Queenstown Airport Corporation's six-monthly report lists the strategic alliance with Auckland Airport as a highlight and has included the impending High Court judicial review into the alliance as a challenge.
The report, along with the airport's draft Statement of Intent (SOI) for the years ending June 30, 2012-2014 will be presented to the Queenstown Lakes District Council finance and corporate committee at its meeting in Queenstown on Tuesday.
The airport, a council-controlled trading organisation, is required to present the items under the Local Government Act (LGA).
It showed the aeronautical contribution was up $1 million (or 26%), with revenues up $1 million, driven by aeronautical activity of international passengers, up 35%, and domestic passengers, up 12%.
The commercial contribution had increased by $219,000 with revenues up by $390,000, driven by car parking and retail.
Overheads, however, had also gone up by $244,000 "driven by planning and legal costs".
The half-year highlights included record winter flights and passengers, the runway end safety area - which remained on schedule to be completed before the Civil Aviation Authority's October deadline, the opening of the new baggage area and increased services from Jetstar and Air New Zealand.
It also listed "new shareholder and strategic partner - AIA" under highlights, along with a restructured balance sheet to fund capital projects.
Under airport key projects and challenges for 2011, the airport listed construction of the runway end safety area, construction of temporary facilities for this winter, the installation of runway lights and, finally, "High Court judicial review".
The airport's draft SOI, which sets out the company's overall intentions and objectives for the next three financial years, must be completed and delivered to the council by June 30, but is reviewed annually with its shareholder - the council, on behalf of the community.
Included in the changes was the commercial value of the airport, which rose from an estimated $109 million in last year's draft SOI to $136 million this year.
The dividend policy now says the directors are "currently consulting" with the council with respect to a dividend policy.
"At this time the company has not determined the proportion of accumulated profits and capital reserves that is intended to be distributed to shareholders.
"Further, any decision to pay a dividend will also require approval of the company's principal banker, in accordance with the company's banking covenants".
Last year's draft version said the directors did not intend to pay a cash dividend to the shareholder, given the capital expenditure and the consequential level of debt being carried by QAC.
Changes were made to the SOI last year between the draft and final versions being presented to the council and, in the fallout from the strategic alliance, the change under the capital subscriptions heading was questioned.
In the draft version it read "no capital injections from shareholders are expected in the current period" while the final version read it will consider the need for and sources of capital subscription - which remains unchanged in this year's draft SOI.
Air New Zealand took legal action against the airport board's directors - Mark Taylor, Duncan Fea, Murray Valentine, James Hadley and, from June 10 last year, Alison Gerry.
The airline alleged "unlawful conduct" against the directors for their decision to enter into the strategic alliance, which it claimed did not comply with several requirements of the LGA and was not in accordance with the corporation's SOI.
