Qantas, Sydney Airport in terminal deal

“This deal provides certainty”, he said.

“While Sydney Airport’s revenue from the terminal will be more exposed to variability in passenger volumes, we consider such exposure manageable, given that the airport is a gateway for global passengers and residents in Australia’s most populated city”, says Ng.

Under the new deal, Qantas will remain the primary airline customer of T3, with the 74,000 square metre terminal to become a common use terminal from mid-2019.

“We now have certainty about our future operations in Terminal 3 post-2019, and an outcome that is a win-win for both Qantas and Sydney Airport”. But she said over the medium term the airport operator might make some changes to the retail, food and beverage offering, which includes 51 concessions.

“Sydney Airport today announced another strong result due to the continued growth of worldwide passengers, in addition to investment driving yield expansion across all businesses”, said Sydney Airport chief executive, Kerrie Mather.

“The integration of terminals is a key plank in our long-term master plan”, Mather re-iterated.

Sydney Airport will regain day-to-day ownership of the dedicated Qantas domestic terminal next month, paying Qantas $535 million to buy out the airline’s lease some five years ahead of schedule.

Ratings agency Standard & Poor’s reaffirmed its rating on Sydney Airport’s senior secured notes at BBB with a stable outlook. After the transaction, Terminal 3 will generate aeronautical revenue from passengers and rent from retail and property lessees situated in the terminal.

Mr Joyce said Qantas also supported the prospect of domestic and global flights being combined in the same terminal over the medium and longer term.

Sydney Airport Managing Director & CEO Kerrie Mather told investors on the H1 conference call that Heinemann’s sales were “in line with expectations” to date. This arises from the uncertainty as to whether Sydney Airport will exercise its right of first refusal to participate in the development and associated financing of this new airport, as well as the extended timeline for the development which is not expected to commence operations until mid-2020s.

“Use of the terminal by Qantas from 1 September will incur a per-passenger charge at an agreed rate through to 2025”.

In the six months to 30 June 2015, revenue rose a modest 4.6% compared to the prior corresponding period, with earnings before interest and tax (EBIT) rising a healthy 13%.

Qantas is also in talks about the sale of its leases at Melbourne and Perth airports.