Good day, and thank you for standing by. Welcome to the Auckland Airport Interim Results 2022 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star, then zero. I would now like to hand the conference over to your host today, Carrie Hurihanganui. Please go ahead. Welcome and good morning. I'm Carrie Hurihanganui, CEO of Auckland Airport, and I am joined today by Chief Financial Officer Phil Neutze. Let's move to slide three, please, to get things started. By way of background on me, I joined Auckland Airport on the eighth of February after nearly 22 years with Air New Zealand, most recently in the role of chief operating officer. I am delighted to have joined Auckland Airport as an organization that will be playing a key role in New Zealand's recovery and future growth. Let's talk about the results. If we can move to slide five, please. Our first half 2022 results continue to reflect the impacts of the pandemic, with revenue decreased by 4% to NZD 126.2 million, with declines in all passenger-driven revenue streams. Operating EBITDA declined 31.4% to NZD 60.3 million. Auckland Airport reported a second year of underlying loss after tax of NZD 11.5 million, which is NZD 2 million higher than the loss of NZD 9.5 million in first half 2021. Reported profit was NZD 108.8 million, with the main variance from the underlying loss being investment property fair value uplift of NZD 131.5 million. As a result of the loss, no interim dividend will be paid. For the six months to December, total passengers decreased by 1.1 million, which is a 39.1% decrease. That's a movement from 2.8 million to 1.7 million passengers. The primary driver of that is domestic, which is down 45% to 1.5 million, and a slight uplift in international and transit passengers of 200,000. You'll note that aircraft movements are down 28%. That is less than the passenger numbers due to the ongoing strength in cargo and the airline support through the MIAC scheme. Capital expenditure of NZD 116.6 million was 24.2% up on first half 2021, reflecting the increased aeronautical investment in renewal activity on the airfield and planning activity for an integrated international and domestic terminal. Slide six, please. Revenue performance breakdown, that we've seen, that 126.2 million that I was talking to before, the breakdown of that is that aeronautical revenue declined 14.6%, driven by a reduction in passengers. Retail revenue was effectively flat at 1.4%. While domestic retail suffered relative to the prior period last year due to the prolonged Auckland lockdown, there was an albeit short-lived travel bubble in July 2021 that did have a noticeable impact on the international retail performance for that short period of time. Car parking income decreased 30.4%, primarily driven by a weaker domestic performance as a result of the lockdowns and lower demand. Similar to retail, the July travel bubble did see that short-term significant uptick in international performance. We turn to Queenstown. Performance was impacted by both the international and domestic travel restrictions, and so their domestic passenger numbers decreased by 29% compared to the same period last year. Underlying hotel performance was supported by Novotel's continued use as a Ministry of Health quarantine facility throughout the period. Occupancy at the Novotel was 62.3%, and that was a reduced reduction on last year, primarily due to a change in the cohort cycle of the quarantine from 16 days to 11. However, we look at property that remains resilient. Rental income, excluding aeronautical and retail, was NZD 64.8 million, an increase of 16.6%. That income growth in the year was primarily due to new properties leased this year, rental growth from the existing portfolio, and the full six-month effect of properties leased last year. If we could move to slide seven, please. Now, while passenger numbers have remained impacted in the first half of 2022 due to the COVID restrictions, there were brief signals of when the restrictions were lifted, that desire to travel. Prior to the COVID Delta variant outbreak that commenced in August, domestic passenger demand during FY 2022 was robust at 87.4% of FY 2019 levels. With Auckland being put into alert level four and the introduction of the Auckland regional border, passenger demand dropped to just 3.9% of FY 2019 volume. If we look at the second half of December and after the regional border was lifted, the country entered into the new COVID-19 Protection Framework. Domestic passenger demand did recover to 63.5% in that final two weeks of December, from the 15th to the 31st. The government's five-stage border reopening should enable a gradual recovery of international travel, but ultimately, the removal of the isolation requirements will be the unlock of a more significant recovery. If we could move to slide eight, please. Now, we continue to proactively manage the short-term volatility in what is under our control. That's from safe operations at the airport to measured core infrastructure investment and building on a strong commercial business. Now, I'll talk to this a little further later in the presentation, but now I'd like to hand over to Phil to take us through the financial performance. Phil? Thanks, Carrie Hurihanganui, and welcome aboard. I'm looking forward to you presiding over a strong regrowth period over the next two to three years. I can't wait, in fact. We're onto slide ten now. The first half of FY 2022 turned out to be pretty hard yakka. That followed a very promising but short-lived surge in international