Airports are a key element in every nation’s economy, and Sydney Airport has been playing a vital role in strengthening that of Australia. The administration decided to sell the airport when they feared that Sydney Airport share price would fall soon. This famous airfield in Sydney has been taken over by a group of investors known as Sydney Aviation Alliance (SAA) for $23.6 billion. This business deal is considered one of the largest corporate takeovers in Australian history.
As a result of this deal, the airport was delisted from the Australia Security Exchange Ltd. (ASX) on March 10, 2022. The airport management reported that 79.29% of the total number of shareholders voted in favour of the acquisition.
SAA is an Australian-led consortium comprising IFM Australian Infrastructure Fund, Australian Retirement Trust, IFM Global Infrastructure Fund, and Global Infrastructure Partners. The Sydney Airport is Australia’s biggest infrastructure asset that plays a vital role in connecting Sydney and Australia with the rest of the world.
Effects of COVID-19 On Sydney Airport Share Price
The pandemic has knocked down the stock values of many business entities and the Sydney Airport share price. The airport authorities were also concerned about recovering from damages caused by COVID-19. It affected passenger traffic and airport business all across the globe, thus becoming a primary reason for selling the airport. The airport has shrugged off a $97.4m half-year loss with the view that Australia is “closer to the end than the beginning of the crisis”.
The airports act as an essential strategic asset to a country’s economy. Still, the pandemic caused a lot of uncertainty to the travel business, causing a great deal of worry to the stakeholders. It also massively affected the Sydney Airport share price on ASX.
Leading Risks That Triggered the Sale
With the share price as a leading factor, some of the major risks that were considered by the airport authorities are:
- The pandemic affected business enormously with international and domestic flight bans and other travel restrictions.
- An expected decline in the Sydney Airport shares price.
- Future competition from the Western Sydney Airport, which is expected to operate at full capacity by 2026 and will be able to function 24 hours a day.
- Uncertainty regarding the aeronautical and commercial revenue.
- The required significant capital expenditure to meet the growing demands of the business and for necessary operations expansion.
- Uncertainty about the future distribution of profits.
- Risk of deteriorating Australia and China’s relationship.
- The airport is capacity constrained, making it difficult for the airlines to find slots at peak periods, which act as a barrier to competition.
A Bit of Background
- In 2010, the airport completed the $500million renovation of its international terminal. The upgrade included improvements in passenger waiting areas and a new baggage system.
- The airport authorities released a draft version of their 2033 master plan for operating international and domestic flights from the same terminals in June 2013.
- The Government approved the airport’s master plan 2033 in February 2014.
- On December 9 2021, when the Australian Competition and Consumer Commission and the European Commission approved the takeover, the Sydney Airport share price on ASX went up to 3%.
- Sydney Airport was among the top 5 best ASX 200 travel shares of 2021, gaining a decent percentage for the calendar year.
- The Sydney Airport share price gained 35% over the course of 2021.
Over the decades, airports have become attractive and rewarding investment opportunities proposing high returns. Sydney Airport outperformed its enormous expansion and acquisition strategies three years prior to its privatisation. Sydney Airport share price has been in the news since its acquisition by the SAA.
That is all about Sydney Airport and the reasons why it was sold. Hopefully, the information provided in this piece of writing is useful and helpful. The Australia Time provides a sea of information about business, technology, science, life, fashion, tourism, history, and more. So, keep visiting us regularly.
Some of the FAQs about Sydney Airport have been discussed below to give you a better insight. Kindly read them.
What is Sydney Airport known as?
The Airport is known as Sydney Kingsford Smith International Airport and is considered a gateway to Australia. It is one of Australia’s busiest airports and the oldest continually operating commercial airport worldwide. The airport was renamed to honour the Australian aviator, Sir Charles Kingsford Smith.
Why does Sydney Airport have a curfew?
The Sydney Airport curfew was imposed to minimise the effect of noise pollution on nearby inhabitants. During the restricted hours, a limited number of aircraft are allowed.
What does Sydney Airport mean for the shareholders?
The shareholders have accepted the deal, and the majority favoured it. Still, before the airport was sold, they raised concerns that they would be required to pay substantial capital gain tax when forced to trade their shares at a pandemic-discounted sale price.
Is Sydney Airport listed on ASX?
The Sydney Airport shares departed their long-term home, Australian Securities Exchange, in March 2022. The airport is no longer listed on the ASX