Plea to QLDC – “step up and earn our confidence.” [Crux, 15/04/20]
Reader Commentary: John Hilhorst
The Queenstown and Wānaka communities should be troubled by the suggestion that councillors abandon their leadership and governance responsibilities for Queenstown Airport Corporation at this time of crisis. Councillor Niki Gladding has called councillors out on a plan to legally “agree to” QAC’s pre-Covid draft Statement of Intent, rubber stamping it as final, at the upcoming 23 April council meeting (Crux, April 9, 2020).
The Statement of Intent, not even due for two-and-a-half months, and Annual Report are the only legally required and publicly visible reporting and control tools that council has to influence this business, of which it is the controlling 75.01% owner and which last year had an enterprise value exceeding half a billion dollars.
The airport’s business has changed massively in the past month, from surging profits to virtually zero revenue, nearly $200 million debt liabilities, and facing the same desperate future of our many local tourism operators. It is a business in crisis.
Some councillors spoken to argue that only the accounts have changed and that most of the content in the SOI remains relevant.
Under the Local Government Act, the SOI is supposed to set out QAC’s objectives, scope of activities, equity to asset ratios and a range of performance targets and measures on both financial and non-financial goals for the next 3 years.
If all these remain unchanged when its business has collapsed, with minimal pipeline business for at least a year, then this must point to a uselessly vague document that falls well short of its purpose.
As principal shareholder, our community has a keen interest in this business. QAC’s past debt funding and recent purchase of Lot 6 could now put Council’s controlling shareholding at risk if significant new capital is needed. How can this risk be avoided? Lease revenues from the eighty-plus tenants provide essential revenue for QAC, but what of the financial stress on these local businesses?
Employee benefits for its 75 staff make up nearly half QAC’s opex costs – what would be the human, community and business costs of reducing these? Queenstown Airport is an essential gateway bringing custom to our local businesses – how will QAC protect and grow visitor arrivals from almost scratch?
We all saw that within three weeks, Auckland International Airport (24.99% co-owner of QAC) had lost half its value, suspended more than $2 billion of capital expenditure projects and raised $1.2 billion through a new share issue, while updating shareholders on an almost daily basis. Their share placement report and presentation, amounting to some 50 pages outlining the new reality and steps taken to protect the business, were published by 9 April, just two weeks after lockdown.
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