PAX in July, which reflected quarantine-free travel across the Tasman and to the Cook Islands. Then Delta, followed by Omicron, got payback for that. This slide tells the story, and I don't have all that much to add. Albeit it's interesting to see that we had 36% more international arrivals than departures in the first half of this financial year. Again, that's for obvious reasons. It'll be interesting to see how that dynamic changes going forward. I suspect we'll have another surge of arrivals over the next couple of months as Kiwis start coming home, and that trend may reverse later this calendar year. On to slide 11. Aircraft movements in MATO showed the same directional movements as PAX in the half year, but there were some interesting contrasts. The drop-off in domestic PAX and aircraft movements, that's domestic on the one hand, were broadly similar in percentage terms, implying, as you'd expect, that airlines responded to Auckland's lockdown by dropping flights. On the other hand, the short-lived surge in international PAX at the start of the financial year only required a modest increase in international aircraft movements. Carrie's touched on this before. Earlier, I should say, we had a two-thirds or the reason for that. We had a two-thirds increase in international PAX in the first half, but only a 20%-30% increase in aircraft movements in MATO. This, of course, is because airlines have been running international services to Auckland with low load factors, but carrying valuable air cargo. This has been supported by the government's MIAC or Maintaining International Air Connectivity scheme, which will remain in place until the 31st of March this year. Moving now to the summary P&L on slide 12. We expect that the big picture financial outturn for the first half won't hold many, if any, surprises for the market. In short, revenue was down modestly versus PCP, and that was due to Auckland's extended lockdown between late August and mid-December last year. Underlying P&L of NZD 11.5 million for the half, that was slightly worse than PCP of NZD 9.5 million. There's a bit of noise on this page which reflects first that reported OpEx this period didn't benefit from around NZD 19 million of prior period reversals, like the first half of FY 2021 did. The reported share of profit from associates was hit by Auckland Airport's half share of the NZD 41 million revaluation loss on the Te Arikinui Pullman Hotel. This loss was entirely due to the increased hotel fit-out costs after this component of the build was repriced in November last year, after being canceled in mid-2020. As a reminder, that was when we terminated well over NZD 2 billion of live construction contracts to protect our balance sheet when COVID first took hold. More on OpEx on slide 14 shortly. Let's take a look first at revenue on slide 13. Aeronautical revenue was down by about 14% versus the first half of FY 2021, and this is less than the drop in PAX. It reflected a couple of things. A couple were set out on the slide. First, we introduced a NZD 2 plus GST passenger charge per our requested and regulatory mechanism to recover the costs of the green zone/red zone segregation of quarantine-free PAX from MIQ PAX. Now, there was also a small scheduled increase in PAX charges in FY 2021. Another important reason is that the higher-yielding international PAX actually increased versus PCP, and this slightly offset the big reduction in lower-yielding domestic PAX. As Carrie touched on, retail income was broadly flat for the half as we continued to rebate over 90% of contracted internal retail rents to support our retailers. Yet again, investment property was a standout performer for us. We had IP rental income up 17% to just under NZD 55 million for the half. And a full six months contribution from the big Foodstuffs distribution center drove this result, plus portfolio-wide rental increases. Moving now to operating costs in slide 14. At a high level, it looks like a big increase versus PCP, but most of this NZD 22 million increase is driven by the non-recurrence of the nearly NZD 19 million of fixed asset termination and expected credit loss reversals that benefited the prior year. I've included normalized OpEx analysis on the next slide to provide some more color on this. I'll come to that shortly. Before that, I wanted to touch on depreciation and interest expense, possibly strangely, both of which reduced in this half versus PCP. Starting first with depreciation. Even though the CapEx program remained active since December 2020, most of that was still work in progress as at December last year. It wasn't incurring depreciation. Some old assets on the fixed asset register were fully depreciated and rolled off. We are expecting higher depreciation in the second half since we commissioned the northern roading network CapEx in December last year. Full-year depreciation should be somewhere between NZD 115 million and NZD 120 million. Interest expense also fell versus PCP, and that reflected mainly that we repaid USPP borrowings in June last year, as well as some bank debt. We're expecting full-year interest expense to fall somewhere between NZD 55-NZD 60 million. On to slide 15. Apologies if you feel you need to put a cold flannel on your forehead to figure this one out. Quickly, the way it works is to show the pluses and minuses in H1 FY 2022 OpEx versus H1 FY 2021, and this provides a bridge to this half's reported OpEx. You can see the fixed asset termination and expected credit loss reversals on the left-hand side of the