Auckland Airport defends billions in infrastructure spending as shareholders press for higher dividend

At Auckland Airport's annual shareholder meeting, the loudest argument was about what to do with the money. One shareholder wanted a higher dividend. The company's leaders said the cash was going into concrete, and that holding back now would only make things worse later.

The sharpest defence came from outgoing director Mark Binns, who said that because he was leaving, he could speak freely without worrying about being fired. He said it was very easy to sit back on your laurels and watch the money come in. Failing to invest in good infrastructure, he argued, simply deferred the day of reckoning. Auckland, he said, had to be a good gateway that represented New Zealand's qualities and values. "We don't spend millions. We spend billions," he said.

Chief financial officer Stewart Reynolds said the company weighed the risks of its investments carefully. The current payout ratio, he said, reflected where the airport sits in its investment phase. The centrepiece of that phase is an integrated terminal for domestic jet and international services, expected to be finished in 2029.

Chair Patrick Hoare, who spoke of a long period of underinvestment before the current multibillion-dollar overhaul, was blunt about the old facilities. "We need to think about infrastructure ... The old domestic terminal's a disgrace," she said. The terminal is 60 years old.

The same shareholder who complained about dividends also questioned the appointment of Sean Donohue to the board. Donohue is a US resident and a former chief executive of Dallas Fort Worth International Airport. The shareholder said he was confused about how Donohue would operate and what value he would add. Hoare replied that the company did not wish to be myopic by having only Kiwis around the table. DFW was the fourth-busiest airport in the world last year, with 85.6 million passengers, against Auckland's 19.4 million in its latest financial year. Donohue said being based in the US would not make travelling to New Zealand for airport business a problem. Asked whether he flew Air New Zealand, he admitted he usually flew Qantas out of New York's JFK. Airport leaders added that he had helped DFW build a good relationship with its main airline, American Airlines.

Airlines and their complaints about landing fees drew a dim view from Hoare. Air New Zealand has complained numerous times about aviation system costs, including airport charges. Hoare said that for domestic jet passengers the charge of $11.85 per passenger was roughly the price of a coffee and a muffin. Chief executive Carrie Hurihanganui said more airline capacity was one part of growing tourism, but that airport charges were not a defining factor. The sector, she said, had to work with promotional agencies such as Tourism New Zealand. On artificial intelligence, she said it might slow job growth, but the airport's often highly physical working environment meant AI would not eliminate new jobs.

Queenstown also came up. One shareholder asked whether Auckland would expand its 24.99% stake in Queenstown Airport. The answer was that this was unlikely, because the majority owner, the Queenstown Lakes District Council, would not be happy with it. Another shareholder said Queenstown charged too much for parking. Hoare said Auckland stayed out of the South Island airport's operations, but told the shareholder to take the question to Auckland's chief strategic planning officer. "Do feel free to find her," she said, to chuckles from the crowd.

Hoare also said the airport was unhappy about the prospect of further Commerce Commission probes into airport price-setting. The next five-year price-setting event begins on July 1 next year. More regulatory interference, she said, risked "shifting the goalposts" for investors and would affect the attractiveness of New Zealand as an investment location.

The votes went the board's way. Donohue was elected with 99.97% in favour. Hoare, chair since 2017, was re-elected with 95.81% and said this would be her final three-year term in the role. Shares were trading mid-afternoon at $8.29, up 7c. Separately, Christchurch Airport appointed former Air NZ chief financial officer Richard Thomson as a director. His resignation was announced in April, and he left the airline in late August after more than five years.