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Macquarie Airports shares regained the $1 mark yesterday after it forecast
$50 million in annual revenue from Virgin Blue's use of the former Ansett
terminal at Sydney Airport.
Macquarie Airports has a direct and indirect 44.4 per cent stake in Sydney
Airport Corp.
Under the deal between Virgin Blue and Sydney Airport, the discount airline
operator is to channel a minimum of 4 million passengers through the terminal in
the first year, rising to 4.5 million.
All litigation between the two parties has been abandoned.
Virgin Blue is expected to completely transfer its Sydney terminal operations
to the former Ansett terminal by mid-December.
Virgin Blue has agreed to a fee of around $4 per passenger, a total of $18
million a year.
Virgin Blue's managing director, Brett Godfrey, said the agreement contained
strong incentives: ``The more we put through, the cheaper it gets."
Virgin Blue already put around 4 million passengers a year through Sydney and
the upper level of the agreement posed little difficulty, he said.
The rest of the revenues anticipated by Macquarie Airports stem from rental
agreements and the like relating to higher throughput at the terminal.
Macquarie Airports now says annual passenger throughput at the former Ansett
terminal will go as high as 7 million.
With the resolution of the deal, Virgin Blue said it is now focusing on new
aircraft, as well as its offshore expansion, which is expected to centre
initially on New Zealand.
Virgin Blue will have access to six dedicated gates at the terminal, Qantas
six and regional airlines one.
Five gates will be left for expansion by existing players or a new entrant.
Sydney Airport is to upgrade the retailing and catering resources of the
pier to be occupied by Virgin Blue, which will boost its prospective return from
the terminal.
Macquarie Airports said it was confident of the gross profit (as measured by
earnings before interest, tax, depreciation and amortisation) forecast of $377.4
million for the airport in 2003.
It is anticipated Macquarie Airports will meet with analysts over the next
week to outline its plans for Sydney airport, which may see earnings forecasts
for the facility upgraded.
Additionally, Virgin Blue is in the process of negotiations for additional
aircraft, to expand its fleet to 30 by March and 40 by the end of 2003.
As part of its expansion, the discount airline operator is to move offshore
for the first time, using Boeing 737 aircraft a move that could be anywhere
from Bali to Fiji, Samoa and New Zealand, Mr Godfrey said.
The international service is expected to be launched during the second or
third quarter of the year, he indicated. ``It won't be in the first quarter, and
I'd be disappointed if it were any later than the last quarter," he said.
A tender has been issued to interested parties, with submissions due in 30
days.
``We've identified half a dozen we're interested in," Mr Godfrey said.
``We will see what competition is out there."
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