Ann: Sydney Airport Traffic Performance February 2020, page-246

I can't see how (limited) domestic travel will be enough to sustain any dividend in 2021. The longer this goes on, the more I am expecting a dilutive share purchase plan to raise money.

The big spenders at the airport (long-term parking, duty free purchases, landing fees, etc.) are international passengers. You could even argue that keeping the airport running for reduced domestic service will cost the airport money during 2020; especially if (like Coles and Woolworths) they need to spend millions, hiring health workers, making modifications and installing whatever needs to be installed to make people feel safe.

If we get international travel back in mid-2021 (as Alan Joyce seems to expect) and it takes time -- until 2022? -- to get meaningful numbers of international travellers, surely that limited revenue will go to servicing the debt, not as distributions to shareholders.

There is the future political risk of Chinese tourists being unwilling or unable to travel to Australia, in addition to the health risk for passengers keeping people home upon re-opening, and financial risk of debt covenants needing a share purchase plan to cover.

I look at the REITs and see how their share prices have been smashed. GPT, SCG, AVN, etc. These share prices have rightfully fallen -- about the same from February's peak as SYD. And these are companies with quality assets, great locations, businesses paying rent, customers who are spending money there, and no issues about being (semi) closed for at least the next six to twelve months. Net Tangible Asset has fallen a little and rent has suffered but not to the extent of SYD. I don't see SYD as any different to the REITs at the moment. Except that its one advantage (the moat of being Sydney's only airport) is suddenly a major disadvantage due to the virus.

I can't justify buying SYD over, say, GPT(not a recommendation; only for the sake of argument...) -- which is at 5 year lows, paying dividends, has a diverse portfolio and will bounce back over time. Don't get me wrong, I would love to buy SYD and hold for the recovery but $5.75 isn't exactly a fire sale. It makes a lot of assumptions about vaccines and 2021 distributions, and assumes a lot of risk that I can't justify.