mr Culbert would also take a 20 per cent pay cut for the three months.

Capital expenditure would focus on essential projects targeting safety, maintenance and asset resilience, although some non-essential projects would be considered to take advantage of the “largely dormant” status of the terminal and airfield.

Negotiations were underway with retail tenants in adherence to guidelines established by the federal government for the COVID-19 crisis with the aim of reaching “fair and equitable outcomes”.

On Friday, the airport announced it had reached agreement with the federal government to close the east-west runway so it could be used to accommodate up to 50 grounded aircraft.

A flight information board showing several cancelled flights, at Sydney Domestic Airport. Picture: AAP Image/James Gourley.