The two airports announced a strategic alliance yesterday aimed at promoting tourism growth. Auckland Airport will take a 24.99% stake in the Queenstown operation through the purchase of new shares, funded from existing cash resources.
Queenstown Airport was previously solely owned by the Queenstown Lakes District Council and, providing the council approves, it may exercise an option for Auckland Airport to increase its shareholding to 30%-35% any time up to June 30 next year.
Mr Geddes said he would oppose the use of the cash to subsidise rates.
The Queenstown Airport Corporation (QAC) would pay the council an upfront special dividend of $10 million "in a matter of days or weeks", with the estimated ongoing annual dividend of at least $2 million to $3 million to follow. However, the timetable had not yet been discussed, Mr Geddes said.
Rates were a reflection of the costs of operating the district and needed to be understood and paid for, not "camouflaged" by the Auckland investment.
"The deal closed [yesterday], the settlement's been made, but it will make absolutely no difference to council's 2010-11 annual plan. That's why I'm saying the use of the special dividend and the ongoing dividend needs to be the subject of a very measured discussion between [the] council and the community."
The announcement was immediately attacked by mayoral candidate Vanessa van Uden and former mayor Warren Cooper, who both criticised the lack of consultation with the full council and the community.
A 25% share sale would have triggered a community consultative process under the Local Government Act.
Auckland Airport chief executive Simon Moutter said the focus of the strategic alliance included co-ordinated destination promotion and route development discussions with airlines.
"The principal target for the alliance really is to generate an additional 176,000 passenger movements per annum at Queenstown by 2015."
At a press conference yesterday, Mr Geddes said the decision had been taken by QAC directors according to the company's constitution.
"It is supported by the council for three reasons.
"Firstly, the decision to increase the share capital and to have [AIAL] take that up has created a very strong and important strategic alliance between the two companies.
"Secondly, that the decision has resulted in a reduction in the risk that had existed to the company and to the ratepayer, as shareholder, in regards to the ability of the company to accommodate the large and quite expensive capital expansion of the airport that is required in the next 10-year period and beyond.
"Thirdly, from the community's point of view, for the first time since this company was formed, the community of the Lakes district, who have been a patient shareholder, will receive a dividend on their investment in this airport, as of course, will our new shareholder."
- Additional reporting by NZPA
