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Infratil Monthly Operational Report
25 August 2009
Infratil's Annual Meeting was held
on Monday 17 August 2009. CEO Marko Bogoievski gave a
presentation updating Infratil's situation and progress on
TrustPower, Wellington Airport and New Zealand Bus are performing
to forecast, Infratil Energy Australia is at the lower end of expectations,
the European Airports are under-delivering. Operating income for
2009/10 is now forecast to be up about 5% over last year's $356
Infratil's funding arrangements have worked well throughout the
crisis and have allowed Infratil to continue its investment programme.
There is now evidence of banks return to "business as usual" has
been illustrated by the bidding interest in Energy Developments.
The priority for 2009/10 remains conserving capital by reducing
outlays and selling low growth or low yield assets. The aim is to
reduce debt and to maintain high return investment programmes. Satisfactory
progress is occurring and the success of the capital raising via
the IFTWB warrants helped.
Capital spending is also being suppressed by regulatory uncertainties
at NZ Bus and Wellington Airport. Legacy regulatory issues in those
sectors are consuming a lot of resource and slowing development.
Infratil's continued delivery of good returns for shareholders depends
on the growth of the sectors in which its businesses operate and
in this regard the prospects remain good. Energy is becoming more
expensive and less carbon intensive. The Australian energy sector
is restructuring and deregulating. Air travel growth may be on hold
right now but is being driven by market and demographic trends.
Bus public transport is the quickest and cheapest way to enhance
urban mobility in cities.
TrustPower Results for the Three
Months Ending 30 June 2009
Despite relatively low generation TrustPower's
directors expressed satisfaction with the Company's trading performance.
Over April-June average wholesale electricity prices were low due
to good South Island lake levels, but during July storage was drawn
down and prices began to firm towards more average levels.
TrustPower's customer numbers rose 6,000 over the period and its
New Zealand generation production was 488 GWh, 8% more than the
very low 2008 output, but still 14% below long term projected levels.
North Island hydro and wind generation were both below long term
The Snowtown Wind Farm produced 79 GWh during the quarter, approximately
13% below long term expectation.
Infratil Energy Australia
Customer numbers grew moderately in
July to 399,000 (up 6000), reflecting 30,000 in South Australia,
40,000 in Queensland and 134,000 gas accounts in Victoria, with
most of the balance being electricity accounts in Victoria.
July (and August to date) has seen a continuation of exceptionally
low spot gas prices in Victoria, at around half expected levels.
On most days IEA is long gas (to cover risks of gas supply failures
and cold day sales levels) and excess gas is sold into the spot
market. Gas supply contracts are currently dictated by sellers and
they offer buyers limited flexibility. IEA will have more flexibility
in its portfolio in future years through contractual access to gas
storage. Increased gas powered electricity generation will also
consume surplus gas as it displaces carbon-price affected coal generation.
While IEA’s ability to manage its gas purchasing is improving, the
market rules require change to better allocate and share gas market
risks. At present residential and other inflexible gas customers
are expensive to supply and gas retail prices to customers are higher
than they would be with better allocation of market risks.
The West Australia Kwinana generation project is progressing well.
Infratil has now committed over A$30 million to the development
(by taking up equity in Perth Energy and lifting its ownership to
81%). The project is on schedule to be available for operation in
early spring next year.
Snapper continues to improve reliability,
its range of uses and the number of merchants and transport operators
which use it. Having surpassed the goal of "less than one error
in 10,000 transactions", on established routes Snapper is closing
in on "less than one error in 100,000 transactions, 99.999%".
Last month Snapper processed its 10,000,000th transaction. In October
Snapper expects to pass 100,000 cards on issue.
Snapper cards are now being used to pay for 60% of the rides on buses
which accept them. The goal is 80% by Christmas. The minority using
cash and slowing up the bus will get the message that switching will
save 20% and everyones' time.
By the end of August Snapper cards will be on use on 4 bus companies.
Go Wellington, Valley Flyer, Runciman Motors and Adams Coachlines
in Whangarei. Any Wellingtonian intending to travel to Whangarei for
the Wellington Lions 11 October game against the Northland Taniwha
should take their Snapper. Adams operates a flat fare policy so there
is only "tag on" no "tag off" (as yet there is
no reload network in place in Whangarei so load up your card before
It is expected that at least two more Wellington transport companies
will be accepting Snapper before the end of the year and early in
2010 Wellington's 100s of taxis will also start accepting Snapper.
The services provided by Snapper to the taxis will differ to what
is available to bus companies. Fare payment is the same, but taxis
are not so interested in the information which bus companies need
to ensure their services run when and where they are wanted. Greater
Wellington Regional Council will receive information on "Total
Mobility" trips and otherwise the transaction information only
is provided to Taxicharge which manages the information for individual
Snapper is achieving operator and transport agency recognition that
it is delivering world-class integrated ticketing at low cost which
will lead to other operators taking up the system. It is also becoming
apparent that only Snapper can deliver integrated ticketing at scale
prior to New Zealand's influx of tourists for Rugby World Cup 2011.
