The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is down after its traffic update for December 2020 was released.
Sydney Airport Holdings operates the Kingsford Smith Airport on a 99-year lease which will revert back to government ownership at the end of this century.
Sydney Airport traffic update
The company announced that total passenger traffic in December 2020 was 703,000 passengers, which is a decline of 82.2% from the prior corresponding period.
Breaking the total down, domestic travellers made up 659,000, down 71.9%. It saw a modest recovery in domestic travel numbers during a brief window of unrestricted travel between all states and territories during the month.
International passenger numbers were 44,000, which is a decline of 97.3% on the prior corresponding period, this number is fairly consistent with last month’s update.
The company said that the downturn in international passenger traffic is expected to persist until government travel restrictions ease.
Australian border update
Yesterday the Australian Government gave two murky updates on the future of international travel. The Guardian quoted Australia’s chief medical officer Paul Kelly, he said: “on travel, we have to be very careful and we have said this on many occasions, I have said it, the first vaccinations, as they roll out in a few weeks in Australia, will not change everything back to normal.
There will be a process through 2021 of returning to some sort of normal…unfortunately, international borders changes will be one of the last things to change rather than the first”.
Paul Kelly also said he is open to international travel bubbles, particularly with New Zealand.
Just two hours later the Prime Minister Scott Morrison tried to put a more positive spin on things by saying the government will monitor how things play out over the course of the year.
Are Sydney Airport shares a buying opportunity?
If it’s shorter term dividends that you’re looking for, you’ll be sorely disappointed. Last month the company said that there will be no distribution paid in its upcoming result.
If share price growth is what you’re looking for, there is certainly a long way to go before Sydney Airport is back to the operating numbers it saw a year ago, so there could be more upside. The share price is up 33% from its lowest point in the COVID-19 crash, but there is too much uncertainty surrounding the short and medium term for my liking.
As a whole, I think that the Australian COVID-19 situation is fairly stable and in a great place when compared to the rest of the world. Domestic travel could see a big up-tick if state borders can remain open to each other.
If you’re thinking long term, beyond 2021, Sydney Airport could be an intriguing share pick.
I think that we will have to see a global uptake of COVID-19 vaccination and also a trend of lower COVID-19 cases worldwide before Sydney Airport can reach its full potential.
There are other ASX growth shares within the recovery-theme space that I’d rather go for such as EML Payments Ltd ASX: EML).