chart, and that resulted in the NZD 61.1 million normalized OpEx result for the prior corresponding period. We show the NZD 8.3 million OpEx increases in the current half, and that's before the benefits of increased capitalized salaries, which, by the way, reduces P&L salary costs and the increased wage subsidies versus the prior corresponding period. That arrives at this half's reported OpEx. This is up just NZD 4.8 million or 8% versus normalized PCP. We actually signaled an increase in OpEx back at the full-year result and again at the annual results. In fact, in July last year, we first indicated that. These were planned OpEx increases as we begin to ramp up operational staff in preparation for the expected growth in international PAX that's coming, plus an increase in outsourced bus operations, baggage services, and car parking activities. We also took advantage of continuing to have less PAX in the terminals, and that allowed us to accelerate some R&M activity. Repairs and maintenance, by the way. Moving now to CapEx on slide 16. As we spoke about at the full-year results announcements in August, we had a range of important CapEx that we needed to get on with this financial year. Our guided CapEx of NZD 250 million-NZD 300 million for the year was effectively locked and loaded, and that was independent of the pace of the COVID recovery this financial year. This slide summarizes our spend for the half year. It's a healthy mix of roading, fuel network, airfield slabs, terminal and transport hub design, and ongoing property developments. We still expect to land within the original CapEx guidance for FY 2022. I've just got a couple more slides to speak to, and then I'll hand back to Carrie to cover off future plans. We're now on slide 17, and the great news is that our eight-bank syndicate remains very supportive of Auckland Airport and optimistic for the future. While the top end of our FY 2022 earnings guidance range would see us comfortably comply with the 2x EBITDA interest coverage covenant that we agreed with our banks back in August last year, we'd breach it at the bottom end, and we thought therefore it prudent to take that risk off the table. We're pleased to announce that the new interest coverage ratio tracked for the 12-month measurement periods between June this year and June 2024. This starts off at 1.25x, and that's a 75 basis point reduction from the previously agreed covenants. We also want to make a quick call-out of our NZD 950 million+ available liquidity. This is dominated by undrawn banking lines, but we've also got circa NZD 34 million of cash. Slide eighteen, it's really just an FYI on our balance sheet numbers. There's not a lot I need to say about this one, but perhaps I'll call out the 6.1% lift in investment property values over the first half. This was supported by the circa NZD 130 million upwards IP revaluation as at thirty-first of December that Carrie touched on earlier. That reval pretty much explains 1.8% lift in our book value of equity as at thirty-first of December. Back to Carrie. Thank you, Phil. I'd like to take just a few minutes as we think about kind of the where to from here, how we're setting ourselves up for the future. If we could jump to slide 20, please. You know, keeping Auckland Airport staff, the traveling public, and the wider community safe has been and will continue to be a priority. If we reflect throughout the pandemic, Auckland Airport has ensured that we adhere to the highest standards of protection through masks and PPE, that the cleaning protocols we've had in the terminals, physical distancing and testing to ensure that we are proactive in our support of border requirements. Now, this continued focus on safety has seen safe operations for over 630,000 arrivals over the past two years, and no Auckland Airport employee has contracted COVID while at work. Now, clearly, Omicron certainly has changed the rules of the game a little bit and has meant a need for further measures to ensure business continuity. We did introduce the concept of work bubbles that were separate that ensured that if there was an outbreak of Omicron, that we were still able to deliver to our operations of the aerodrome with no concerns. We've also introduced high-frequency rapid antigen testing for selected frontline groups to support alongside the PCR surveillance testing that they have been having as border workers. If we move to slide 21, please. Even against the toughest backdrop of the last couple of years, but in particular, six months has shown us we have continued to invest in core infrastructure. You know, the impacts of the pandemic means that we've been very prudent about the amount of strategic aeronautical infrastructure and property development across the business. However, lower passenger and aircraft volumes have allowed us to pursue an accelerated NZD 28 million program of airfield-related fuel system compliance and upgrade activity, including slab and apron renewals. In addition, we delivered the majority of the northern network roading upgrade, including a new terminal exit road. This project actually was the largest standalone roading project delivered by Auckland Airport to date. Now, this thirty-plus million investment has also seen new and widened roading, high occupancy vehicle lanes, and pedestrian and cycle pathways introduced. Slide 22, please. Now, domestic activity is key in supporting the recovery in our retail and transport businesses. We've been proud to continue to offer support. It has been an incredibly tough couple of