The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price will be on watch when trading opens tomorrow after the company released its Traffic Performance report for February after hours today.
In today's release, Sydney Airport acknowledged that the announcement from Qantas Airways Limited (ASX: QAN) this morning demonstrates the significant impact the coronavirus is having on the local travel and tourism industry.
With this in mind, Sydney Airport decided to release its monthly traffic update earlier than usual to provide the market with as much clarity as possible.
February passenger numbers down significantly
Total traffic in February 2020 at Sydney Airport amounted to 3.1 million passengers. This number was down quite significantly by 9.3% on the 3.4 million passengers reported for February last year.
Domestic traffic was 4.5% down on the prior year with a total of 2.0 million passengers. Not surprisingly, international traffic was hit more harshly, coming in 16.8% lower against the prior year at 1.1 million for the month.
The company noted that travel across most nationality groups was impacted during February. The greatest impact to passengers came from Chinese and South Korean nationals, with 72.4% and 34.0% declines respectively on the prior year. This reflects the travel restrictions imposed by the Federal Government, reduced passenger capacity by airlines as well as reducing passenger demand.
Sydney Airport's outlook
The company noted that for the first nine days of March, provisional data indicates an even larger drop-off with a 25% decrease in international passenger traffic and a 6% decrease in domestic passenger traffic. However, Sydney Airport was quick to point out that these numbers could change considering the short period of measurement and the usage of market estimates.
Commenting on today's update, Sydney Airport CEO Geoff Culbert said, "Like our airline partners, we are also experiencing the financial impacts of Coronavirus. There is a direct link between passenger arrivals and departures and our aeronautical revenues, so we share the pain of every flight cancellation."
"Everyone in the aviation and tourism industry is hurting and we are in discussions with all of our partners about the best way to support each other during this period," he added.
Culbert also highlighted that the company's balance sheet and liquidity positions remain strong. On this, Sydney Airport's recent bond issue fully refreshes its $1.4 billion of available bank facilities.
Culbert went on to add that the company will continue to assess and invest in projects that deliver capacity and growth over the long term, while also continuing a disciplined approach to managing operating costs. He believes Sydney Airport is well placed to meet the current market challenges due to the changes made to its business strategy last year.
