Auckland Airport (ASX:AIA) share price dips in afternoon trade

COVID-19 continues to impact ASX travel shares.

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The Auckland International Airport Limited (ASX: AIA) share price is edging lower in afternoon trade. At the time of writing, the share price of the airport is down 0.59% to $6.72.

Below we take a look at the ASX travel share's latest trading update.

What did the trading update report?

Auckland Airport's share price is sliding after the company reported on the continuing uncertainty to its business outlook due to COVID-19. It said international travel numbers are expected to be impacted for the rest of 2021 as people remain unsure about potential future border restrictions.

Adrian Littlewood, Auckland Airport's CEO, pointed to the new outbreaks in Australia as undermining passenger confidence. Littlewood said domestic and Cook Islands passenger demand was strong, while international demand was at "historically low levels"

Littlewood said that the path to recovery, as evidenced overseas, is via widespread vaccination. He added:

In line with this, the international passenger recovery in New Zealand is unlikely to materially change until the vaccination program rolls out to a significant number of New Zealanders across the next few months.

As a result, international passenger numbers and those business lines linked to passenger volumes, including retail and transport, may remain very subdued for the remainder of the calendar year. However, we do expect steady recovery from early in calendar year 2022.

The company is continuing to support retailers at its international terminals with ongoing rent relief. Littlewood said that due to the slower than initially expected return in passenger numbers, retail income will continue to be impacted at the airport. Total retail income for the 2022 financial year is forecast to be $25–35 million.

Auckland Airport has already increased its operations in anticipation of a full reopening, along with accelerating repairs and maintenance. It forecast operating costs being in the range of $160–175 million in the 2022 financial year.

After repaying $65 million in February, Auckland Airport has now repaid the remaining $425 million of its USPP borrowings.

Commenting on the repayment, Littlewood said, "When combined with the cancellation of cross-currency hedges associated with the USPP borrowings as well as some future fixed interest rate hedges this is expected to reduce Auckland Airport's 2022 financial year interest expense by around $10 million."

Earnings guidance for the 2021 financial year is unchanged, with a forecast loss after in the range of $35–55 million.

Auckland Airport share price

While still down more than 23% from its pre-COVID levels, the Auckland Airport share price has gained 13% over the past 12 months. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 23% in that same time.

Year-to-date the Auckland Airport share price is down 5%.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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