years, particularly within retail, in regards to the reduced passenger numbers going through the terminal. During the travel restrictions, there has been a 92% of internal retail rental income abated. If we move on to slide 23. You know, we look at commercial property, and that has remained resilient and continues to provide income growth. With solid development pipelines from both new and existing tenants, including the completion of the Jervis Wilson and Hellmann facilities. Now, with a weighted average lease term of 9.4 years and an occupancy rate of 98.5%, it continues to be a solid performer. Design and pre-development works are well underway for the retail outlet center, with enabling works commencing in the short term. We've been really excited to see significant interest coming in, including major international brands for that development. In November last year, Phil touched on this, in conjunction with Tainui Group Holdings, we recommenced the fit-out construction in the Te Arikinui Pullman Auckland Airport Hotel, with an expected completion date in the first half of 2024. We'll move on to slide 24. Now, work continues and is underway to deliver to our sustainability agenda, including the issuing of our second Modern Slavery Statement, the definition of the pathway to achieve our net zero carbon objective, the incorporation of sustainability principles into infrastructure design standards, and supporting the New Zealand vaccination drive. You know, we converted Park & Ride into Park & Vax Center and saw 155,000 vaccinations delivered to the South Auckland community with that. We also worked with the local health providers around the mobile vaccination health clinics with the Shot Bro and Shot Cuz buses that allowed another 50-odd thousand vaccinations to be delivered. We were really proud to be able to support that vaccination drive for New Zealand. Moving on to slide 25. Auckland Airport, we remain focused and well-positioned for long-term recovery. We are while it is still uncertain, we are optimistic against the backdrop of high vaccination rates, the government's five-phase border reopening plan, you know, indications that health restrictions will fall away once Omicron peaks. Clearly, if you look across the Tasman to Australia and their border openings and what they are seeing in the early signs of demand, puts us in that positive space. Now, our priorities are going to be the ongoing safe operation of the airport and ongoing engagement with airline partners to ensure that New Zealand remains part of their network plans, both in the short term and long term. What we do know is that airlines are focused on improved certainty before committing their assets and network, and removal of key health restrictions like self-isolation will be key to building their confidence and their commitment. In summary, we're ready to go and positive about the year ahead. Now, speaking of the year ahead, I will hand back to Phil to walk through the outlook. Phil? Thanks, Carrie Hurihanganui. Carrie Hurihanganui touched on, I think that we're focused on what we can control, but there still is considerable uncertainty regarding the timing and shape of the eventual COVID recovery. We're on slide 27, and in recognition of that uncertainty, as well as the difficult trading environment being faced not only by Auckland Airport but also by our airline partners, in the first half of this financial year, we consulted with the airlines on delaying the first price rises to take place in PSE4. PSE4 is the period of FY 2023 to FY 2027. We've delayed that first price rise by around 12 months, and we'll conduct the standard full-blown aeronautical pricing consultation during FY 2023. By the end of that year, we're hopeful that the forecast COVID recovery and the timing of our key aero CapEx projects will be far more certain than they are today. This concession has been well received by our airlines and the commission. Finally, on to guidance on slide 28, and then we'll go straight into the Q&A. We've decided to reinstate earnings guidance for FY 2022, notwithstanding considerable uncertainty regarding the government's border settings and how they will evolve over coming months, and uncertainty regarding how deep and how long the inevitable Omicron travel shyness will play out. There's only just over four months to go in the financial year, so we're pretty confident that our FY 2022 underlying profit result will fall as a loss somewhere between NZD 25 million and NZD 50 million. We've set out some of the key assumptions underpinning that range on slide 28. You can make your own assessments of how valid those assumptions are. Unfortunately, none of us have a crystal ball that we can refer to here. As I mentioned before, CapEx guidance remains at NZD 250 million-NZD 300 million through FY 2022. Carrie and I are now happy to open up to Q&A. Our first question comes from the line of Andy Bowley with Forsyth Barr. Your line is open. Please go ahead. Thanks, operator, and good morning, Carrie. Good morning, Phil. I've got a couple of questions to kick things off here. First of which is around the retail business. Keen to get a sense of how many retailers are operating currently, how many hibernating, and how many have walked away. Then, kind of the follow on in relation to that is, can you give us a sense of or insight into the process for the duty-free retender and thoughts with regards to potential, you know, single duty-free model in future? Certainly. Andy, can I start by saying I'm delighted that you've asked