The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price will be on watch on Monday following the release of an update.
What was in Sydney Airport's update?
This morning Sydney Airport released a comprehensive update on how the coronavirus pandemic is impacting its business and its response to the challenging times.
According to the release, total traffic for the month of March was 2 million passengers. This was down 45.1% on the prior corresponding period.
This comprised 0.7 million International passengers (down 47.9%) and 1.3 million Domestic passengers (down 43.4%).
As you would expect, traffic numbers have continued to deteriorate in April after travel restrictions took full effect. For the first 16 days of April, provisional data indicates a 96.1% decrease in International passenger traffic and a 97.4% decrease in Domestic passenger traffic versus the prior corresponding period.
Management expects this to remain the case for as long as current restrictions on travel remain in place.
Response to COVID-19 crisis.
In light of these difficult trading conditions, management advised that it will conserve cash by not declaring an interim distribution for FY 2020.
Combined with $850 million worth of new bank debt facilities, the company believes its balance sheet and liquidity position is strong. As such, at this time it does not see the need to raise equity.
The company is also looking to cut its operating costs materially during the crisis. It is targeting a reduction in operating costs of at least a 35% for the next 12 months from April 1 2020. This will ensure the operating cost base reflects the lower level of activity, without compromising on the safe and secure operations of the airport.
Sydney Airport CEO, Geoff Culbert said: "The entire industry is hurting but we are all in this together and we are working closely with our airline and commercial partners to make sure everyone has the best shot of making it through to the other side, while continuing to operate the airport as an essential service."
"We remain confident in the strength of our balance sheet and liquidity position, but we will continue to tightly manage liquidity and operating and capital expenditure to reflect the significant reduction in passenger traffic at the airport," he concluded.
