The Sydney Airport Holding Pty Ltd (ASX: SYD) share price hasn't had a great year so far, falling 34% in the first 6 months of the year. In comparison, the All Ordinaries Index (ASX: XAO) is down around 12%, year to date.
Sydney Airport is well known for being a reliable high yield stock. However, the global COVID-19 pandemic has sent shock waves through the travel industry and shares of the nation's largest airport have been sent tumbling lower. Sydney Airport shares even went lower than $5 in mid-March, sinking to a level they haven't seen since late 2014.
What caused the Sydney Airport share price to fall?
The Sydney Airport share price was up for the first month of this year, following on from its all-time highs in late 2019. The share price continued to lift following the release of strong full year results in late February. Some highlights from the company's 2019 full year results include:
- Revenue growth of 3.5% on 2018
- Earnings before interest, tax, depreciation and amortisation lifted by 4%
- Capital expenditures were expected to be between $350 million to $450 million in 2020, up from $300 million for 2019.
However, this was about where the good news ended. In a sign of things to come, traffic performance for February showed a dramatic 16.8% fall in month-over-month growth of international passengers due to rising COVID-19 concerns. In the weeks that followed, the Sydney Airport share price fell 37% to its 52-week low of $4.37.
These results were just a precursor to a release 13 days later, which outlined the impact of the coronavirus pandemic on Sydney Airport's finances. Some of the key takeaways from that announcement were as follows:
- Total funds available of $2 billion
- $1.3 billion of debt due in the next 12 months and another $200 million due by November 2021
- Strong cutbacks on discretionary spending.
Remarkably, following this undesirable release, the Sydney Airport share price rebounded strongly to $6.11.
In late April, another $850 million dollars of funds were established from debt facilities to provide insurance during the pandemic. The half year dividend was also suspended, due to the uncertain trading outlook of the company. This may worry investors prioritising income as the forward dividend yield looks unlikely to match the trailing yield.
However, hopes of recovery from the pandemic sent the Sydney Airport share price surging through mid-June, hitting highs of over $7.
Subsequent updates confirmed the low passenger numbers, with the most recent results for May showing a 49.4% decrease in customer traffic.
Foolish takeaway
Since reaching its highs in mid-June, Sydney Airport shares have been on a slide as a rising number of COVID-19 cases continue to worry the travel sector. The share price slumped to a $5.67 finish at the end of June.
In further bad news for investors, the Sydney Airport share price continues to fall, dropping to a lowly $5.35 at the time of writing. Nevertheless, the share remains volatile and investors will be hoping for the easing of COVID-19 restrictions to see it start to regain some of those losses.
