Sydney Airport (ASX: SYD) shares fell 2% after announcing that passenger numbers were down heavily in May 2020.
What is Sydney Airport?
Sydney Airport is the company that operates the Kingsford Smith Airport, it currently has a 99-year lease on the airport but it will revert back to government ownership at the end of this century. According to Sydney Airport, as of 2019, it generates around $31 billion in economic activity for Australia each year. That’s equivalent to more than 6% of the NSW economy.
What did the airport operator announce?
Over the month of May, domestic passengers were down 97.2% to 62,000 and international passengers were down 97.7% to 29,000. This meant that total passengers dropped by 97.4% to 92,000. Total passengers in the year to date were down 49.4%, which includes the non-COVID-19 months at the start of the year.
Sydney Airport said it expects the downturn in passenger traffic to persist until government travel restrictions are eased.
There were heavy declines across the board. Australian passengers were down 98.7%, Chinese passengers were down 95.9%, New Zealand passengers were down 97.7%, South Korean passengers were down 94.2%, UK passengers were down 96.4%, USA passengers were down 98.6% and Germany passengers were down 94.3%.
However, interestingly, Saudi Arabian passengers were up 19%.
If passengers eventually return to Sydney Airport then it could be a cheap infrastructure buy at a share price of around $6, particularly with how low the official RBA interest rate is. However, I think it could take until at least 2021 before passengers start returning in modest numbers. This obviously has a knock-on effect to various parts of the Aussie economy. I’d want to be picky with my share picks this year.
[ls_content_block id=”14945″ para=”paragraphs”]
Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