the first question. I had high expectations and you've delivered to them. Outstanding. Thanks, Carrie. Please, I'll hand you, Phil, to add to it as well. In regards to occupancy, we, you know, we've been very pleased. We've had high levels of occupancy remaining in the retail business. You know, it's been a tough couple of years for the tenants, and so we have been offering support to them to help them navigate through this period and as we head into a initial recovery. Phil, in regards to specifics, is there anything you want to add on that first part of the question? Yes. Of course, the uncertainty that we have regarding the recovery trajectory doesn't just apply to aeronautical activities, applies to retail too as well, and what the prospects are for our internal retailers. We are thinking about the timing of that retender process. Normally, we'd be kicking that off towards the end of this calendar year. There's a possibility that we might seek to defer that. Yeah. Sorry, go ahead, Carrie Hurihanganui. I was going to say, you know, the long-term goal, and we continue to always have the aspiration of high-quality retail customer experience. Now, you know, the last couple of years, it has been pretty challenging and therefore the support. You know, really stability is what's on our mind and creating a level of stability before we start to think about what does, you know, a future operating model look like. In the short term, you know, stability is the key focus. If we deferred the duty free retender, that's to say that we just carry on with the kind of twin operator model at the moment or would there be scope to combine the two, you know, prior to retender to have a period of time to understand how the new model may work? We'd need to work that through with the existing operators exactly how that would work. Clearly there'd need to be a transitional arrangement if we were to defer that retender. I guess we should also touch on your question around single operator. You know, we have had discussions with the Commerce Commission, where we are confident that there won't be obstacles for us moving to a single operator model. There's been considerable interest not just from our existing operators, but also potentially new ones around that single operator model. That's something that we're considering seriously too. Maybe just to clarify, so we haven't started the retender process yet? That's right. We've only launched it because it's not evident publicly, but we haven't started the process. No, we'll be kicking off those discussions this month. Yep. Okay, great. Thanks. Second question around dividends and broader capital management. What are kind of the expectations in terms of recommencement of dividends? I recognize the covenant waiver, suspension has been in place, and that's prohibited dividends up until now. You know, perhaps you can talk to the board's current thinking around, you know, dividend recommencement and maybe potential broader capital management initiatives over the next few years as well, given the relative strength of the balance sheet. Yeah. Yeah. So on- Yeah, sorry, Carrie Hurihanganui. You direct the questions, and I think you're about to refer to me, so I'll continue on this one. Yeah. On dividends, as part of the arrangement with the banks on the relaxed and risk-averse dividend for the next couple of years, we have agreed to extend the dividend blocker. There's a absolute dividend blocker, and that's in place until thirty-first of December this year. It was previously thirty-first of December last year. That means we won't be able to pay any dividends in relation to FY 2022. The interim dividend that would normally get paid in March this year and the final dividend that normally get paid in October, neither of those can go ahead. That's really not a material constraint because we're not expecting to have any underlying profit from which we would pay a dividend, and our dividend policy relates directly to underlying profit. Andy- Sorry. Go ahead. No, you carry on, Phil. Sorry. Oh, no, I was just gonna ask about the second part of your question, actually. If you could just- Oh, look, maybe just clarifying the dividend. The first dividend that you could pay is effectively March 2023. Yes, that's right. Great. Look, just the second part of the question was around broader capital management initiatives over the next few years. You know, we've talked about it before in terms of the potential for a capital return. You know, any update in terms of your strategic board thinking in relation to the balance sheet over the medium term? Over the medium term, it all hangs off how strong is the recovery from COVID. We would need to see things back on track on the pre-COVID growth trajectory in three or four years' time before there'll be any possibility of contemplating something like a capital return. We do have a significant aeronautical infrastructure program ahead of us. I think it'd be fair to say that capital return over the next five years will be a pretty slim prospect based on how we see things today. Okay. Thanks, guys. Much appreciated. Thank you. Our next question comes from the line of Rob Koh with UBS. Your line is open. Please go ahead. Good morning. Can I ask a question about the updated OpEx guidance? I guess that kind of implies a bit of an uplift in spending in the second half, which I presume is kind of preparatory for recovery. I wonder, Phil, you could maybe give us some color on some items in there, please. Yes, will do, Rob. Yes, it's largely around staff, and