- Sydney Airport (SYD) claims it has enough cash on hand to weather the ongoing COVID-19 storm
- As the virus continues to ravage the travel sector, the company said it has an effective $2 billion in cash available to stay afloat
- Still, some hefty cost-cutting will take place as more travel restrictions are enforced by the government
- As such, the company is no longer expecting to spend it’s predicted $350 million to $450 million over 2020
- Shares in Sydney Airport are just slightly lower today, currently down 0.62 per cent and worth $4.83
With the COVID-19 pandemic still ravaging the travel sector, Sydney Airport (SYD) released a surprisingly upbeat announcement to shareholders today.
The company revealed earlier this month that passenger numbers were down almost 10 per cent over February on the year before. However, while Sydney Airport has not shied away from revealing the impact of the coronavirus on business operations, the company said it’s in a strong position to weather this economic storm.
At the forefront of the airport’s financial stability, of course, is a strong balance sheet. According to company management, Sydney Airport has over $370 million of unrestricted cash on hand and $1 billion of undrawn bank facilities from more than 10 banks.
Further, with $600 million set to be hitting the company’s books in June from February’s U.S. Private Placement (USPP) bond, Sydney Airport has an effective $2 billion in available cash to keep things afloat until the virus has dissipated.
The company said it has $1.3 billion of expiring debt over the next 12 months, with another $200 million due in November 2021. As such, the hefty funds behind the airport are enough to keep debtors happy for quite some time.
Part of the reason for the nice little lump of cash comes from Sydney Airport’s “strong operating cost control” over the past year, according to today’s release to shareholders.
Nevertheless, this cost-saving will be heading into overdrive to offset the heaviest of the COVID-19 losses.
“Despite the strength of our balance sheet, we are in the process of reviewing our entire capital expenditure program for 2020, with the objective of only continuing with critical projects and deferring less critical projects until further clarity is gained regarding the persistence of the current travel impacts,” the company explained.
“As such, we no longer expect to spend our previous forecast of between $350 million to $450 million in 2020.”
Perhaps this prudent spending and comfortable savings is part of the reason Sydney Airport is somewhat-outperforming its sister stocks in the travel sector.
While SYD shares have still declined a heavy 42.67 per cent since February 21, other travel stocks have fared far worse over the same period of time. Webjet, Qantas, and Air New Zealand have each nosedived by more than 64 per cent since February 21. Virgin Australia has slumped over 59 per cent.
Today, shares in Sydney Airport are trading a slight 0.62 per cent lower at $4.83 each. The company has a $10.84 billion market cap.