Forum Archive Index - December 2002

["G Stolwyk" <stolwyk@wave.co.nz>]

I want to set out more clearly the cost and cost savings incurred by building runways and refer to the Terminal as well.

1. General.
I have referred to the renewal of the main runway. Sofar $85 mill. has been spent in 4 years, leaving $55 mill. to be spent. That will completely replace this runway at a cost of $140 mill. within a relative short time. No mean feat really!

AIA will then move to the construction of the second runway, the first large section to accommodate non-jet aircraft. That runway to be ready by 2030, but say 2025. Thus, each year a slice of runway totalling some $6.1 mill. per year. will be produced. (Rough NPV numbers).

That is not necessarily constant of course and expenditure may vary depending on the state of the balance sheet. Meanwhile, there is very little expenditure on the new main runway which will last for 40+ years. However, landing fees totalling the current $53.6 mill. will continue to be paid in my opinion.

It is quite obvious that while part of the landing fee was used to replace the main runway to the tune of $20 mill+ per year, we now only need some $6.1 mill. or thereabouts. That is very positive for shareholders (Greater cashflow and profits). It is also possible that initially the progress may be speeded up.

2. Discretionary spending.
I believe that spending on construction of new runways is flexible to some extent. AIA now says that "major work" is not now scheduled till the 2003/04 year. This could strenghten any profit forecasts made.
My projection for the current year is 25 cents per share and a dividend of 20 cents; I am comfortable with that.

3. Other Capital spending.
People don't realize how much money has been spent on the terminal itself: $22.5 mill. was spent since Febr. 2001 on expansion and it was operational by Nov. of the same year. Further expansion is continuing.

4. Summary: Within the next 2 years, major capital expenditure will cease and debt can be repaid. It is at that point that AIA will stand out: solid cashflows!

Gerry

********************************************************

I approached AIA with 2 questions and here are the answers:

1. When will work start on the second runway?

1. Answ: Current estimate 2007/8
Current cost estimate, initial investment - $30-35 million

2. What is the state of the Resource consents?

2.Answ.: Resource consent received.

Noise obligations agreed.

Survey of requirements to be undertaken next year.

--------------------

My comment: The $30-$35 mill. referred to will be spread over some years. 
I referred to a remaining expenditure of $55 mill on the MAIN runway.

This works out at about $14 mill. per year over 4 years. At the conclusion, work will start on the second runway - See above.

Gerry