Morningstar | Following investments in fiscal 2018, Auckland Airport's margins should expand in future years.
Auckland Airport enjoys a wide economic moat given its ownership of its namesake airport, as well as the large industrial, commercial, and retail precinct surrounding. New Zealand continues to grow as a topnotch tourist destination, with several international airlines announcing plans to fly to the country in recent years, and Auckland should remain its gateway. To capture this opportunity, the airport will continue a substantial expansion and upgrade over the next several years, which will require significant capital outlays, but we expect passenger growth and accelerating pricing to drive a rebound in cash generation, with EBITDA growing at 9% per year, on average, over the next decade. The company's monopoly position justifies its wide moat rating, and we believe the light-handed regulatory environment will enable the company to generate returns above its weighted average cost of capital over the long term.Auckland International Airport provides airport facilities and supporting infrastructure in Auckland, New Zealand. Co. and its subsidiaries have three reportable segments: Aeronautical, which provides services that facilitate the movement of aircraft, passengers and cargo, and provides utility services that support the airport; Retail, which provides services to the retailers within the terminals and provides car parking facilities for airport staff, visitors and passengers; and Property, which is engaged in the rental of space on airport land outside the terminals including cargo buildings, hangars and stand-alone investment properties.
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