it's largely in our aeronautical operations team. We've been running on the bare minimum pretty much for the last couple of years, and we do need to start to recruit those people and get them on board and train them in anticipation of the eventual recovery in international PAX. We need to get that underway in the second half of this financial year. That is the main driver. There's also, as we increase activity, there are certain elements of the business that are outsourced, like bus operations. That's both aeronautical and also related to our Park & Ride operations. We've got baggage services. We've got car parking operations. As activity builds, those costs will start to build, too. Finally, we do intend to up the cadence a bit on repairs and maintenance. They'll be the main contributors. Okay, great. Thank you. Turning to the PSE4 process, I guess, that's you know, pretty challenging at the moment, but hopefully you'll be able to have some passenger forecast visibility by the time you get into that. Are you thinking about any other kind of flex mechanisms or catch-up provisions within that process this time around? Carrie, perhaps I'll jump in there as well. In terms of catch up, no. You know, the way Auckland Airport has always set aeronautical prices has been that we take demand risk and OpEx risk and CapEx risk during the price setting period. There isn't a formal washup mechanism. We will not be able to, or have no intention, in fact, of seeking to recover losses due to COVID over the period FY 2018 to 2022. That's a couple of years of COVID losses in there. For going forward, you've probably picked up that while we're freezing prices for the first year of FY 2023, it's on the basis that we'll set charges over the remaining four years so as to forecast our target return for that period. There will be an annual return in the first year of PSE4 that we expect to make up in the remaining four years. Okay. Yeah, that makes sense, Phil. Can you maybe remind us who bears inflation risk under the kind of agreements? Again, the airport does, because it's all based on forecasts that you put together pre-setting prices under the building blocks model. Effectively, you forecast your OpEx, you forecast your capital base, and you recover OpEx plus return on that capital base, plus depreciation. If they turn out differently to what you forecast, that's at risk, the risk of the airport. It swings and roundabouts. You can win on that basis or lose, and we've done both in my time here. Yeah. Yeah. All right. Well, I wish you well in that period then. That's all from me this morning. Thank you. Thank you so much. Thank you. Our next question comes from the line of Alex Prineas with Morningstar. Your line is open. Please go ahead. Thank you. Good morning. Just good to see the renegotiation of the covenant tests, particularly in the longer term. Just a question about the more sort of shorter term situation. Would I be right in assuming, you know, based on the guidance for a loss, that you still unlikely to meet that June 2022 lower interest coverage test? Phil, to you. Yes. Thank you, Kerry. No, we are expecting to comply with that. That's why we renegotiated the covenants with the banks so as to ensure compliance going forward. Okay. Thanks. You know, if, let's say, you know, in a scenario where the passenger recovery is, you know, slower than expected, can you sort of comment on the appetite of the lenders to, you know, either further renegotiation of those covenants or further waivers in the short term? It's fair to say both the lenders and Auckland Airport are a bit tired of negotiating covenant waivers or accommodations. We think we've set in place a covenant track that's going to cover us going forward. You know, if you look at the 1.25 times that we've agreed for this calendar year, we would still meet that if all we had was MIQ travel. We didn't have arrivals under self-isolation or any further freeing up. We had domestic PAX only running at less than 20% of pre-COVID. We're well and truly protected this financial year. There will be a step up. Sorry, this calendar year, I should say. There will be a step up to two times next calendar year. It's again based on realistic recovery assumptions now that the borders are starting to open. It's hard to see that being challenged next year. Just for a bit of context, in terms of EBITDA interest coverage, historically, we've run at more like eight or nine times coverage when we're in normal times. We've been light years away from breaches until COVID struck. Thank you very much. Thank you. Again, if you have a question at this time, please press star then one. Our next question comes from the line of Marcus Curley with UBS. Your line is open. Please go ahead. Good morning. I've got three, unfortunately. I just wondered, Phil or Carrie, if you could talk to what the current New Zealand winter schedule looks like for seat capacity. Phil? My understanding is that it's starting to build. Actually, we've had recent positive engagement with a bunch of airlines. You know, we're encouraged by what we're seeing from Air New Zealand, both domestically and internationally, particularly the Tasman. What we understand about capacity that's been laid on is quite a bit stronger than, say, the midpoint of our guidance range. Quite a bit stronger. Of course, it remains to be seen if those aircraft are sold and if they stay on. I think I could add to that. Sorry, Marcus. I'd just add that while those plans are in place per the earlier comments, you know, clarity