With a market cap of over $13 billion, Sydney Airport is the largest airport in Australia and the Oceanic region. With the ability to handle up to 80 aircraft movements per hour, how much will the coronavirus impact the Sydney Airport Holdings Pty Ltd [ASX:SYD] share price?
The SYD share price has shown over a decade of growth from the bottom of the Global financial crisis in 2009 and was up 636% through to December 2019.
2019 was a landmark year for Sydney Airport, celebrating both our centenary and the arrival of their billionth passenger. Throughout the year, 44.4 million passengers were recorded delivering solid performance across both aeronautical and non-aeronautical businesses.
January 2020 saw the rise of the coronavirus emerging from the city of Wuhan in the Hubei province of China. By March 2020 the novel virus has circled the globe and been declared a pandemic by the World Health Organization (WHO) according to CNBC.
What does this mean for SYD share price and global travel…
On 10 March 2020, Sydney Airport decided to release February traffic results early to provide the market with as much clarity as possible.
Total passenger traffic at Sydney Airport was down 9.3% year-on-year in February to 3.1 million. Sydney Airport CEO Geoff Culbert said: ‘Like our airline partners, we are also experiencing the financial impacts of the coronavirus. There is a direct link between passenger arrivals and departures and our aeronautical revenues.’
Qantas is in the process of drastically reducing capacity as well, with the company announcing further cuts (unspecified) on top of their 23% reduction in international flights and 5% of their domestic flights.
With this in mind, Sydney Airport is experiencing a significant fall in their share price. How far can it fall?
Taking an examination of the weekly movements, Sydney Airport has recorded over a 35% drop in price from the high in December 2019 of $9.30. At time of writing the closing price was $5.81, being below the historical support level of $5.85.
With the WHO proclaiming that Europe is now the epicentre of the coronavirus, and cities around the world putting state of emergency plans in place slowing down the movements of people, what is the future for Australia’s busiest airport?
The last significant low was recorded in February 2017 with a low of $5.80, with the price closing slight above this recently, Sydney Airport has now recorded a 100% retracement from the high of $9.30 in December 2019.
The uncertainty surrounding the globe currently could push the price much lower.
With historical support levels recorded at $4.46 and $3.46, will this be enough to stop the fall or is Sydney Airport looking at sub $3.00 share prices?
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For Money Morning