Airservices is Australia's air navigation service provider - we provide air traffic control, aviation rescue and fire fighting and air navigation services.

Corporate Plan Home | BackNext

Download full PDF

Five-year corporate financial plan


This five-year financial plan builds on the financial outcomes established through our transformation during 2016–17 and supports the delivery of our enterprise initiatives.

The plan embeds the cost savings delivered through our new operating model, enables real price reductions of around 10 per cent to be delivered to industry over the next five years, and funds key investment programs to deliver important safety and service improvements.

Updates to the plan have been incorporated to reflect the latest economic outlook and airways traffic projections. Our forward capital investment program, which remains focused on key safety and service improvements such as the delivery of the OneSKY Program, has been updated in accordance with the current investment delivery schedules.

Pricing

We set our prices with our customers for core airways services under Long Term Pricing Agreements (LTPA).

Under the provisions of the Competition and Consumer Act 2010 any increase in prices must be notified to the Australian Competition and Consumer Commission (ACCC) for its review.

We established the current LTPA in October 2011. It allowed us to recover all reasonably incurred costs (including a return on capital employed) relating to the delivery of our services and it has provided price certainty for our customers over the last five years.

Today our prices are the same as they were in July 2015. Reflecting the delivery of a more efficient operating cost base through our new operating model, this plan maintains weighted average prices at existing rates, delivering our customers real price decreases and improved service value through to 2021–22.

Operating performance

The five-year operating and performance projections are provided in Table 2. These financial outcomes are driven by the improvements that have been achieved in our underlying cost base through the implementation of more efficient business structures, asset management and project delivery practices, and business support processes.

Return on assets (RoA) and net profit after tax (NPAT) are forecast at an average of six per cent and $64 million per year respectively. These returns are in line with price regulatory benchmark rates.

As a result of strong international services, 2016–17 provided an uplift in aviation revenues. Over the same period the performance of the domestic sector remained static, particularly across regional services.

In the near term these domestic market trends are projected to persist. Whilst international services will continue to grow on the back of the ongoing expansion of the Asian market, this is expected to slow and return to normal levels over the period of the plan. On this basis traffic is projected to grow at an average of two per cent per annum over the next five years. With no planned increases in weighted average prices, revenues are planned to grow at the same rate.

Expenditure projections reflect the improvements that have been achieved over the last 18 months in our underlying cost base. In the middle planning years some expenditure growth is planned for transition and capability readiness activities, and overlapping support for old and new systems which is required as part of the implementation of the new ATM system. Forecast depreciation cost increases reflect growth in capital expenditure, primarily driven by OneSKY investment.

Table 2: Five-year operating and performance projections

Description

2016–17
Forecast
($ million)

2017–18
Plan
($ million)

2018–19
Plan
($ million)

2019–20
Plan
($ million)

2020–21
Plan
($ million)

2021–22
Plan
($ million)

Airways revenue

1043.2

1064.1

1085.4

1107.1

1129.2

1151.8

Other revenue

28.4

28.6

28.8

29.0

29.3

29.5

Total revenue

1071.6

1092.7

1114.2

1136.1

1158.5

1181.3

Staff costs

678.8

640.8

650.1

662.6

673.7

686.9

Supplier costs

181.7

198.1

200.7

210.1

218.3

223.4

Depreciation

146.2

147.4

149.2

150.3

150.8

152.0

Total expenses before interest and tax

1006.7

986.3

1000.0

1023.0

1042.8

1062.3

Performance

Earnings Before Interest & Tax (EBIT)

59.8

103.4

111.1

110.2

112.6

116.0

EBIT/revenue

5.6%

9.5%

10.0%

9.7%

9.7%

9.8%

Return on assets

4.0%

6.5%

6.5%

6.0%

5.9%

5.9%

Net profit after tax

24.5

59.2

66.6

64.0

64.3

65.5

Return on equity after tax

4.6%

10.3%

10.7%

9.6%

9.0%

8.6%

Gearing*

52.8%

50.2%

50.7%

50.8%

49.8%

47.4%

Returns

Dividends**

8.9

18.9

19.6

19.2

19.5

* Gearing = (net debt + non trading liabilities)/ (net debt + non trading liabilities + shareholders’ equity)
* Dividends are shown as a cash flow in the financial year they are paid, with an interim dividend paid during the financial year and the final dividend paid in the following financial year

Capital expenditure

The five-year capital investment projections are provided in Table 3. This investment profile incorporates some re-phasing of expenditure across the planning years with total investment levels estimated at just over $1.1 billion over the next five years.

Capital expenditure continues to be driven by OneSKY activities and associated enabling projects, as well as key service improvement projects agreed with customers to deliver tangible benefits. Over the five-year planning period, OneSKY and its enabling projects account for $652 million, or 61 per cent, of the total spend.

The remainder comprises $421 million of investment to improve services and sustain current infrastructure as well as to support new runway operations at Brisbane, Melbourne, and Perth.

Table 3: Five-year capital investment projections

Description

2017–18
Plan
($ million)

2018–19
Plan
($ million)

2019–20
Plan
($ million)

2020–21
Plan
($ million)

2021–22
Plan
($ million)

TOTAL
5 Years
($ million)

ANS investment

165.6

241.2

201.4

179.9

148.4

936.7

ARFFS investment

15.8

13.7

22.7

17.7

13.6

83.4

IMT and corporate investment

13.6

13.6

11.5

9.0

4.7

52.4

Total Programme

195.0

268.6

235.6

206.6

166.8

1072.5

Returns, dividends and gearing

The five-year returns, dividends and gearing projections are provided in Table 2. Over the term of the plan:

  • earnings before interest and tax will average $111 million a year
  • returns over revenue are forecast at an average annual rate of ten per cent.

With capital expenditure funding requirements remaining high, this plan maintains current dividend payout ratios at 30 per cent of net profit after tax. This is projected to return an average of $17 million in dividends each year.

Through sustained levels of profitability, dividend planning and management of capital expenditure funding, gearing is projected to remain within target levels and average 50 per cent per annum over the term of the plan.