on things like isolation and some of those restrictions, I think is ultimately gonna be the final kind of commitment piece from airlines. It's certainly a question we are getting regularly as we are engaging about potential network opportunities. I can't push you further, you know, in terms of what, you know, the level, you know, for example, on the Tasman and international long haulers relative to pre-COVID, you know, as you see it today in the schedule? I don't have that in my fingertips, Marcus. Okay. Maybe we can circle back. Secondly, just on OpEx, can you talk to what you think, you know, the new normal will be for the business? One would assume probably looking into FY 2023. You know, do you think you'll return to sort of FY 2019 levels, or whereabouts do you think you'll land? Yeah. Sorry, you go, Carrie. The joys of remote calls. I'll reply, Phil, and then keen for you to add to it. From a planning perspective, you know, we aren't operating with the assumption that we'll just go back to the way that it was. We're engaging deeply on what are the key learnings, what are the opportunities for efficiency out of that. But it does remain uncertain a little bit until we understand what FY 2023 looks like from a schedule and network perspective. But Phil, you were gonna add something to that? Yes. Thank you. Exactly, the situation, we do have to understand how things pan out over the next six months and prepare our budget for FY 2023 and going forward. Big picture gut feel, I would expect that OpEx in FY 2023 would continue to be below pre-COVID levels. Looking further afield that, you know, there are likely to be some additional operational requirements around health at the border and a need for more staff, more space, other costs. You know, as we've answered this question for the last couple of years, it's probably fair to assume that we head back to that 75% EBITDA margin, and that's a good basis, I think, for long-term modeling. Okay. Finally, Phil, can you just give us a little bit of color, when you think you need to determine your passenger forecasts, yeah, for the next pricing reset? You know, is there a reason why you just don't defer this further to avoid estimation error? That's a big reason why we deferred is because you have to have building block forecasts in order to set economic prices. Really, it's ideal to reach broad agreement with your airline customers around those. There's so much uncertainty at the moment that would be very, very difficult. Of course, we wanted to provide some support to the airlines at the moment when we've got next to no passengers going through the terminal, certainly internationally. When would we need more clarity? It would be March, April next year that we'd be starting to lock in on those passenger forecasts. There should be a lot more clarity by then. There'll probably still be more of an inherent uncertainty on those longer-term forecasts than what we've dealt with in previous pricing rounds. We'll have to work that through. March, April still gives you time to consult, yeah, if you're gonna implement charges, yeah, three months later. Yes. Yeah, that's about the time that we're consulting on a pricing proposal around about then. Okay. Working through the final parts of that. Yeah. Okay. Maybe I can just open one really quick one for you, Phil, again. Is there any requirement for non-bank lending waivers? No. There are some covenants, but they, even in the depths of COVID, we were absolutely miles away from challenging those. They're things like secured liabilities or the proportion of total liabilities and other minor things. What you should also know, though, is all lenders in effect benefit from the banking covenants, because if we default on those, then that triggers what's called a cross default. Then all lenders are able to take action, which in simple terms means require us to repay their loans if they want us to do that. That's why it's so important that we avoid banking covenant breaches. Great. Thanks. Thank you. Our next question comes from the line of Amit Kanwatia with Jefferies. Your line is open. Please go ahead. Good morning. Good morning, all. I'm just continuing on the theme of passenger recovery. Now, I understand under the staged reopening plan for international borders, I mean, they would be open completely by October. So the question is, I mean, what's your expectation for when the full recovery of international passengers occurs? I mean, what I'm trying to get is once all of the travel rules are relaxed, say in October, under the current plan, how many months do you think for international passengers to reach pre-COVID levels? And kind of discussions you'll also be having with the airlines, similar discussions. So just any views there, please. Phil, I might start, and I'm sure you'll have a view on this as well. You know, there's quite varied perspectives on that, whether that be quite aggressive views by some firms of FY 2023 or calendar year 2023, right through to 2025. You know, if the restrictions fall away so that it's largely kind of open travel, the trajectory of that recovery would be far faster than if things remain in place, such as, you know, isolation reducing from seven days to three or two. Unfortunately that's not giving you a clear answer from my perspective, but it will be dependent on any restrictions that remain in place once borders open as such. Phil, as far as your perspective of time frames? Thanks. Thanks, Carrie. Yeah, you've touched on the main point, Carrie, that under the current reopening