In addition to its proven delivery and low cost, another feature of
Snapper which differentiates it relative to other systems is that
it is an open scheme. For instance in Europe there are no large scale
small-value transaction systems which function as Snapper does enabling
payment on many public transport operators as well as to make small-value
Northern region patronage in July was 2.2% higher than a year prior, but the southern region was 4.5% lower (3.3% when adjusted for tertiary holiday differences).
The recession appears to be reducing demand in both regions (in Auckland patronage is down in areas of the region where the economic down turn has probably hit harder).
Auckland patronage has probably been helped by changes to fare terms
and some prices. The cost of public transport to seniors and tertiary
students has been reduced and while this has resulted in some erosion
of adult fares, total patronage appears to have responded positively.
|Northern passenger trips
||4 months to 31 July
||12 months to 31 July
|Southern passenger trips
||4 months to 31 July
||12 months to 31 July
figures in July, 388,595 domestic passengers used Wellington
Airport, a decline of 3.3% compared to July 2008, there were 1%
fewer seats available than a year prior.
Jetstar's commencement of services from Wellington to Auckland and
Christchurch is stimulating traffic on the trunk especially with
resolution of its early teething issues. In July 79% of Jetstar's
service arrived within 15 minutes of the scheduled time.
International passengers were down 6.5% against July 2008, reflecting
a 6% decline in capacity. In particular Sydney experienced a drop
of 11.6% in seat capacity and 8.6% in passengers relative to July
2008, although the anticipated commencement of Pacific Blue services
to Sydney in September 2009 will add competition on this route and
generate passenger growth. Despite Qantas stopping its Brisbane
services, there was an increase in overall passenger numbers on
the Brisbane and Melbourne routes.
Pacific Blue's marketing campaign targeting New Zealand expats in
East Coast Australia contributed to a 24% increase in Visiting Family
and Friends (VFR) travellers in June 2009 compared to June 2008.
Wellington Airport has completed another major infrastructure project
- the $11m runway overlay - on time and on budget, bringing recent
investment in runway quality and safety to a total of $42m. This
includes the new safety areas at each end of the runway.
4 months to 31 July
Work is well underway on the new international
departure terminal, the Rocks. This photograph was taken on 19 August.
||July Freight Tonnes
4 months to 31 July
4 months to 31 July
191,940 passengers used Glasgow Prestwick
Airport in July, 28,000 more than June, but 66,000 less than the
year before. Load factors across the majority of routes held up
versus the prior year, with the decrease in scheduled passengers
being driven primarily by capacity reductions by Ryanair, mainly
on domestic and Irish routes. Ryanair, along with other airlines
and airports, continues to apply pressure to UK and Irish Governments
to drop the aviation taxes due to their economic damage which is
compounding the impact of the recession on the tourism sector.
Ryanair announced the launch of six new sunshine routes with Alicante,
Palma, Gran Canaria, Lanzarote and Ibiza for Summer 2010.
Freight volumes for July were 1,027 tonnes, 30% down on the previous
year, when Polar Air Cargo had scheduled services into Europe
July was another strong month for Kent
with 3,637 tonnes handled during the month, an increase of 234%
on the prior year (1,088 tonnes).
It was the busiest July in the history of the airport's freight
operation. Services were undertaken by nine separate carriers. In
addition Virgin Atlantic operated a series of A340 charters to move
military personnel on behalf of the Ministry of Defence.
Scheduled traffic for July was a record
for Lübeck at 79,515 passengers compared to 55,499 for July
2008 (43% up). The new summer routes to Palma de Mallorca, Alghero
and Alicante delivered strong load factors attracting travellers
from the Hamburg area and also Denmark. The high percentage of outbound
passengers also created a record month for car park patronage.
In the six months to the end of June 2009, Lübeck traffic rose
by 24.9%, making it one of only three of the top 20 German airports
to experience growth. Hamburg Airport traffic declined by 8.2% in
the same period.
The City's search for alternative investors continues in advance
of Infratil's put option becoming exercisable in October.
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