Sydney Airport (ASX:SYD) shares have paid a great dividend over the years. However, they have had a weak start to 2019. What are the challenges for the business and what are the key charting levels to look for?
Sydney Airport (SYD) has been placed in a quandary after the Commonwealth government set out the terms for development of the second Sydney airport at Badgery’s Creek in its notice of intention (NOI). The main change to expectations is that there is no federal funding involved in the NOI, placing the investment decision squarely on SYD, which has first right of refusal.
Sydney Airport has started to re-negotiate access agreements. Macquarie assesses the company is facing a more challenging slot environment, as competitors, such as Western Sydney, Melbourne and Brisbane, are adding runway capacity.
The month of August is expected to reflect the impact of the Hong Kong protests on demand for flights out of Sydney. Some 7% of international passengers are bound for Hong Kong on average, and the broker now assumes a reduction in its forecasts.
The company anticipates a one-off expense of -$182m in FY19. This relates to an indemnity provided by Sydney Airport under the previous Macquarie Airports ownership structure and in relation to the sale of Copenhagen Airport in 2011.