Regulator's view of Auckland Airport: broker's pick

Listed Auckland International Airport is unlikely to get flayed for making excessive profits by the Commerce Commission, broking firm Forsyth Barr says.

The commission released today its final report into the price structures of Wellington International Airport, co-owned by listed infrastructure company Infratil and the Wellington City Council.

The commission accuses the airport company of drawing excessive profits, prompting airlines to call on the government to curb the airport company's greed.

Forsyth Barr has pulled back its recommendation for Infratil (NZX: IFT) from buy to accumulate.

The commission is also reviewing Auckland International Airport (NZX: AIA), with a draft report expected around the middle of the year.

In a research note issued today, analyst Andy Bowley says Auckland will not be in for the same treatment as Wellington.

Mr Bowley says Auckland is making an estimated return of 8.4% from 2012-17 – which is higher than the 7.1% to 8% range noted in the commission's report as "reasonable", but far lower than Wellington airport's estimated return of between 12.3% and 15.2%.

"We expect a different conclusion from the commission when it concludes on Auckland Airport later this year."

Infratil shares have gained almost 30% in the last 12 months, but have slipped 1% by 3pm today.

AIA shares, meanwhile, are up 15% over the last year and were unchanged by 3pm today, at $2.85, on trade of more than $600,000.

As reported earlier this week, investors are snapping up Auckland Airport shares ahead of an expected positive result later this month.

dwilliams@nbr.co.nz


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