Wellington International Airport reviews impact of Covid-19

Infratil Limited 5 Market Lane, PO Box 320, Wellington, New Zealand Tel +64-4-473 3663 www.infratil.com




20 March 2020



Wellington International Airport reviews impact of Covid-19

Attached is a market release from Wellington International Airport Limited (WIA) advising that it is
continuing to assess the impact of Covid-19 on its business (including as a result of the New Zealand
Government’s announcement to close its border to international travellers) and that S&P have placed
all rated Australian and New Zealand Airports on CreditWatch Negative as a result of the reduction in
passenger numbers.

Infratil is the 66% shareholder in WIA.


Any enquiries should be directed to:

Mark Flesher, Investor Relations, Infratil Limited
mark.flesher@infratil.com

---

Wellington Airport reviews impact of Covid-19

Wellington International Airport Limited (WIA) is continuing to assess the impact of Covid-19 on its
business, including as a result of the New Zealand Government’s announcement to close its border
to international travellers.
While the full impact of Covid-19 on both international and domestic air traffic is uncertain, we know
it will materially impact WIA’s revenues for an as yet unknown period of time. However, WIA is a
resilient business, with available bank facilities and supportive shareholders. Like other companies
affected by this situation, WIA is deferring capital projects and is under strict cost management.
Notwithstanding, S&P have placed all rated Australian and New Zealand Airports on CreditWatch
Negative as a result of the reduction in passenger numbers (see attached).
WIA continues to work with our airline partners and remains committed to airport operations and
supporting the Government and border agencies.


Ends

For further information please contact:
Melanie Nunn
Communications Manager
Melanie.Nunn@wellingtonairport.co.nz

Ratings On Australian And New Zealand Airports
Placed On CreditWatch Negative
March 19, 2020
- The rapid spread of the new coronavirus across the globe and intense border control measures
by various countries have triggered an unprecedented drop in passenger traffic across airports
in Australia and New Zealand (ANZ).
- While there will be pressure on near-term cash flows, liquidity remains adequate at all the
rated airports, there are no immediate debt payment concerns, and we believe the sector
should see a slow recovery over the next 12 to 24 months.
- On March 20, 2020, S&P Global Ratings placed the ratings on five Australian airports and three
New Zealand airports on CreditWatch with negative implications.
- We will look to resolve the CreditWatch after assessing the airports' trend in traffic recovery,
future earnings profile, and cash conservation measures to support liquidity and service debt.
MELBOURNE (S&P Global Ratings) March 20, 2020--S&P Global Ratings today placed the ratings
on five Australian airports and three New Zealand airports on CreditWatch with negative
implications (see list).
We placed the ANZ airports on CreditWatch with negative implications to reflect the current
extraordinary curtailment of air travel across the globe caused by the rapid spread of the
coronavirus and border controls by various countries. The uncertainty on the duration of the travel
curtailment makes it difficult to forecast a recovery pattern, which will differ across airports.
However, given that airports are essential infrastructure assets, we do not think that this
represents a secular risk to the sector and its historical investment-grade profile.
Importantly, all rated airports have adequate liquidity, including sufficient cash and undrawn bank
lines to meet capital-market debt maturities. Airports are prudently managing capital spending
and dividends to weather the earnings impact in 2020. For example, Auckland airport has
cancelled the interim dividends announced as part of their half-year results. We expect airports to
arrange additional banking lines, if needed, to enhance their liquidity positions and avoid any
short-term refinancing risk. In addition, all airports have indicated tight controls on operating
costs and will curtail capital spending in 2021 as a start.
The outlook for passenger traffic has significantly worsened since our most recent update (see
"Australian And New Zealand Airports Brace For More Pain With Coronavirus Outbreak," published
Feb. 4, 2020). This is due to certain travel restrictions and a mandatory 14-day self-isolation
period implemented by the ANZ governments to inbound visitors following the rapid spread of
COVID-19. In addition, rapidly deteriorating conditions affecting the airlines industry are also
spreading from the international to the ANZ domestic markets, with airlines across both
geographies substantially reducing capacity over at least the next three to six months. This is on
Ratings On Australian And New Zealand Airports
Placed On CreditWatch Negative
March 19, 2020
PRIMARY CREDIT ANALYST
Parvathy Iyer
Melbourne
(61) 3-9631-2034
parvathy.iyer
@spglobal.com
SECONDARY CONTACT
Meet N Vora
Sydney
(61) 2-9255-9854
meet.vora
@spglobal.com
www.spglobal.com/ratingsdirectMarch 19, 2020 1

