Sydney Airport (ASX:SYD) share price slumps as losses skyrocket by 80%

The company faced a rough 6-months as COVID took its toll.

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A traveller holds her head in her hands at the airport amid border closures and dflight disruptions

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The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is slumping lower this morning. That’s after the company posted its financial results for the 6-months ending 30 June 2021.

At the time of writing, shares in Australia’s gateway airport are down 0.13%, trading for $7.71. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has started the day up 0.46%.

Let’s take a closer look.

Sydney Airport share price in focus after revenue drops 30%

  • Net loss after tax benefit of $97.4 million. This is up 81.7% on the prior corresponding period’s (pcp) loss. This includes a 36% drop in aeronautical revenue and a 40.6% plunge in retail revenue.
  • Revenue down 31.3% on the pcp to $351 million.
  • Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $210.8 million – a 29.8% loss on the pcp.
  • A negative cash flow of $565.5 million for the 6 months.

What happened in the first 6 months for Sydney Airport?

The biggest drag on Sydney Airport’s financials – and the Sydney Airport share price – for the period is undoubtedly the COVID-19 pandemic. Overall passenger numbers declined 36.4% on the pcp – including a 91% plunge in international arrivals.

A brief glimmer of hope came about in April when the Trans-Tasman travel bubble between Australia and New Zealand opened up. Before the pandemic, New Zealand was the number 2 departure spot for wannabe tourists in Oz. As quickly as hope appeared, it vanished. The New Zealand government, along with every state and territory, shut their borders to NSW as the state’s delta outbreak began to take hold. The first cases and initial border restrictions occurred at the end of the period.

What did management say?

Sydney Airport CEO, Geoff Culbert, said

It was a challenging six months, but we were encouraged to see passenger traffic rebound strongly every time borders were open. From January to April, we recovered to 65% of our pre-COVID domestic passengers and in just over two months between late April and June, trans-Tasman traffic recovered to more than 40% of pre-COVID levels.

We’re optimistic that this trend will repeat itself as the vaccine program gains momentum and we see a sustained easing of restrictions.

What’s next for Sydney Airport

The biggest story affecting the Sydney Airport share price at the moment is the attempt to take over the business by a consortium of infrastructure investors. Twice the consortium has tried to buy all the shares in the company and twice it has been rebuffed by the board.

On the second attempt, the board gave the following rationale.

In coming to this conclusion, the current environment does not change the Boards’ view of the long-term value. The Boards also note the rapid increase and acceleration in Australian vaccination rates in recent weeks and the governments’ plans to progressively ease restrictions as the population reaches vaccination targets which will then see the re-opening of travel.

Sydney Airport share price snapshot

Over the past 12 months, the Sydney Airport share price has increased 47.1%. This has been driven mostly by the initial takeover attempt. Its share price has still not recovered since the March 2020 coronavirus selloff.

Sydney Airport has a market capitalisation of approximately $20.8 billion.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. 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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