All you need to know before Sydney Airport says Good-Bye

Sydney Airport (ASX:SYD) will be suspended from trading on ASX from 09 February 2022. In the announcement dated 03 February 2022, the Company announced that SYD shares would get transferred to Sydney Aviation Alliance Pty Ltd.

At the Scheme Meetings on 03 February 2022, Sydney Airport Security holders agreed by the requisite majorities the company scheme of arrangement and the trust scheme under which Sydney Aviation Alliance Pty Ltd will acquire all of the securities in Sydney Airport.

However, the scheme is subject to Court approval and some other conditions precedent as mentioned in the Scheme Booklet dated 17 December 2021. However, the Company has applied to the Court for orders approving the company scheme of arrangement as well as for the provision of the Second Judicial Advice concerning the trust scheme at a hearing on Wednesday, 9 February 2022 at the Supreme Court of New South Wales.

Once the Court approves the scheme, the Company would lodge an office copy of the Court orders and the executed SAT1 Trust Supplemental Deed with the ASIC on 9 February 2022. If this occurs, then SYD would apply for its securities to be suspended from trading on the ASX from the market close on 09 February 2022.

In the Scheme Implementation Deed, the Company highlighted that it is appropriate for SYD shareholders, in considering the Schemes, to be aware of several general risk factors and risks specific to Sydney Airport and the industries in which it operates. Some of the risks include:

• COVID-19 uncertainty
• Pandemic risk
• Passenger and aircraft movement
• General economic conditions
• Airline fee risk
• Access to capital
• Financing covenants
• Reliance on the third party
• Reliance on a relatively small number of airline customers
• Regulatory risk and changes in government policy
• Operational risk
• Competition risk
• Political and sovereign risk.
• Aircraft accidents or incidents
• Physical security incidents
• Actions by airlines
• Risks relating to commercial operation

It highlighted that these risks could hurt the operating and financial performance of the Company along with the value of Sydney Airport and the potential for any future dividends.

Sydney Airport made its ASX debut in April 2002 and is amongst the oldest continually operating airports in the world. It is amongst the most important pieces of infrastructure in Australia. It is an important part of the transport network, and it links to over 90 destinations worldwide.

It has made a significant contribution to the local as well as national economies. From 2012 till 2019, the Company has constantly provided dividends to its shareholders. However, the Company was hit significantly because of the COVID-19 pandemic.

In 2020 and 2021, the Company could not provide any dividends to its shareholders.

From FY2016 till FY2019, the Company constantly reported an increase in the topline and bottom-line numbers. However, in FY2020 its revenue dropped significantly, and the Company reported a loss of AU$146.1 million.

The pandemic adversely hit the Company during 1H FY2021 (period ended 30 June 2021). The number of passengers declined by 36.4% to 6 million. EBITDA dropped by 41.9% to AU$187.9 million. Revenue declined by 31.3% to AU$351 million.

The performance of the Company during the period was driven by domestic passenger traffic, aviation revenue, retain revenue, property, and car rental revenue and parking and growing transport revenue.

In December 2021, the Company witnessed a 44% growth in domestic passengers compared to the previous corresponding period. However, the domestic passengers were 59.6% below the numbers in December 2019.

Similarly, the number of international passengers increased massively by 465.4% compared to the previous corresponding period. However, it was 84% below the level in 2019.

Before the Company gets delisted from the ASX, let us look at some of its major achievements so far.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Suite 1A, Level 2, 802-808 Pacific Highway, Gordon NSW 2072, Australia | 1800 005 780 | info@kapitales.com.au