top of a downturn in passenger traffic due to travel bans to China and South Korea from February
2020.
We assume global air traffic will decline by 20%-30% compared with that in 2019. Full recovery
will likely only occur in 2022-2023, noting that the situation is highly uncertain and rapidly
changing. This view takes into account COVID-19's rapid spread to over 125 countries and the
severity of lockdown measures to contain the virus, given the risk of contagion.
The extent of passenger decline in 2020, as well as the recovery over 2021 and 2022, across the
different airports will vary. The recovery timing is uncertain and could start sometime around end
June 2020 to September 2020, with perhaps some normalcy returning in the first quarter of 2021.
Airports' competitive positions, as well as local conditions, will influence the trends. For example,
in New Zealand, we would expect Auckland airport to recover faster than Wellington or
Christchurch airport, given its dominant position as the gateway airport in the country. Similarly,
we believe that the recovery in passenger traffic could be faster for Sydney and Melbourne
airports, compared with Adelaide, Brisbane, or Perth airports.
While airports' EBITDA and cash flows will fall in 2020 and not meet our ratings thresholds, our
focus will be on the rebound and ramp-up of traffic. Despite airports' diverse revenue streams, the
plunge in passenger numbers will also affect non-aeronautical revenues from retail space such as
duty free, shopping, food and beverage outlets. This is in addition to lower revenue from car
parking and ground transportation.
In our view, the drop in non-aero revenue will not only come from lower passenger numbers but
also potentially from airports supporting struggling retailers. As such, it's difficult to predict the
overall impact on airports' EBITDA for fiscal 2020, which could range between 20% and 40%
compared to the prior year.
We would seek to resolve the CreditWatch over the next few months by assessing various factors
such as the airports':
- Operating environment;
- Trend in traffic recovery based on airline strategy and capacity additions, health of the airline
industry, global and regional economic conditions, and changes to airline schedules;
- Speed of recovery, noting that the trajectory might be different for different airports;
- EBITDA and cash flows over this period, and the trend-line in metrics;
- Policies with respect to shareholder distributions and deferral of nonmandatory capital
expenditure; and
- Liquidity position along with covenant compliance.
While there continues to be a high degree of uncertainty about the rate of spread and timing of the
peak of the coronavirus outbreak, some government authorities are estimating late Q2 to mid
Q3—which we've used in assessing economic and credit implications. In any case, the COVID-19
pandemic has likely pushed the global economy into recession and could cause a surge of defaults
among nonfinancial corporate borrowers (see "COVID-19 Macroeconomic Update: The Global
Recession Is Here And Now" and "COVID-19 Credit Update: The Sudden Economic Stop Will Bring
Intense Credit Pressure," published March 17). As the situation evolves, we will update our
assumptions and estimates accordingly.
www.spglobal.com/ratingsdirectMarch 19, 2020 2
Ratings On Australian And New Zealand Airports Placed On CreditWatch Negative

Related Criteria
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
- Criteria | Corporates | General: Reflecting Subordination Risk In Corporate Issue Ratings, March
28, 2018
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- General Criteria: Rating Government-Related Entities: Methodology And Assumptions, March
25, 2015
- Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Dec. 16, 2014
- Criteria | Corporates | General: The Treatment Of Non-Common Equity Financing In
Nonfinancial Corporate Entities, April 29, 2014
- General Criteria: Methodology: Industry Risk, Nov. 19, 2013
- Criteria | Corporates | Industrials: Key Credit Factors For The Transportation Infrastructure
Industry, Nov. 19, 2013
- Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
- General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
- General Criteria: Methodology: Management And Governance Credit Factors For Corporate
Entities, Nov. 13, 2012
- General Criteria: Use Of CreditWatch And Outlooks, Sept. 14, 2009
Related Research
- COVID-19 Macroeconomic Update: The Global Recession Is Here And Now, March 17, 2020
- COVID-19 Credit Update: The Sudden Economic Stop Will Bring Intense Credit Pressure, March
17, 2020
- The Coronavirus Pandemic Could Reduce Global Air Passengers By Up To 30% In 2020, March
17, 2020
- U.S. Transportation Infrastructure Sector Outlook Update: Now Negative For All Sectors, March
16, 2020
- Australian And New Zealand Airports Brace For More Pain With Coronavirus Outbreak, Feb. 4,
2020
www.spglobal.com/ratingsdirectMarch 19, 2020 3
Ratings On Australian And New Zealand Airports Placed On CreditWatch Negative

RATINGS LIST
* * * * * * * * * * * * * Adelaide Airport Ltd. * * * * * * * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Adelaide Airport Ltd.
Issuer Credit RatingBBB/Watch Neg/--BBB/Stable/--
New Terminal Financing Co. Pty Ltd.
Senior SecuredBBB/Watch NegBBB
* * * * * * * * * * Auckland International Airport Ltd. * * * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Auckland International Airport Ltd.
Issuer Credit RatingA-/Watch Neg/A-2A-/Stable/A-2
Auckland International Airport Ltd.
Senior UnsecuredA-/Watch NegA-
Commercial PaperA-2/Watch NegA-2
* * * * * * * * * Australia Pacific Airports Corp. Ltd. * * * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Australia Pacific Airports Corp. Ltd.
Australia Pacific Airports (Melbourne) Pty Ltd.
Issuer Credit RatingA-/Watch Neg/NRA-/Stable/NR
Australia Pacific Airports (Melbourne) Pty Ltd.
Senior SecuredA-/Watch NegA-
* * * * * * * * * * * * * * BAC Holdings Ltd. * * * * * * * * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Brisbane Airport Corp. Pty Ltd.
Issuer Credit RatingBBB/Watch Neg/NRBBB/Stable/NR
Brisbane Airport Corp. Pty Ltd.
Senior SecuredBBB/Watch NegBBB
* * * * * * * * * Christchurch International Airport Ltd. * * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Christchurch International Airport Ltd.
Issuer Credit RatingA-/Watch Neg/A-2A-/Stable/A-2
Christchurch International Airport Ltd.
Senior UnsecuredA-/Watch NegA-
Commercial PaperA-2/Watch NegA-2
www.spglobal.com/ratingsdirectMarch 19, 2020 4
Ratings On Australian And New Zealand Airports Placed On CreditWatch Negative

* * * * * * * * * Perth Airport Development Group Pty Ltd * * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Perth Airport Pty Ltd.
Issuer Credit RatingBBB/Watch Neg/NRBBB/Stable/NR
Perth Airport Pty Ltd.
Senior SecuredBBB/Watch NegBBB
* * * * * * * * Southern Cross Airports Corp. Holdings Ltd. * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Southern Cross Airports Corp. Holdings Ltd.
Issuer Credit RatingBBB+/Watch Neg/NRBBB+/Stable/NR
Sydney Airport Finance Co. Pty Ltd.
Senior SecuredBBB+/Watch NegBBB+
S&P Underlying RatingBBB+/Watch NegBBB+/Stable
* * * * * * * * * Wellington International Airport Ltd. * * * * * * * * *
Ratings Affirmed; CreditWatch/Outlook Action
ToFrom
Wellington International Airport Ltd.
Issuer Credit RatingBBB+/Watch Neg/A-2BBB+/Stable/A-2
Wellington International Airport Ltd.
Senior UnsecuredBBB+/Watch NegBBB+
Commercial PaperA-2/Watch NegA-2
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors,
have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such
criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings
information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating
action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search
box located in the left column.
AUSTRALIA
S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations
Act 2001. S&P Global Ratings' credit ratings and related research are not intended for and must not be distributed to any
person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).
www.spglobal.com/ratingsdirectMarch 19, 2020 5
Ratings On Australian And New Zealand Airports Placed On CreditWatch Negative

www.spglobal.com/ratingsdirectMarch 19, 2020 6
Ratings On Australian And New Zealand Airports Placed On CreditWatch Negative
STANDARD & POOR’S, S&P and RATINGSDIRECT are registered trademarks of Standard & Poor’s Financial Services LLC.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors.
S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites,
www.standardandpoors.com (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means,
including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at
www.standardandpoors.com/usratingsfees.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their
respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P
has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each
analytical process.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for
certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole
discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as
well as any liability for any damage alleged to have been suffered on account thereof.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are
expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not
recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any
security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on
and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making
investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While
S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due
diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons
that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a
credit rating and related analyses.
No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any
part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or
retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The
Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers,
shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the
Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results
obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is”
basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT
THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE
CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive,
special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and
opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such
damages.
Copyright © 2020 by Standard & Poor’s Financial Services LLC. All rights reserved.