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Strong Traffic Performance for Sydney Airport in November

Strong Traffic Performance for Sydney Airport in November
Dec 18, 2015 By Simon Herrmann Tags: SYD

Sydney Airport (ASX:SYD) released a strong November traffic report to its investors, which showed robust growth for both domestic and international travellers. 

Domestic passenger traffic grew by 4.2%, compared to the preceding November. In contrast, International passenger traffic grew by 5.2%. Overall, total passenger traffic grew by 4.7% in November.

Improved airport traffic results were driven mostly by seat capacity growth from new and existing airline customers.

Foreign nationality demand grew by a noticeable 7.5%, with Filipino, Chinese and Korean passengers contributing over 69% to this growth. Additionally, Australians going abroad grew at a respectful 3.8% in November, with China, Hong Kong, Thailand and New Zealand being significant contributors to this growth.

Solid growth in domestic passenger traffic was mainly attributed to seat capacity increases of 4.2%. Brisbane and Melbourne were the biggest beneficiaries of the seat capacity increases in Sydney.

Moreover, Xiamen Airlines and All Nippon Airways were welcomed to Sydney Airport on the 30th November and 12th December respectively. Xiamen Airlines is the 4th largest airline in China, with more than 220 domestic and 30 international and regional routes. Whereas, All Nippon Airways (ANA) is the largest airline in Japan, with 80 international and 112 domestic routes.

With the arrival of these new routes from Xiamen Airlines, this will further reaffirm Sydney’s status as a world leading airport for Chinese long haul airlines.

Whereas with the arrival of ANA, Sydney Airport estimated positive impacts on tourism and trade by bringing an additional 36,000 Japanese visitors to Sydney each year. The company projects that it will contribute a projected $74 million in annual visitor expenditure in NSW.

Overall, the introduction of ANA and Xiamen increases Sydney Airport’s number of airline customers to 45, and an additional seat capacity of 280,000 annually.

Sydney Airport had a strong 1H2015 performance, with 4.6% growth in revenue, along with 2.1% growth in total passengers. These positive results were heavily reflected in 8.7% growth in the 1H dividend distribution, to 12.5 cents.

Investors were pleased with the announcement pushing SYD shares 0.8% higher to $6.23, as at 10.15am. SYD shares have grown 30% year-to-date due to growth in revenue and airport traffic and the arrival of new airlines to the airport.

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Simon Herrmann Author: Simon Herrmann Dec 18, 2015

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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