Sydney Airport shares look to be getting a welcome reprieve from domestic borders reopening after lengthy COVID closures.
The post Why the holidays are looking up for Sydney Airport (ASX:SYD) shares appeared first on Motley Fool Australia. –
After gaining more than 38% in 2019, things took a sharp turn for the worse in February this year. That’s when investors began to cotton on to the fact that the kind of lockdowns China had instituted to control the coronavirus in Wuhan could spread across the globe.
As indeed, they did.
With the prospect of international and domestic air travel grinding to a halt, the Sydney Airport share price crashed more than 45% from 4 January through to 19 March. Since that low, shares have rebounded by 48%. Still, Sydney Airport shares remain down nearly 20% year to date.
But with domestic borders reopening, the light at the end of the tunnel for Sydney Airport, and a host of other ASX travel and leisure shares, appears to be growing much nearer.
What does the company do?
Sydney Airport Holdings owns a 100% of Sydney Airport. The domestic and international gateway connects to more than 90 other airports around the globe.
The company is headquartered in Sydney. Its two main business units – Aviation (Sydney Airport) and Leasing & Advertising Opportunities – provide aeronautical, retail, property, car rental, and parking and ground transport services.
Sydney Airport listed on the ASX in 2002.
Why the Sydney Airport share price is gaining today as the ASX 200 slips
After opening 0.6% higher in the early morning, the S&P/ASX 200 Index (ASX: XJO) is down 0.9% in afternoon trading.
The Sydney Airport share price, while also giving back some of its earlier intraday gains, remains up 0.15% today. That puts Sydney Airport shares up around 24% in November, compared to a 10.5% gain on the ASX 200.
Investor enthusiasm is likely driven by the reopening of most state borders.
New South Wales is again open to Victoria as of last week, and tomorrow Queensland and South Australia will reopen their borders with Victoria. Tomorrow will also see travellers from Sydney once more being allowed to fly into Queensland.
That’s “huge” news, according to Sydney Airport’s CEO, Geoff Culbert, as quoted by the Australian Financial Review:
We are expecting a really material impact on the amount of passengers coming through the airport. If you look at trips from Sydney to Queensland, Sydney into Victoria combined, they represent about 70 per cent of our total domestic traffic and about 50 per cent of all traffic through the airport, so those two border openings are going to be huge.
Even with the pending rollout of a COVID vaccine, international travel is unlikely to return to its pre-pandemic levels for some time. But the promised return of domestic air travel is already boosting interest in Sydney Airport’s shares.
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