Auckland International Airport Ltd to sell Queensland Airports stake

Auckland International Airport Ltd (ASX: AIA) has announced this morning that it is advising the market it will offer its 24.6% stake of North Queensland Airports for sale to existing investors for $370 million.

The company said that whilst all existing North Queensland investors are entitled to purchase their pro rata share, Perron Investments and The Infrastructure Fund have agreed to accept up to the entire offer.

Auckland Airport Chief Executive, Adrian Littlewood, said “Following the completion of our strategic review in August 2017, we have undertaken discussions with both existing investors and third parties regarding a potential purchase of our interest in North Queensland Airports.”

“After an extensive process, we are very pleased to have reached a position that will result in a sale of our entire interest and that two existing and experienced infrastructure investors have agreed to support North Queensland Airports in the next stage of its development”.

“The sale will enable Auckland Airport to focus attention on growing its New Zealand travel, trade and tourism businesses and to recycle the proceeds into supporting the significant step up in aeronautical investment at Auckland Airport over the next five years and that we recently announced with our aeronautical charges for FY18 to FY22.”

The company also released its monthly passengers update for November 2017 today. Total international passengers grew by 5.5% compared to November 2016. Total domestic passengers increased by 10.8% and total passengers overall increased by 8%.

The biggest increase of arrivals by country of last residence was surprisingly not China, as I might have guessed at first. The United Kingdom had the biggest increase with 11.5% and the USA had the second largest increase at 10.8%.

Foolish takeaway

I think management have made the right choice by choosing to sell and utilise the cash to invest in Auckland Airport. As the passenger numbers suggest, there is a lot of growth for the business to take advantage of by offering more services. I actually prefer Auckland Airport to Sydney Airport Holdings Ltd (ASX: SYD) as an investment idea.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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