plan, self-isolation is still an integral part of that. You know, we won't see a significant recovery while we have self-isolation, so it'll only be once that's removed that we get a strong recovery. Actually, we don't have any better information than anybody else on the planet on how things might pan out after that. Yes, there is a range of years of a full recovery. I think somewhere between 2024 and 2026, and you can probably tag that to our financial years. We agree that it will be somewhere in that range that we're likely to get back to pre-COVID levels. All right. That's fair enough. I mean, the other question is, again, on the PSE4. Now, I understand there is a pricing freeze you've agreed for FY 2023 passenger volumes. As you say, uncertain, but there is some greater clarity as you say. I mean, the question is, the CapEx on the new domestic terminal, around NZD 1 billion as well as ground hub. I think the construction for this infrastructure. Currently some works have started. But the, I mean, is there any expectation or is there any color and clarity you can give, whether this domestic terminal and the other CapEx would be delivered in the PSE4 time period before the PSE4 ends? Would that be included in the PSE4 WACC, and would you be earning any returns from that or too early at this stage? Well, certainly from my perspective on that, we've got enabling works. You're absolutely correct. Enabling works have commenced at the international terminal to make way for that future integrated terminal. You know, the pace of recovery will be a key pacing item as we think about the return of the likes of trans-Tasman. Earlier, Phil commented about kind of getting back close to pre-COVID volume and demand. We purposely set up the infrastructure program to be stageable so that we could make key decision and gating along the way. Phil, in regards to PSE4 specifically, anything PSE4 finishes in June 2028. Delivering the new domestic terminal by then would be an absolutely outstanding outcome. It's more likely when we trigger that that it would get delivered and commissioned early in PSE5. It's at the point that it's commissioned that we start to price for return on that. All right. Fair enough. Just final question, just on the PSE4 again. I mean, if I think about the PSE4 target returns, and obviously the current pandemic has shown sort of higher risk for airports. There's significant under-recovery in PSE3. I mean, is there any? What do you think? What's the view if you can improve the asset beta and corresponding WACC returns so that you can safeguard your returns in the future from any similar disruption going forward? Carrie, I'll jump in there again. Yeah. Good question, and definitely something that I think you'll find regulated airports around the world are looking at. If you take a look at the data set that the Commerce Commission used to establish asset beta for its view of airport sector WACC, there's clear evidence that asset beta has been tracking up a little bit before COVID and some more after COVID. It bears the question, is that sort of systematic risk something that is likely to be with us for a long time? Is there an ongoing risk once COVID's done and dusted that there might be something similar in the future? I think you'd be pretty brave to bet against that being a risk. We will be presenting really solid quantitative analysis to the commission around these issues, particularly around asset beta. I can't share with you what sort of increment that could result in terms of an uplift in asset beta, but there's definitely some room to move, in my view. All right. Thanks. That's all from me. Thanks. Appreciate it. Thank you. Again, if you have a question at this time, please press star then one. We have a follow-up question from Rob Koh with UBS. Your line is open. Please go ahead. Thank you for letting me come back. If I can ask a question with my ESG hat on, can I ask a question of Carrie, how you're assessing and thinking about employee engagement in these particularly troubling times for the aviation industry? Thank you, Rob. Yeah, you look at a backdrop, it's been a tough couple of years. And certainly, the airport team has done an outstanding job of navigating through that. You know, creating a pathway that we've got the strategy, which we do, the master plan largely holds true. There's certainly a desire from the team who are incredibly committed to want to get the We continue to focus on around culturally. It's about creating opportunities for employees in regards to career development. Probably most importantly is actually seeing progress across things from the infrastructure program to the return of travel, the increasing of demand. We have a pretty engaged group. I'm certainly spending time out and about where I can in the current Omicron environment to understand what's on their mind, so that as we are creating those plans, we are catering for the most important things for the workforce. Okay, great. Thank you so much for the follow-up. Appreciate it. Thank you. I'm showing no further questions at this time, and I would like to hand the conference back over to the company for any further remarks. Well, many thanks. I appreciate everyone joining us today. I guess if we can leave you with one element is that Auckland Airport remains focused on not only managing the short-term volatility, but positioning ourselves for that long-term recovery. Thank you, everyone. Appreciate your time, and have a great afternoon. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.