Commercial revenues underpin growth at Sydney

Tina Milton

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The retail business has performed solidly at Sydney airport as revenues grew by 4.4% for the year to 30 June 2006

Sydney Airport has reported its retail business continued to "perform solidly" for the year to 30 June 2006 as revenues were up by 4.4% to A$155.9m ($116.7m) on 2005. Annual results indicated that total revenues grew ahead of passenger growth at 6.5% reflecting improved yields from all commercial businesses, while earnings increased by 6.1%.

Sydney Airport Corp CEO Russell Balding said: "Growth in Sydney Airport's commercial businesses has continued to underpin the earnings growth. Retail revenues have benefited from a broader range of products and the introduction of further brands at terminal one as well as improvements in the retail offering such as the new food court at T2.

"Significant ongoing investment is planned over the next five years to cater for the next phase of Sydney Airport's growth. Project STAR [a five-year programme to upgrade facilities at T1] will result in T1 and the airfield being upgraded to provide state of the art facilities including: self service check-in; an improved baggage system; aircraft handling facilities for next generation aircraft and new retail and food and beverage facilities identified by customers in recent feedback and market research."

New jewellery concepts have been introduced at the international terminal over the last quarter, while at T2 the new food court was completed and new specialty retail offers were opened as part of the 5,000sq m (53,800sq ft) redevelopment of the terminal. The $A20m ($14.9m) redevelopment will be completed early in 2007, with the introduction of further retail brands.

Sydney also revealed plans to refinance part of its existing bank debt and maturing capital market facilities, and to raise new debt facilities to fund its next stage of growth. It intends to approach the market to implement the refinance strategy in two stages, with the bulk to be arranged by December 2006 and the balance in 2007.

Balding explained: "We are now preparing the airport for the next phase of growth driven by a combination of a new generation of aircraft and further modernisation of passenger facilitation processes to continue to increase customer service levels."

Sydney Airport Corp's management board is expected to approve the commercial department's nomination for the airport's main duty-free contract soon. Incumbent retailer The Nuance Group is believed to be one of the frontrunners, as is DFS Group.