In a Share Investor Q & A with CEO of Auckland International Airport Ltd [AIA.NZX] Simon Moutter coming up tomorrow, Simon gives his view on the dispute that has arisen over the Auckland ports purchase of a stake in Queenstown Airport that has ruffled feathers in Queenstown local political circles and the boardroom at Air New Zealand Ltd [AIR.NZX].He is candid in his answer of my question about the dispute that was instigated by three other parties as he is also candid in the other questions he has answered.
Here is my question from the full interview:
SI - On the purchase of a stake in Queenstown Airport late last year. Please explain, from your point of view, why there has been so much opposition from some quarters down in Queenstown and specifically from Air New Zealand?
SM - The local opposition to the investment seems to be almost totally driven by concerns about the process adopted by the Queenstown Airport board. The Board, a group of independent and local people, decided to issue new shares to Auckland Airport under powers included in the constitution given to it by the Queenstown Lakes District Council.
This power in the constitution was used exactly as designed – to allow the Board to exercise commercial judgement in the best interests of the airport and the community. This is consistent with good corporate governance, which involves having clear rules that delineate the respective roles of shareholders, directors and managers. In contrast, opponents of the deal believe that the Board should have passed the process over to the Council, which would then have undertaken community consultation before making a decision. As would any business, we preferred the certainty achieved through the deal we negotiated with the Board.
We’re now focused on demonstrating to the Council and the Queenstown Lakes community that we are a good shareholder who is making a real, positive contribution to Queenstown Airport and to the regional economy. Our status as NZ’s pre-eminent international airport and our relationships with many of the world’s top airlines mean we can offer value to Queenstown that no other partner can.
Regarding Air New Zealand, I must admit I’ve struggled to understand their opposition. I note they have publicly stated a desire to own a shareholding in Queenstown Airport themselves, so perhaps this is behind their stance. Air New Zealand has claimed our investment will push up airport prices at Queenstown, but I believe this is a red herring as Auckland Airport's current charges to airlines are, on average, lower than Queenstown Airport's. This opposition to an alliance also seems at odds with their own desire to form a similar sort of alliance with Virgin Blue.
Disclosure: I own AIA shares in the Share Investor Portfolio
Share Investor Q & As
Auckland Airport CEO Simon Moutter
Warehouse Group CEO Ian Morrice
Briscoe Group CEO Rod Duke
Ryman Healthcare's CFO Gordon Macleod
Ecoya's Geoff Ross
Xero's Rod Drury
Mainfreight MD Don Braid
Burger Fuel Director Josef Roberts
Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Convention Centre proposal interview with Sky City CEO Nigel Morrison
AIA @ Share Investor
Auckland Council look set for a Auckland Airport Takeover
Auckland City Council new AIA Policy Doc
Make me an offer I cant refuse: Auckland International Airport Ltd
Long Term View: Auckland International Airport
VIDEO - Simon Moutter on Australian Airport Purchase
Auckland Airport Capital Raising a fair call
Auckland International Airport lands Australian Ports
What Infratil sale of Auckland Airport stake means...
Is another Auckland Airport bid likely under a business friendly Government?
Latest Airport coverage
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?
Queenstown Airport Buyout @ Share Investor
Queenstown Airport: Court Case looks set to Drag
Queenstown Airport: Loud Voices & Loyalty
Queenstown Airport: Air New Zealand's Crocodile Tears
Queenstown Airport: AIA purchase good Long-Term but will cost shareholders Short-Term
Discuss this Stock @ Share Investor Forum - Register free
Download AIA Company Reports
c Share Investor 2011
