The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has seen a lot of movement lately. Here is the latest news.
Sydney Airport June 2021 traffic numbers
Sydney Airport said that its total passenger traffic in June 2021 was 989,000 passengers, down 70.9% on the corresponding period in 2019 (before COVID-19).
Domestic passenger traffic of 906,000 made up a majority of total passenger numbers. This is down 56.8% on the corresponding period in 2019.
To compare June 2021 to the prior corresponding period of June 2020 (which was during COVID-19), total passenger numbers were 174,000 in June 2020 versus 989,000 total passengers in June 2021. Domestic passengers in June 2020 were 140,000 and increased to 906,000 in June 2021.
NSW lockdown effects
International and domestic passenger numbers were impacted by the ‘stay at home’ orders issued by the NSW government on 25 June 2021.
COVID-19 restrictions for NSW have affected Sydney Airport’s passenger numbers, with border closures to NSW and the suspension of the trans-Tasman travel bubble from the 23 June 2021. Before the suspension, the trans-Tasman travel had returned to more than 40% of the corresponding period in 2019.
Rejected takeover offer
Earlier this month Sydney Airport received a takeover offer for a 42% premium to the last share price before the takeover offer was made. Sydney Airport’s share price went nuts in response.
In the end, the Sydney Airport board unanimously rejected the takeover offer.
Sydney Airport share price
Source: Rask Media SYD 2-year share price chart
Thoughts on the Sydney Airport share price
The offer of a 42% premium to the share price was an interesting proposition, considering that it is still an unknown of when travel can return to pre-COVID levels. The Sydney Airport board appear to believe that Sydney Airport’s true value lies at/above pre-COVID levels.
There is no guarantee that air travel will go back to exactly the way it was before COVID, just like air travel changed after the 11 September 2001 terrorist attacks. It may take quite some time to recover, let alone produce growth in the industry. There may be restrictions, new procedures and regulations that increase costs and/or limit the ability for profit in the airline industry even once borders are more freely open.
It is interesting to see that Sydney Airport’s share price has remained high since it rejected the takeover offer of $8.25 per share. The current share price is $7.86 which is 1% higher than the $7.78 per share when the takeover offer was announced. Perhaps the market is expecting another takeover bid.
If I were a shareholder I would consider if selling and redeploying the cash would yield better results than waiting around for an unknown amount of time for travel to recover and grow again.
