Wellington Scoop
Network

City Council provides pandemic underwriting of $25.76m for Wellington Airport

News from WCC
The Wellington City Council has announced details of the shareholder support which it has provided to Wellington International Airport Limited as a response to the financial impact of the pandemic.

The City Council owns 34% of the Airport and Infratil owns 66%. Together the shareholders have agreed to jointly provide an equity underwrite of up to $75.76 million. The Council’s share of the underwrite is $25.76 million – in line with its 34% shareholding.

The Council voted on 23 April to approve its share of the underwrite. Since then the participating parties have been finalising the agreement.

The facility will be able to be drawn by the Airport, importantly only if required, through the issuance of redeemable preference shares (RPS). It is not expected that there will be a need to draw down, but it is important to give WIAL’s bankers comfort.

The actions of the shareholders ensures the Airport is soundly financed to meet all of its obligations and maintain the support of its lenders over the next two years as it recovers from the significant impacts of Covid-19 on the airline industry.

12 comments:

  1. Dr Sea Rotmann, 10. June 2020, 13:56

    It would be good if the shareholders would hold Wellington Airport to account when it comes to its expansion plans. Even though they said they are “on hold”, they are still discussing the runway extension as if it was an actually viable idea – which it never was but in the current (and future) climate, it certainly never will be. Time to lay the white elephants to rest and invest in some resilience & community & coastal restoration instead.

     
  2. Tamatha Paul, 10. June 2020, 17:07

    Pleased to say I did not vote for this, BUT I will be working with the airport and other major stakeholders like the Chamber of Commerce, the DHB, the Uni etc on the Te Atakura First to Zero Implementation Plan where we can start making some good stuff happen for our CLIMATE. [via twitter]

     
  3. Michael Gibson, 10. June 2020, 18:02

    This is my O.I. request re the Council’s Public-excluded decision: “Please let me have all the records associated with Item 4, a motion to exclude the public recorded in the Minutes of the Council Meeting on April 23.” I have also congratulated Crs Pannett and Paul for voting not to kick us out.

     
  4. Sarah Free, 11. June 2020, 11:05

    As the mover of this paper in a public excluded meeting, I always wanted to ensure the details were made public once it was appropriate to do so. Worth noting that WCC has received generous dividends over the years. [via twitter]

     
  5. Michael Gibson, 11. June 2020, 14:56

    Cr Free – would you let WCC staff know your opinion so that I can get a reply to my O.I. request please?

     
  6. Michael Gunson, 12. June 2020, 0:55

    This exercise in privatising public assets has come full circle. The airport was privatised in 1998, along with other public assets during the Ruth -less – economics of the fourth National Government. Why give welfare to corporates?

    The controversial Act of Parliament to privatise the airport was slanted as bringing private investment to the strategic asset (the airport, also a territorial Authority in its own right). to alleviate the investment burden on the tax/rate payer for future expansion.

    Yet the new majority shareholder has frogmarched the airpor’s minor shareholder (the ratepayer) into paying the lion’s share of consent application costs for the extension of the airport, and wants the the Crown to front up for the majority of the project’s funding?

    Stop the bloody nonsense! If the council is needed to underwrite covid 19 debt, and then that debt called upon, make that injection transferable in shares for the ratepayer.

     
  7. Hel, 12. June 2020, 21:11

    This has zero to do with corporate welfare. As much as i like to criticise the WCC, in this instance they are doing the right thing to protect the ratepayers’ significant investment in the airport. Ratepayers have done pretty well out of this privatisation; prior to the private investment the airport was a complete dog and now we have an airport to be proud of.

     
  8. Dr Jenny Condie, 14. June 2020, 18:21

    I want to sell WCC’s stake in the airport. That said, refusing to underwrite this loan was similar to giving away some our shares for next to nothing. If we sell, we must get a good price for ratepayers.
    Why do I want to sell?
    1. As minority shareholders we have almost no influence.
    2. Risky investment, as covid proved. Especially in a post-carbon economy.
    3. Removes perceived conflict when WCC acts as regulator of the airport.
    4. Better things to invest in, eg social housing… [via twitter]

     
  9. Hel, 14. June 2020, 18:52

    Jenny totally agree that not supporting the airport would be a very poor decision. However your rationale for wanting to sell feels lightweight. Almost all airports in NZ have local government ownership, they manage the perceived conflict. As a regulatory Council will always have a range of conflicts to navigate, I’m concerned you don’t think the Council is capable of doing this. Apart from supermarkets which businesses weren’t impacted by Covid-19? Airports have been low risk investments and are likely to be again; what returns has the Council received from this investment? I suspect they are pretty impressive. You are confused comparing a social investment that has social returns but requires subsidies, versus a commercial investment generating real returns that help pay for social aspirations. Your approach could drive costs up for ratepayers.

     
  10. Michael Gibson, 15. June 2020, 8:39

    Dr Condie – your views on this are much appreciated but why did you vote to exclude the public from the meeting where you presumably first gave them? Or did you take advantage of the Council’s kicking us out to keep quiet about what you thought? You are now a member of a public body where you are expected to express your views at meetings which are held in public. Please can you also also expedite my O.I. request for the release of the “secret” papers which you discussed.

     
  11. Helene Ritchie, 15. June 2020, 11:53

    Jenny Condie, mayor and other councillors: Wellington Airport is an important public strategic asset for Wellington and the capital of Aotearoa/New Zealand, ratepayers and residents . The council usually receives a handsome annual dividend. It should be wholly publicly owned. Its income is primarily as a domestic hub and is mostly “monopolisitic money for jam”. This underwrite however is essentially an underwrite for Infratil, the private partner (unless proscribed as otherwise..and we (public) do not know that because the Council held a secret decision-making process).

    Wellington Airport Limited should drop all extensionplans – for climate change, Covid 19 impact and other reasons such as personal ambition and cost reasons. The council has already paid (not underwritten) much to support aspects of the extension. Such waste of ratepayer funds should be opposed.

     
  12. CC, 15. June 2020, 14:19

    What seems to be forgotten in this discussion is that Infratil have a dismal international record with airport ownership and operation. Probably the only reason the company has retained its share of ownership of Wellington Airport is that the Council and ratepayers let them get away with the sorts of Corporate Welfare deals that eluded them overseas after the Government ditched its share – probably way below a realistic price. Ironically, it was Steven Joyce who told Infratil where to go when they tried to have the Government pay for a runway extension to enhance the dividends for the shareholders.

     

Write a comment: