Ahead, Adrian.
Thank you, and good morning, everyone, and welcome to the results webcast for FY 'twenty one. Just a quick note, we are doing ahead. Given the level 4 lockdown here in NZ. So just an advanced apology ahead. Thank you for joining us.
I'm joined by go ahead. Bill Norte, our CFO, who's on the call and some of our team will say listening in. So look, FY 'twenty one really reflects, ahead. I guess the status of our business in the context of a pandemic, it's significant impact from passenger ahead. Activity in volume, but underlying strength and us looking through and out the other side of this current phase and really trying to strengthen our business for the longer term.
Ahead. So I'm going to turn to and say a few words, an intro and summary, referencing the slides. I'll then hand to Phil who will walk through some of the more detailed results and then I'll then
give you
an overview of some of the detailed activities and looking ahead to the ahead. So I'm going to turn to page 5 of the presentation and results. And look, this just gives you a quick ahead. Scan of really what I said is the impact across our business quite heavily dominated by passenger impact was if I reference FY 2019 numbers international down ahead. 95%, domestic still down, almost 40% on what might have been normal in FY 2019.
So quite high impact flowing through to retail, ahead. Again, heavily down in the period, down 87%. Transport have been a bit better, obviously, supported by the return ahead. Domestic travel during the year, certainly down about 42% in the period. And we'll touch on that more later.
Hotels also ahead. The same dynamic as is our investment in Queenstown. Property though has been the shining lights in our current results ahead. Breaking through the $100,000,000 revenue mark for the first time, up almost 14%. Still have a good pipeline with ahead.
160,000,000 of projects under construction and our portfolio value is now broken through the $2,500,000,000 mark with the lift in underlying go ahead. Property values and the metrics there remain very strong. So I'll touch on that in more detail later. Ahead. Just looking at the high level results and how that all rolls up on page 4, sorry, going back to page.
So our top line revenue down ahead. $281,000,000 underlying earnings $171,000,000 for the year, down 34%, so reflecting some discipline there in cost management. Ahead. But obviously the headline being the underlying loss in the period. Page 6 go ahead.
Really shows that story quite starkly in the context of our history, and we've talked a lot about this. But this just shows you how the 2020 and 2021 have been ahead. By the pandemic compared to our long history of back through 1995 in this period, so that sharp decline. On the right hand side, you can see that break ahead for international versus domestic and the various lockdowns throughout the year affecting domestic volumes. Ahead.
But obviously as we all know we're back into level 4 now and so we're back into probably that looks closer to April 20 ahead. Turning to page 7 for our handsets. So I just really wanted to preview and touch on what Great job our team has done because literally our team has not wasted a day during this last 19, 20 months getting after what matters. Ahead. If I think about the 4 legs to that, working on running the border safely, doing our work to protect New Zealand from COVID at the ahead.
And at the same time, leading, I think, the work on how do we think about future border models and that work continues. Ahead. Secondly, investing in core asset resilience and investments, runways, roads, fuel lines, fiber and taking the time while we have it to invest in those core assets, ahead. But at the same time, resetting our infrastructure program and announcing it last week. In commercial business, ahead.
Again, we work very hard with our tenants right across our retail and commercial property portfolio. It's ahead. Stay helping them, supporting them, but obviously working and keeping that momentum and the discount fashion out that we ahead. Announced today is I think a sign of our view looking through this. And underpinned through all of that has been the work we did to stabilize the balance ahead.
She raised new liquidity, really concentrate our effort on our capital operational cost management and then reset our funding and covenants go ahead. Thank you. Thank you. Thank you. Thank you.
Thank you. Thank you. Thank you. So with that, I'm going to hand to Phil, Who will pick up on Page 9 of the presentation. Over to you, Phil.
Thanks, Adrian. And thanks to my team, I think, go ahead. For giving me this confronting slide to kick off on. It's Slide 9, by the way. So the comparison of PACS go ahead.
Versus PCP is consistent with our usual approach, but it slightly understates the impact of COVID-nineteen on our FY 2021 numbers. Ahead. So versus the pre COVID FY 2019 results, international packs for FY 2021 ahead. We're down 94.7 percent and domestic packs were down 39.1%. But in the final quarter of FY 'twenty one, Domestic tax were running at just over 77% of pre COVID numbers and this peaked at nearly 90% in July of this year.
Ahead. On to Slide 10 now. So this is pretty self explanatory. The main call out ahead. Is that government subsidized international cargo services held up international aircraft movements in Maktou ahead.
It took up 30% of pre COVID levels relative to the much greater decline in international tax. Ahead. Again, Slide 11 doesn't make great reading. It shows that border restrictions continue to have a dramatic impact ahead. On Auckland Airport's revenues during FY 2021, we did however carefully control operating expenses, as Adrienne mentioned, ahead.
During the year, we guided investors to expect this time last year. So this slide overstates The turnaround in expenses owing to some FY 2021 reversals of CapEx impairments and termination costs. Ahead. A better view is set out on Slide 14, which we'll get to shortly. Depreciation was up by about $12,000,000 in FY 2021.
Ahead. This reflected prior year's CapEx and completion in FY 2021 of runway slab replacements, air bridge refurbishments ahead. And various IT upgrades and that included installing new car park guidance systems. Interest expense rose by 22 $200,000 in FY 2021, but all of that increase relates to one off impacts of USPP make good payments ahead. And various swap closeout costs.
So these changes will deliver more than $10,000,000 per annum of interest savings going forward. Ahead. Moving to Slide 12. The 2 main call outs I want to make from this slide relate to retail income and investment ahead. Property income.
So retail income was down nearly 90% versus PTP. International retailer sales were down by nearly 90 5%, slightly more than the reduction in international packs versus PCP. And this ahead. Supercar's mag was waived for FY 2021 and there were also some concession rate reductions. Investment Property Income, on the other hand, ahead.
Our key standout performer in FY 2022. It was up $12,000,000 or nearly 14% versus PCP. Ahead. And this reflected some big new property developments coming online in FY 2021. That included the foodstuffs warehouse and office ahead.
I think you'll learn a bit more about later and some rate revisions. So now on Slide 13. Ahead. And as indicated last year, Auckland Airport needed to quickly resize after the border was closed ahead. And our revenues fell quite dramatically.
So this impacted many expense lines. Sadly, we had to fill out ahead. Many fellow staff in the final quarter of FY 2020 and the annualized impact of this contributed to the 27.5% ahead. The FY 2021 P and L also benefited from some one offs. We reduced impairments on some paused CapEx projects that we now expect to resume over the next couple of years.
Ahead. And successful negotiations with several contractors who had to down tolls on ahead. CapEx projects when we pause them, but we've resolved those discussions and resulted in significant ahead. Lower termination costs than we provided for in FY 2020 FY 2020, I should say. So together, these resulted in ahead.
$19,400,000 of reversals of prior period fixed asset losses, and that was partly offset by ahead. $2,500,000 of new provisions that we made in the Slide 21. Turning now to Slide 14. Ahead. As I first mentioned a few slides back and as we indicated to investors this time last year, ahead.
Auckland Airport was able to significantly cut back on operational expenditure in FY 'twenty one to respond to COVID-nineteen. Ahead. On a normalized basis, we reduced OpEx by circa 30% versus FY 2019. Ahead. And those savings were concentrated in staff costs, as I mentioned earlier, as well as outsourced operations.
Ahead. Examples include baggage handling, bus services, our strata lounge, valet services and park and ride. Ahead. And we also had reductions in utilities, cleaning and marketing costs. Ahead.
Now on Slide 15 and not too long before I hand back to Adrian. This slide is self ahead. And it calls out some of the main projects that contributed to Auckland Airport's nearly $200,000,000 of CapEx in FY 2021. Ahead. So key projects included major upgrade of the Northern Airport access roads, so that's George Boldt Memorial Drive, ahead.
The construction of State Highway 20 B, so that's the road that goes east, high occupancy vehicle lanes. Ahead. We renewed runway slabs as well as some additional apron slabs and fuel systems. Ahead. We stood up a dedicated facility for processing passengers to manage isolation and we completed the food staffs go ahead.
Office and warehouse development as well as a couple of other investment property projects. So turning to Slide 16. Ahead. So as you can see from the table to the right of the slide, if it wasn't for the interest coverage covenant waivers ahead. We negotiated with our banks back in April last year where we've been in default on this covenant for FY 2021.
Ahead. And then moving forward from then, even before the Tasman bubble was closed on 23 July and later, of Of course, New Zealand's level 4 lockdown from midnight this Tuesday, we were getting uncomfortable regarding our ability to comply with ahead. The 1.5 times EBIT based interest coverage covenant for FY 'twenty two after the existing ahead. Why this is due to expire? So we set about negotiating a modified EBITDA based interest coverage covenant ahead.
So apply from June next year. So this starts at 2x and steps up in calendar 20 go ahead. And again in calendar 2024 to 3 times. Now I should just clarify that ahead. This EBITDA measure in this context is measured before fair value changes and investments and associates.
Ahead. So it's equal to our reported EBITDA to measure. And we expect to comply with this covenant going forward, so waiver is no longer ahead. Required. At the same time, we extended nearly $700,000,000 of bank facilities due to mature early next year ahead.
For between 7 19 months. So all in all, we're very comfortable in terms of liquidity going forward. Finally, for For me today, we're on Slide 17. Again, the slide is self explanatory, but there's a couple of highlights I'd like to call out. Ahead.
Non current assets grew strongly as a result of the circa 13% lift in PP and E ahead. And that was dominated by the $760,000,000 uplift in the fair value of non investment property land in FY 2021. Ahead. We also booked a nearly $530,000,000 fair value increase in our investment property portfolio in FY 2021. Ahead.
And this includes yet to be developed investment property land. Cash reduced significantly during the year ahead. And that mainly related to the circa $650,000,000 of debt repayments that we made in the FY 2021. Ahead. So that was largely USPP.
There was some maturities as well as prepaying the remaining balance And $150,000,000 New Zealand Debt Capital Markets bond that we repaid. So together, this resulted in our total borrowings ahead. Falling by more than a third. And as I mentioned earlier, these debt repayments plus the closing of some interest rate and currency hedges ahead. We'll reduce our interest expense by more than $10,000,000 per annum going forward.
Back to Adrian here.
Ahead. Thank you, Phil. All right. So starting at Page 19, and just as a reminder for followers of our results, this presentation is really ahead. Designed not only to support this call, but also for others who can't join who can view it later.
So it is a bit of a record of the year as well as someone to talk ahead. So in some of these things we've talked about or touched on already, so I'll just touch on highlights as we go through. So we may move quickly through ahead. Next section. So on Page 19, I guess it's just a reflection and a summary of the broad based activity we've taken right go ahead.
No stones have been left unturned, both to reset the business for the pandemic phase, put out ourselves ahead. And control as much as we can of our own destiny through the equity raise and restructured financing, but all the work we've done to reset the business. And I ahead. It's paid dividends and will help us on the way out. So that's the sort of a summary of the strategy going into this.
But if I turn to page 20, again, I just want to acknowledge ahead. The great work our team have done over the past 19 months to safely operate the border, to work closely with government border go ahead. And then really investing time and energy on how do we make ahead. Systems and process work again in a safe way. So for example, we lead the work on the trans Tasman safe travel zone.
We built a quantitative risk ahead. Based border model, it was peer reviewed through the New Zealand Medical Journal. And then we obviously split our terminal into a health management ahead. And a quarantine free travel zone. And again, no trifling issue, particularly when you have to put all systems into separate categories and manage it ahead.
So that's been a real joint effort. I just want to acknowledge our team's work on that. So that's operations. If I turn to page 21, the other thing that ahead. I touched on before was keeping on with the critical infrastructure investments despite the pandemic.
So we have taken advantage ahead. This time to keep on with key projects as well as bring forward others that were previously planned, which are very difficult to get after. And I think we've seen about $220,000,000 across, obviously, a couple of financial years, but since the pandemic started, in runways, ahead. It's Eudson Roading. And so that's been a feature.
And for those of you who've traveled, you will see the road works. They're getting ahead. The runway upgrade was another huge project. And we've taken that same philosophy through into our updated infrastructure ahead. And it was great last week to be able to talk to that and talk about how we've reset that program.
Ahead. And I think that the key in all of that has been again that close work with border agencies through the border, Executive Board, Barnes, ahead. And how we've rethought about that program. And that is a narrowed down program ahead. With an anchor around the new domestic hub merging into the international terminal.
So just quickly touching on that in a bit more detail. And this is the next ahead. Page, which is Page 22, just to try and locate it because sometimes it's hard to get your head around to additional elements. Let's try to capture what was the 8 anchor project ahead. So you can see these projects that are now on hold, which is obviously the Northern Runway, Northern taxiways and stands, the International Arrivals ahead.
And the cargo precinct, those are on hold. And as we said last week, they are more orientated towards international travel. And ahead. So it's absolutely appropriate for those to go on hold. They are protected.
The work is not lost. It will be restarted. Ahead. And the team did a great job of navigating our way out of those contracts where they were underway. So the 4 that are continuing, which ahead.
I touched on was obviously anchored by the new domestic hub merging with the international terminal and that location there in the center of the page, ahead. A new ground transport hub, which I'll come back to later. The road and transit system, which I think will up we will be spending $160,000,000 in this phase on that program, which ahead. Creates an entirely new traffic and transport system and then obviously ongoing investment in the current domestic terminal. So that is the go ahead.
And if you can locate the parts of that new domestic hub, you can imagine underneath ahead. The head house area we call it, there's a lot of existing infrastructure that will be decommissioned like baggage systems and bag halls, ahead. Power centers, operation centers, services and utilities, the service aircraft. So we were not able to do that ahead. Prior to 2019 under our previous model because of how intensively used some of those assets were.
So we are trying ahead. And to use this time to decommission those assets. And in fact, where we will end up with is a better product end product for airlines, passengers ahead. And those operating in the airport environments. And it allows us to get real efficiency through contiguous security screening, common check-in, several go ahead.
Little round trends will happen away that wasn't as possible before. So it's great to look at that. The network will really kick off in the New Year. Network's ahead. Continuing over the last 19 months, but we'll be into enablement work, demolition and preparation of the sites early in the calendar next year.
Ahead. The next page gives a quick artist impression of the walk here. If you can imagine for those regular travelers through international, ahead. New Zealand, if you in Auckland, if you go through current aviation security, you sort of hit right towards go ahead. Under this model, imagine going left and heading down towards a new pier.
That is the view you will see looking out ahead. Towards the pier in the background, and this is the transitional area as you go through F and B and other shops on the way out to the new go ahead. We think this is going to be a great product and something New Zealanders are really keen to see happen. Now turning to Page 24, Obviously, the air terminal was only part of it. The transport hub and how you get from vehicles and transport into the terminal is a key part of that transition.
And we have updated Plans that we were starting out on previously. And I think again, we've used this time to make a better answer. So ahead. We have reconfigured our transport hub that will provide public pickup and drop off commercial operators and transport with access to The front door of the terminal connected to the terminal with air bridges, so you'd be able to transit across at grade or at a air bridge. Ahead.
It will provide about 2,500 car parks with a covered pickup and drop off area for the public and really does form part of a wider multimode transport plan that considers both what we need now, but also the future. So we have a ahead. That considers both what we need now, but also the future. So we have a really clear view on Stage 2 and we also have a clear view on how mass transit would integrate ahead. Into this transport hub.
So we are aggregating activity and traffic for public movement into the terminals from this area. So this will be a huge step up In terms of experienced travelers, and I think will be well welcomed and fit through tightly into the, I guess, the land side precinct with a hotel precinct ahead. Just adjacent to that area and is entirely aligned with our current roading program that is almost complete. Now turning to Page go ahead. 25.
This really digs a bit deeper into the retail and transport sub segments that Phil touched on before. Look, again, I won't go into too much detail, but we've ahead. Really hard to support our retailers in the retail segment. And our rent abatement arrangement is now circa ahead. $185,000,000 in the year, and it's really a reflection of our support.
And I guess that's also reflected in ahead. Occupancy still remains very, very high. I think something like 96% in internal retail and 99% on commercial property. Ahead. And that's because we've supported them through that.
Obviously, we are focusing on the restart and want to make sure they are ready in hold to restart when they can. Ahead. And Ed, we've had fantastic feedback from our retailers on that. On the transport side, look, ahead. Pleasing, I guess, to some degree, so well down on the prior year.
But what we have seen is domestic parking recover strongly ahead. Relative to passengers, we've actually seen a bit of a mode shift away from shared taxi vehicles into private vehicles. That's been helped. Our team have worked hard on ahead. Promotions and upgrade cycles to give a great customer experience.
And I think so you've seen stronger car parking ahead. Domestic relative to passenger activity, if you compare back to the July 2020 period, you can see that separation going. So that's great. Ahead. And the team managed to open the full suite of products in the year.
I look, turning to Page 26. One of the ahead. Highlights here has been our investment property that has continued. I think both the quality of the product we build, ahead. The feedback from tenants, core metrics on the portfolio have remained very, very strong.
And I think we brought in roughly $500,000,000 of go ahead. Assets into the portfolio in the past year with the Foodstuffs DC and Head Office, the Midwest developments and the spec warehouse that has now been ahead. And we've got a great pipeline of high quality tenants coming through. Just as an update on the hotels, we continue to ahead. Adopt our policy on the hotels, which is on hold or tracking recovery very closely.
So the Macure, last go ahead. Last time we got to talk was getting close to completion on closing the facade and protecting that site that's now complete and the works have stopped there. On the tail of Nikanui Pullman Hotel, 5 Star Poland Hotel, that work is continuing. Our facade is It's ongoing and then we will track the decision about whether we continue with split out when that moment comes. Novotel has been supported by ahead.
So investment property has continued to be very strong and a real standout in this period. Really underpinning ahead. Our plan to plot our way through the pandemic and out the other side. We've announced today a fashion outlet this A confession outlet located on the northeastern sort of boundary of the airport precinct. On what is the old aviation golf course that has been ahead.
Out of action for some time now. And this is a concept we've been thinking about for quite a long period and we obviously have some Landslide Retail today and ahead. Discount stores in there. But really, we have been holding this until we were clear on some key actions, Which really revolves around runway orientation, consenting, the associated transport planning and investment that we've been doing in the last sort of while and then updating our infrastructure Our program focused on the DVC terminal. So we wanted to confirm that and understand the path on that and be clear with that before we ahead.
Confirmed on the discount fashion outlet, but this is a really exciting development, about 23,000 in LA, ahead. In this development, located away from the airport precinct, generous parking and ahead. We'll develop and operate model where we will be the sole operator owner of this. And we think that's important for the overall ahead. Business and system both commercially and operationally that we're able to manage that effectively.
And we spent a lot of time Looking at these similar developments overseas, Vancouver airport, spent a lot of time talking to them, Brisbane and Perth and others. And we think there's a real opportunity ahead. We're in the markets for a really focused DFO development. And we've had fantastic feedback from retail brands and actually through our market ahead. With end consumers about what they're looking for.
And we want this to be a really quality development in the context of what a DFO should be. Ahead. And so we're focusing on things like retail rating, how we work on general sustainability initiatives in this context. So we want to make this a really fantastic development. Ahead.
Look, these things take obviously time to develop, but we are playing our way through that path ahead. And excited about announcing that today. I'm going to move now to Page 2829 because again ahead. For a small number of team with reduced headcount, our team will work really, really hard on many different fronts. And one of the really pleasing ahead.
The work our team right across our business have been involved in is updating our sustainability strategy and goals. And ahead. And we have announced a whole range of new targets. That's being matched with our updated reporting, which includes go ahead. Climate change, disclosure report and the greenhouse gas emissions report explaining our impact on the world and what we're doing about it.
Ahead. We're not recent to this rodeo. We've been at this for a long time, over many, many years. And in fact, targets we set in 20 Well, around sustainability focused on warming at a 1.5 degree rate, we have well surpassed And actually, so it's appropriate to reset that. We've reset that at a 2 degree scenario and have tested scenario right through up, I ahead.
To 4.8 degrees of warming across the world. But obviously, climate change in carbon is not the only ahead. It's important to acknowledge carbon in the context here is a mid 0 by 2,030 target, which I think ahead. It's worth celebrating, but it goes across 4 dimensions of purpose, place, people and community and touches on customer satisfaction go ahead. In terms of their experience at the airport, our procurements, shareholder returns, carbon, water and waste targets, people targets around ahead.
Gender and diversity and safety and then how we can play a part in helping our community to benefit from ahead. Being alongside an important economic hub for our country. So some real meaningful targets here for us to work on mainly focused on go ahead. 20.30. If you're interested on page 30, you can dig into this in more detail.
As is best practice, we go ahead. The first time they published these reports alongside our annual report, and you'll be able to dig into some real detail on our disclosures in there. Ahead. And you'll see that we've got some things to work on, I think, as every company does, but it's important that we put that down on paper and work towards it. So now sort of turning a little bit to outlook and this is in a couple of phases.
If I turn to page 31, we acknowledge ahead. There's still uncertainty right now. This is a very unusual time, nothing like this in the history of the airport over 50 odd years. Ahead. But we have worked hard on this and we'll continue to work hard on it.
You would have seen the Prime Minister last week talked about the Red Connecting New Zealand strategy. Ahead. I'm pleased to say our team have been leading on a lot of that work and that promised I mentioned an 8 week program to look ahead. How we might design a border model for the future. We've been central to that alongside our aviation colleagues.
Ahead. There's a public and private partnership model and we're determined to try and help first design it, but then also importantly convert it into ahead. To a credible operating model that can be operated at the border. Underneath all that, obviously, vaccine rollouts are critical as is health capacity in the country ahead. And Health Technology around Testing and Surveillance.
And I guess we are looking for clues Overseas and we can see those countries who had a tougher road through COVID, no doubt, but have had high ahead. Vaccination rates where a new normal is emerging. It's important for listeners on this call to remember that ahead. We don't need a switch back to FY 2019 to continue with our program. We have quite a ahead.
Degree of flexibility to work with any recovery scenario and continue with our program. But we want to be involved in helping ahead. So what does positioning for a post COVID world look like on Page 32? Really simple. We need to work our way through reestablishing Your inaugural network and our ER commercial team, although much smaller and not traveling nearly as much, has maintained very close contact ahead.
With our airline partners around the world and we continue to get really good feedback about the desire to contact connect with New Zealand. New Zealand is seen as a safe ahead. And I do still think that in the future model of travel, high value travel New ahead. Everyone's proposition features very strongly in that. So we will work very hard on reestablishing that network ahead.
Root by root, working with governments and airlines, we will work with trade here to support growth in travel and ahead. Cargo and we do want to make sure our commercial business is in great shape so we can come out the other side and need a better position than what we were. Ahead. So if I then turn to 34 in terms of guidance and outlook, we are facing the uncertainties I mentioned and that's really why we are ahead. Spending underlying earnings guidance for FY 'twenty two.
There's just too many moving parts at the moment for us to give that and I hope it would be in constant updates ahead. So the markets, if we try to. Having said that, we are committing to guiding on CapEx. And so CapEx guided to 250,000,000 to $300,000,000 in FY 'twenty two and that does include completing some existing projects that are underway, but also progressing the design and enabling works as I mentioned before about the terminal ahead. Development program, we want to see that through.
And it's important for you to know that that program has been part of the discussion Obviously, pricing is looming on horizon. And ahead. We are consulting on whether we defer that. Obviously, with the uncertainty, it's quite hard to apply the usual building blocks model in the way that we normally would. And So we need to go through that process of consultation with you much just to work that out.
But I know that some of the other airports have done the same. Ahead. So look, obviously, the guidance is subject to any of those material adverse changes, which are becoming more frequent these days. Ahead. Just finally, before I sort of sign off and hand over Q and A, it's my final results in this job.
It's been a great privilege ahead. To work for this company, I'm incredibly proud of what our team has done, particularly during the pandemic period. But even pre pandemic, they work incredibly hard ahead. And really proud of the work they do. We'll see our way through this.
And I'm hoping that the work we've been putting in the last 19 ahead. I'll just really set that up for the future. It's also been great to work with all of you on this call. I wish we won't get a chance to meet face to face probably before go ahead. I just want to thank you all for your support.
And with that, I'll hand back to the moderator. Thank you.
Ahead. Our first question today comes from the line of Amit from Jefferies. So please ask your questions, Amit.
Good morning, all. Ahead. Thank you for taking my question. The first question is on the domestic hub infrastructure investment. Now If I think correctly, you said it would be dependent on the aviation recovery as well.
So I was just wondering if you can talk to some of the passenger figures. Do you agree with the airlines ahead. When this investment gets activated in a meaningful way?
Yes, sure. Good morning, Adrian. Ahead. Look, I think the way we've constructed the program and the way we're thinking about the program is in phases. So ahead.
We've highlighted and focused on enabling Workset at 1st 30,000,000 in the early part of next year as the first phase. Obviously, ahead. The next phase is where you start to press big buttons around spend coming out of the ground is obviously those points where we will pause and just look at ahead. It's quite hard to be precise about what specific metrics we'll be watching, but clearly passengers will feature most highly ahead. And a combination of both domestic and international.
But if I try and give you a reference point back in February, we talked about you only have to believe ahead. Domestic operating roughly where it has been in the last year or so, plus roughly just over half ahead. Close to 2 thirds of Tasman traffic coming back for us to be able to continue on our program completely. And what that means is we don't need ahead. A fully FY 'nineteen sort of traffic recovery to continue on the program as we've described it.
We've got quite a lot of capacity. Ahead. We're in a position where when markets or passenger volume drops heavily, it's quite hard because we've got fixed costs. But on the other side, when markets ahead. So, yes, significant amount of capacity quite quickly.
So, that's probably a rough guide, I mean, in terms of how we'd look at it. We're obviously still Quite a way away from those moments, but we are thinking about that as we construct contracts and programs.
Very good. Thank you. Ahead. Just another question on the PSC IV. Obviously, you've said the pricing is I mean, that would be delayed.
And ahead. You've said some of the under recovery from lower pricing, I mean, would be recovered through the years as PSC progresses. Ahead. But I mean, can you just give a sense of in terms of would you be still retaining the passenger volume risk in the PSC 4? Ahead.
Or would you be looking to share some of this risk, both upside and downside with the airlines?
Phil, do you want to
Yes, sure. So yes, the concept that we're consulting on ahead. For the period of the price raise, effectively, we are sharing ahead. Passenger aircraft movement recovery risk on that because that year or whatever price freeze The period would flow into the building blocks models as actuals. So to the extent that we had an underreturn in that period, It will be made up through the forecast return over the remainder of PSC IV.
At the moment, we are not looking at ahead. This is an extended form of risk sharing around recovery, but that's definitely something that we would need to look into in detail. Effectively, what we're talking about is a 2 stage consultation. 1 is the consultation to freeze prices for go ahead. Well, we've got extreme levels of uncertainty on the outlook, and then we would consult on the remainder of the period.
And discussions around risk ahead. Sharing around passenger recovery will come into that consultation.
Great. Thank you. Ahead. Just a final question on the OpEx now. Obviously, dollars 133,000,000 in OpEx in fiscal 2021, that's a 30% reduction, good outcome.
Ahead. So I mean just your view for fiscal 2022. I mean would you be able to deliver similar levels of underlying OpEx For the next year? Or how sticky are some of these ticker leases?
Yes. Well, we did provide some guidance on 1st July around the OpEx outlook as well as expected ahead. Retail income. And so we still see that range as being Relevant. I'm just trying to remember off the top of my head actually what that range is that we guided.
Ahead. Perhaps I'll just I think you said 16175. Yes, that's correct. Yes. So given recent events, ahead.
I think it's fair to assume that we would be aiming for something less than the top of that range. We need to work through go ahead. Thanks for the current disruption and the extent that will impact OpEx over FY 2020P. Ahead. There were a number of areas that were on hold during FY 'twenty one that we can't indefinitely.
So we do need to ahead. And to that additional expenditure. Examples include upcoming retender of duty free. There's go ahead. Quite a process that's involved with that as well as Adrian touched on earlier, the aeronautical pricing reset.
There's quite a bit of go ahead. And regulatory lawyers, etcetera, that go into that and some other compliance areas that we do need to pick up. Ahead. So we're not expecting to be able to continue at FY 2021 levels, but we are expecting to be within that guidance
ahead. Okay, understood. Thank you. That's all from me.
Ahead. Your next question comes from the line of Benjamin Brayshore from Beren Joey. So please ask your question, Benjamin.
Ahead. Yes. Good morning, Adrian. Thanks for the presentation and congratulations on a successful tenure as CEO. I just wanted to personally Chat about tax, there would appear to be $29,000,000 of tax expense for the second half of twenty twenty one.
Ahead. Could you just clarify what does that relate to? And does AIA have carry forward tax losses that it can utilize for the next 12 months?
Ahead. Firstly, thank you for the kind of comments. I'll hand to Phil on tax.
Yes. Yes. So this is deferred tax Expense, so it relates to the investment property revaluation, non land ahead. So it's not going to be incurred as a cash expense this Financial year, and yes, we do have significant losses that will carry forward. Ahead.
Okay. Thank you. And just on the I suppose the covenant renegotiation, ahead. Could you just clarify, has there been any change in the margin for the underlying syndicated
ahead. Yes. So, the way we went about the extensions was ahead. Bilateral conversations with the 5 or so of our banks that had maturing facilities over ahead. January to April next year.
And we the line fees and margin were part of that discussion. Ahead. Taken together, there was a material reduction in overall fees through the 35% compared to where we got to when we ahead. We financed in April last year.
Okay. And just finally, ahead. In relation to the property portfolio, you're highlighting 185 hectares of land available for future development. Ahead. Could you just talk about the composition of that?
How much is available for development within the landings
and how much is outside of the landings and therefore presumably
more long term, And therefore presumably more long term in opportunity.
Yes. Ahead. Yes. I think the available land from the landing ahead. It's around about 40 hectares of that.
But in terms of our total investment property land holding, We've got more like 220 hectares. So there's approximately 40 hectares of that that we've tagged as ahead. Not developable. That's things like riparian margins around estuaries and other areas, unsecitable ahead. But yes, it's the minority that's in the landing.
That's in a significant ahead. Area and the old golf course and also as you move east on Poonau Road to the right of the road as you're heading
ahead. Okay. Thank you.
Ahead. Okay. Your next question comes from the line of Andy Boehly from Forsyth Baer. So please ask your questions, Andy.
Ahead.
Thanks, operator, and good morning, guys. And best wishes, Adrian, for the future. A couple of questions from me. The first of which is ahead. Around the recovery profile.
So really keen to dig into your thoughts about how things unfold here in New Zealand. There's clearly a lot of unknowns out there ahead. At the moment, but IATA, if we step back, are expecting Global PAC's recovery back to pre COVID levels by calendar year ahead. Maybe the way to frame my question is, could you give us an idea of how you're thinking about Auckland Airport in calendar 2020 go ahead. Sorry, this is pre COVID type levels.
Yes, sure, Andy. I'm slightly disappointed you can get first some of your question that breaks the strike. Ahead. It's really hard to say what looks like. And it's as we sit consistently through this, it has been the New Zealand dimension on this.
Ahead. Look, my personal view is it's going to be clunky on the way out and it will probably happen initially slowly and then we'll accelerate in terms of what ahead. The coverage of that curve will sort of take a while to get going and then really take off. And that's also a big though to what we don't know around virus Behavior activity and also mitigations of the response. I know we're all prognosticators on viruses ahead.
But these things do tend to fill out over time as vaccines sort of take place and it becomes endemic. It's just New Zealand may be slower
to that path And the rest
of the world, I hope we've been tracking very closely, you do and others do. What's happening in other markets, U. S, Europe and others, ahead. There are still bumps, no question, but some of those domestic airlines in the U. S.
Are operating over FY 2019 performance. Ahead. People are, I think, very keen to travel again. So there will be some catch up in there. It's also why we are very focused on ahead.
How do we help the help safely reopen the border and we've got the government on that? I think the government here knows as the PMC that we have to reconnect. Ahead. It's going to be a tricky period between now and then. So we want to actually, we put the effort into designing the go ahead.
So, look, Andy, I do think in the New Year, you'll ahead. Starting to see markets covered naturally, Australia will always be the focus for our country. And then you will see other countries ahead. Reconnect and some candidates that I mentioned were Singapore, Korea and others, Taiwan. So ahead.
It's hard to give a clear view, but by 2023, 2024 maybe normal It's getting closer again. It will be a new normal. There's no question. Some things that we have today around process will remain and ahead. And then other things will fall away as it becomes more normalized.
Sorry, any as good as we can give at this stage? No,
go ahead. Fair enough. I don't know either.
So I'm not sure anyone else any of us do. 2nd question, retail. Phil, you mentioned a
couple of things. 1, you mentioned concession rate reductions.
And you also mentioned around the ahead. And you also mentioned around the RFP process for duty free concession. So maybe could you elaborate ahead. On both of those, firstly, in terms of the concession reductions, are they temporary? And how are you thinking about concession rates when borders reopen?
And then on the ahead. The FFP side of things, what's the process? What's the timing for the duty free concessions?
Yes. I'll go ahead with that. Look, so right through this, Andy, We've taken quite a bespoke. It's been very custom to each tenant and their circumstance in the market. So certainly, whether it's land go ahead.
It has been temporary in nature. It's sort of rolling. And maybe that's gone from go ahead. Well, up to up to a slightly longer sort of window. And we're constantly leaving in thresholds and metrics that allow us to restart The conversation with retailers about it.
So now it's time to keep going again. So I mean domestic, while very small compared to international, is a good example of that. We supported the domestic ahead. Retailers through the initial lockdown period, Scott and Guy again. And some of them were trading ahead of where they were pre pandemic.
So that's a great sign. What's important The continuity through to the other side and getting going again. A lot of the hard decisions by some of those retailers have been made. And we still have as I said, our go ahead. Occupancy is, I think, close to 96%.
So that's been really pleasing. And I guess, obviously, we are looking ahead to the next tender cycle. Ahead. So again, not sort of focused on here, but our team has done a lot of work on looking ahead to that next tender cycle and trying to think about how our re go ahead. And our approach would look.
What we had to land first in that sequence was the terminal integration plan and How Demesec would integrate into international. And so we've actually we did a lot of work working through a range of options, which go ahead. We don't have to go to here, but how that would work because obviously we don't want to hit a tender process with a lot of details go ahead. So look, I think we're actually in pretty good shape. We are still focused on, ahead.
I guess a single operator model for the G3, which is by far the vast majority of airports go ahead. There was only a handful, which we have, like a couple globally who run a full service dual model. So that still remains our focus. But We're going to work our way through that, but I think we're in good shape at the end of it.
So just in terms of timing of that, I think the Current concessions end, what, next year, end of next year? Are you expecting still to manage the process as those it expire or can we extend the existing concessions further because of the uncertainty?
Well, it does rule parts of the calculation that leads to week 3. And I guess we'll leave our time ahead. As long as we can to get a clearer path, a little bit like we're doing on euro pricing. I think that the greater certainty we can have on what recovery looks like, the better. Ahead.
I think we'll start to get close on that Q1, Q2 calendar year next year. So that will help us. But no change in program Now we're working on a basis we're running a standard program in terms of retainer, but obviously we can modify that if we need to
ahead. Your next question comes from Andrew Steele from Jarden. Please ask your question, Andrew.
Ahead. Good morning, guys. The first one for me is just on your CapEx guidance. Can you just highlight the ahead. Swing factor between the top end and bottom end of the range.
And if you could, in particular, call
ahead. Yes, sure. Hi, Andrew. So the range really reflects ahead. The potential range in our delivery of those CapEx plans over FY 'twenty two, as we've talked about particularly this time last ahead.
Yes. We put on ice almost the entire in excess of $2,000,000,000 ahead. You're in order CapEx program a bit before this time last year. And that means that quite a few of the Redundancies were focused on that project management space. So we're in the process now of ramping up that team again.
Ahead. So it's just applying a risk adjustment to delivery of the budgeted CapEx. I'm sorry, what was the second part of your question, Andrew?
Ahead. How much within that do you expect for investment property for Ginnaca?
Yes, investment. Yes. Ahead. So let me refer you to if you look in ahead. Page 15 of the financial results at the bottom of it, we've got the outlook for FY 'twenty two.
So less than property between $50,000,000 60
ahead. Great. Thank you, Phil.
And just, I guess, a follow-up ahead. To Andy's question on the retail side of things. How would you describe your current relationship with the 2 go ahead.
Yes, really good. We're in constant contact, both head office and more local offices. Ahead. Look, we're going to see the same thing in parallel, it's actually not dissimilar to the airlines, right? So, something like an existential crisis to go ahead.
So look, it's very regular and that applies not only to the G3 guys but all the retailers.
Ahead. Great. Thank you. And just last one for me is just on the change in profile of capitalization of OpEx And Triskov, what's the level of those two numbers sorry, what's the level to numbers you expect for FY 'twenty three sorry, FY 'twenty two?
I will have to come back to you on that one, Andrew. I don't have that at my fingertips, but we are restarting a number of projects. So we would expect capitalized interest to increase ahead. Reasonably significantly in FY 2022. Great.
That's all for me. Thanks, guys.
Your Your next question comes from the line of Wade Gardiner from Craig Investments. Please ask your question.
Ahead. Hi, guys. Just want to labor the point on retail. Ahead. I mean outside of the duty free operators, are there a number of other tenders?
Because I understand we know timing of the duty free, but some of the other retailers are on different timing is my understanding. There are a number of those that ahead. Are also expiring. And are you comfortable that they will be happy renewing contracts?
Ahead. Yes. Good day, Wade. Look, the timing is different. You're right.
I can't at the top remember exactly when the sequence is. But if you think about when we went Through that cycle, duty free simply came out of the blocks first and was contracted some maybe on 24 months, I think, before the new space ahead. So there is a profile to the expiry, which starts really with duty free. Look, in terms of what it means at the other side, look, it's still a little bit hard to say because we're not alone in this. This is a global issue.
Some of the retailers are global. Some of them are more local operators. So I don't want to pretend it's going to be Perfect. Pivot out the other side, but and there will be some bumps that have some of them as they spin up and start going again. But look, ahead.
The best thing we can do the most that we can do to stay in control of our own destiny is to stay close to them, support them and keep them operating ahead. On the return path. I'm sorry, that's probably all I can say, Wayne. There's not all until we get there, it's all hard, so. Ahead.
Okay. Just on the aero discussions,
can you give
a bit of color on how far through those discussions are you? And is the clawback of FY 'twenty three
ahead. Yes. Going to be a
sticking point. Yes. So we have completed the initial round ahead. Of consultations or had feedback on the proposal, we are working towards ahead. And then we'll come back to a couple of the airlines regarding their request.
Ahead. So we would expect to have that completed. We have an Aaron Michael pricing committee meeting coming up in November. So we want to run that to ground ahead. By the end, there's certainly a ahead.
Strong understanding of why we would expect to recover under earnings in the 1st year. If that's the period of any price freeze, you may recall that this is quite similar to the approach that Wellington Airport adopted. Ahead. Unlike Wellington Airport though, we're not seeking to recover in PSC IV the several $100,000,000 of aeronautical losses that we've incurred as a result of COVID, whereas Wellington, that COVID ahead. Actually spanned its pricing period that was consulting on.
So it's been able to forecast to recover those. Ahead. So those are the sort of things that are under discussion, and we haven't quite landed it.
Okay. Just Final question. The guidance that you the retail guidance that you gave in early July, ahead. It was clearly before this most recent lockdown. And I think also, I mean, prior to New South Wales really Case is taking off.
Are you still comfortable with that retail range? Or should we assume that it is sort of tracking that Given the current situation, you'd be more comfortable at the low end than the high end?
Yes. That's a valid assumption, Wade. Ahead. As on the low end of the range is a better guide now.
Okay.
That's all for
me. Your next question comes from Suraj Nambhani from go ahead, Citigroup. So please
ask your
question, Suraj. Good morning, everyone. Thanks for taking the question. So firstly, sorry Sorry to hop on about retail, but just wanted to get something clear. When exactly does the duty free contract expire, please?
Ahead. Yes, Suraj. It's not a contract. It's 2 contracts and it expire the 2 don't expire at the same time, so there's Sprint. So from memory, It's towards the end of next year and the period thereafter, some half a year or something after that.
Okay. Thank ahead. And just one for Phil. I think you were talking about the additional ahead. Through FY 2022 is the ones included in the €160,000,000 to €175,000,000 ahead.
Can you just provide a bit more detail on that, Phil?
Yes. So We are rebuilding Teams. So there's going to be additional headcount will come through there. I mentioned the consulting and legal work around aeronautical pricing reset, the similar work ahead. And also we had significant savings in ahead.
Outsourced operations, so the likes of car park operation, park and ride, valet in particular ahead. And also cleaning was operation of the Red Zone separate Processing facility in Pier B that's incurring additional costs that will carry forward. So those are all the categories that are contributing to that Step up in OpEx in FY
2022. Okay. All right. Is Is it possible to quantify them? And is there any flex around those items depending on how ahead.
How the
lockdowns progress?
Yes. There is. We see the flex as being reflected in that range that we provided back ahead. In July, dollars 160,000,000 of $175,000,000
Okay. And on the debt costs, I think, Phil, you were talking about a reduction in And the overall fees, are you just able to quantify that or give some numbers around the debt cost expectations for FY 2022 maybe?
Ahead. Yes. The best guidance really to reiterate that we're expecting on a normalized basis interest expense to reduce by ahead. A little bit over $10,000,000 for FY 'twenty two going forward. So it was roughly 70,000,000 ahead.
Pre the abnormals through the restructuring expenses in FY 'twenty one.
Got it. Okay. Ahead. That makes sense. Thank you.
Okay. Your next question comes from Marcus Curley from UBS. Go
ahead. Thanks. Can we just start maybe Adrian with Where you see the key gateways next year for order reopening, in particular, ahead. What needs to happen to get Australia back operating?
Yes. Ahead. Well, look, the gateway is something the attention we're going to focus on is obviously Australia as you sort of finished on. That's going to be fundamental ahead. From a personal connection, commercial and tourism point of view, it's a critical market.
We got most of the way there, and that was great, And it was building actually. So while it was not where it needed to be longer term, it was building strongly. So look, that's an obvious place to start. And I think we should be realistic that a vaccinated travel pathway rather than the quarantine free traveler Unvaccinated model that was there before is how it's going to restart, I think, given the outbreak of Delta in New South Wales and Western Australia and now here. Ahead.
So, back then at pathway to Australia, I think is probably realistic. Beyond this, I think it will be It's a little bit the start again from the beginning and go to where your fundamental roots were before it started expanding significantly in the sort of ahead. So Singapore would be an obvious one, probably Korea, Taiwan and then you ahead. Look to the U. S.
As always candidates. The Emirati hubs, there's a lot of cargo going that way around it, but they would be ahead. What it will then depend on is how those hubs operate there. Infrastructure is something we've been dealing with, but they have significant ahead. And we'll be able to operate potentially different traveler types and or process to ahead.
Make reconnection here work. But it's actually that detail Marcus that we need to work through this Make We Work program because ultimately New Zealand has to decide what it needs ahead. And we are a small country, right? So we've got to be realistic around that. And I think that's a dose of operating reality we need ahead.
Advise the government on in terms of what can be achieved at those ports. So, yes, I would start from a simple principle go ahead. I'll go to the core sort of hub routes that we hit in the early part of our network for 2016, 2017 and then build back from there. The The biggest swing factor was probably China, I think. And that will really depend on both China's attitude and New Zealand's attitude.
Ahead. Yes. World class getting people tested and vaccinated in a short period of time. So I think if they can work that out And New Zealand wants to reconnect with that market, which it does. That will be the thing that will probably shape the go ahead.
And in your discussions with the government, has it been or Can you provide any color on whether there is a minimum threshold for New Zealand vaccination levels before a Your vaccine passport traveler from Australia can enter our country? No.
Look, I can't give any color on that, Actually, Marcus, that's really a question for the government. We'll try and make it work whatever ahead. Standard they choose to. But I think the key thing, I think, this was mentioned last week was the intent to open and the sort of sense that ahead. It's figuring out how to do that and no hard target on vaccination.
In a way you could argue that was smart because it allows a more nuanced ahead. Approach to vaccination status in the country as we understand what the rollout looks like. But in a random way, as I said, The current outbreak might encourage vaccination rates to go quickly if it has New South Wales. So that might accelerate whatever ahead. The metrics, the scientists and the advisers of the government are thinking about in terms of what we are looking for.
I think they understand though both the human impact and the ahead. Commercial impact on being disconnected from the world means. And so figuring out that answer is I think they really understand
ahead. And secondly, Has there been any change in the dividend policy or any thinking around the dividend policy post the covenant
ahead. I'll dive in there, Marcus. So ahead. The dividend policy hasn't changed. However, we are still under Dividend blocker, the existing covenant waivers are in place until 1st January next year.
Ahead. And our dozen policy is to pay, obviously, dividends out of underlying profit. Ahead. So it will very much depend on the recovery of FY 'twenty two and 'twenty three, the extent to which those ahead. Funding through underlying profit to pay a dividend, but this will be ahead.
Re examined by the Board probably around about this time next year. And there is a possibility that dividend policy may change reflecting what go
ahead. Okay. Thank you. And then just on the new outlet center, ahead. Yes.
I know it's early days, but any sort of ballpark on the CapEx investment there and potential timing?
Ahead. Look, it's probably I mean, this is a rough guide, right? And there's milestones we ahead. Probably a few but you can do expect it probably a 4 year project. Ahead.
Look, we haven't disclosed any numbers, but it's a meaningful project. I'll call it that. Ahead. But look, as we get through the project, I think we'll be able to talk more about that. But you can kind of get a sense of scale, 20,000 Squares ahead.
It's a meaningful sized project. But look, Marcus, we'll come back to that once we get through the project. Ahead.
Okay. And then just finally, just hopeful as well. You mentioned interest costs. Ahead. Yes.
Can you give any guidance on where you think depreciation lands next year?
Ahead. Most of the projects will be ongoing that we the CapEx projects ahead. So there will be likely a small uplift, but not significant, certainly not at the level or experience
go ahead. FY 2020 2021.
Okay. Thank you very much.
And your final question comes from Jason Fermelton from the ACC. So please ask your question, Jason.
Ahead. Hi, good afternoon guys. I'm sort of Marcus following a little bit, but just on the outlet center, just talk about like what sort of metrics or hurdles you're looking at, what ahead. The yield and cost you're targeting. And then just for clarity, you will be the owner, sole landlord, etcetera,
ahead. Yes. Look, that's right, Jason. And that's actually an important part of the And we did think about this. You can imagine these are well understood operations And commercial businesses globally and so there's real interest in this kind of concept.
But we thought about it as part of a total system and we talked ahead. Many times before about how we saw the future of our retail business emerging through 4 different dimensions, including the online channel as well as terminal, off terminal ahead. And then land side. So this is the final leg, I guess, to some degree of that retail stuff, that strategy coming to bear. In terms of metrics, ahead.
I think what I would really refer you to and I want to talk about those, but we've looked at local ahead. Some examples, I looked at rates, excluding the rates there in terms of rental rates and compared them. Ahead. And so we have a pretty good handle, I think, on what that looks like. And I think it's a very attractive proposition from that point of view for us.
Ahead. And we've had excellent feedback. And I can't under do this, but we have been working very, very closely across Australia and New Zealand. Ahead. Pre pandemic, we were doing work on this, making talking to brands and Aussie and NZ as well as doing a lot of consumer research and qual on go ahead.
And some of our feedback has been exceptional. It's been really strong. So ahead. I think both on a commercial analysis using our reference cases and basing based on ahead. Tenant feedback and consumer feedback, I think it's a very exciting prospect.
And it is complementary. And I think that's been a big part of our thinking. Ahead. The overlaps with our terminal activity and online stuff, I think we can really focus on complementary go ahead. There are brands that just don't and won't fit in the terminal environment that we've been missing out on.
We know there are products around Orkut where some of those brands ahead. Yes. I don't think that's what they want to do in a DFO style model. So I think this proposition, the feedback we've had absolutely go ahead. Yes, I mean, I know that's not specific, Jason, but hopefully it gives you a rough ahead.
Okay. So again, just on retail, I don't want to leave at the point. But if we look back to When you gave that guidance on 1st July, about $25,000,000 to $30,000,000 $35,000,000 And then look at what you delivered this year, to the bottom in there's not much ahead. But clearly, when you gave the guidance, the TransUnion Bubble was operating, there was probably an expectation at some stage once ahead. I'm just trying to understand why this uplift wasn't expected to be greater.
Ahead. And I guess I'll marry that with what you said today around passenger spend rates by those travelers who were hitting across the Tasman being back above ahead. We're back to 2019 levels. So I'm just surprised that that number wasn't higher when you guided back in 1st July. Can you just allude to why
ahead. Yes, perhaps I'll dive in there. It reflects the level of relief that we're providing to ahead. International retailers at the moment. So as I mentioned, it's a combination of mag release notes, so no mag ahead.
And also some reduction in concession rates. And Probably fair to say, we tend to take a conservative approach to our recovery assumptions, which we would know were below Market consensus. And of course, that's changed dramatically now with the TASM bubble closed and the lockdown we're experiencing in NZ.
Ahead. Okay. And then just one final one. The just on those the new covenants, ahead. I'm right in thinking that they apply on a calendar year basis rather than financial year basis.
I start applying from 1st January 'twenty two and then 1st January 'twenty three.
Ahead. Actually, they plan a rolling 12 month basis, and they're only measured twice a year. So they measure that 30th June 31st ahead. But we expressed them in terms of calendar years because the metrics themselves ahead. Adjust on a calendar year basis, so 2.0 times for calendar 2022, 2.5 times for 2023 and then ahead.
Three times from 30th June 24 onwards.
Okay. And so to assist so the covenant is it like this time next year for the full year 'twenty two result will be based on the two times number which applies to the whole ahead.
Yes, that's right. And I'll just reemphasize that it's equivalent to our EBITDA per measure that excludes several new changes
ahead. And Adrian, all the best. Thank you for your great stewards of the airport. You've done a fantastic ahead. Obviously, it doesn't mean the last 18 months or so that I guess you will perhaps other people have planned for, but well done and all the best for the future.
Appreciate that. Thank you. Ahead.
A question We've got from Paul Butler from Credit Suisse. So please ask your question, Paul.
Hi, thank you. I Just wanted to ask about the your proposal to delay the PSC for ahead. It's a good deal of uncertainty in trying to do that now. But I'm just wondering, apart ahead. From volume forecasts, what are the key inputs that are difficult to ahead.
Just a question, is there not an opportunity to Do that now in an environment where there's uncertainty where potentially you could argue for higher returns because of that
go ahead.
So building blocks, the key components in the forecast are forecast, ahead. Obviously, passenger numbers or units of demand, because you use them to divide your required revenue by to get prices, ahead. Forecast operating expenditure and forecast capital expenditure. And ahead. The elements that are most uncertain there, certainly unit demands, some units of demand, I should say, passenger numbers in ahead.
Magto and we are somewhat concerned that there will still be significant uncertainty ahead. On that, come around May next year, when we'd have to set prices. And the problem of having that uncertainty is that it becomes difficult To reach agreement between airlines and the airports, naturally airlines argue for a strong ahead. The recovery so that the unit prices are lower and airports tend to base it on what evidence we're seeing at the time. Ahead.
So it's not helpful to have a big scrap around your forecast demand assumptions. Ahead. And that's part of the reason why we prefer to put off the decision until we have greater alignment with the airlines on the recovery. Also, as we touched on earlier, we've got a significant air and local infrastructure program that we're targeting moving forward. Ahead.
Other than the enabling works per FY 'twenty two CapEx guidance, the rest of that ahead. The program isn't yet triggered. And as Adrian touched on, we would need to see something like the Tasman reopening at 2 thirds of pre COVID levels to trigger the whole program. So it's a moot point whether or not we'll be at that at the time when you set prices. Ahead.
On the question of what about target return, yes, there is certainly evidence that we ahead. I have compiled with expert advisers that would suggest that there is an argument around target return, systematic risk ahead. Associated with COVID and risk of pandemics. But we will apply that ahead. The pricing period even if it was deferred would start from the 1st July next year.
So we would have to calculate Weighted average cost of capital in our target return from the 1st July next year. That would simply apply for the 5 year period. But as we touched on, The first period during price freeze will be based on actuals rather than forecast. But certainly, any arguments around Our weighted average cost of capital on target return will apply right from the beginning of that period.
Thanks very much.
Ahead. Okay. With that, there's no further questions. So I might hand the call back to you for now, Adrian, for some concluding remarks.
Great. Well, thank you, everyone. Really appreciate the questions, and thanks again for your support over the past year and ahead. So I just wanted to again finish by thinking outside for had an unbelievable effort in the last 18 months. They've done themselves proud.
Ahead. And I think the results and the path out reflects their hard work. So thanks again, everyone. Hope you have a good day and hope lockdown goes okay for you. Thank you.
Ahead. Ladies and gentlemen, that does conclude today's conference call. Once again, thank you all for participating today, but you may now all disconnect.