Auckland International Airport Limited – Annual report – 30 June 2026
Industry: transport
2. Summary of material accounting policies (extract)
(a) Basis of preparation (extract)
Measurement base
The financial statements have been prepared on a historical cost basis, except for investment properties, land, buildings and services, runway, taxiways and aprons, infrastructural assets and derivative financial instruments, which have been measured at fair value.
When the group applies fair value hedges to borrowings, the carrying value of the borrowings is adjusted for fair value changes attributable to the risk being hedged.
(g) Property, plant and equipment
Properties held for airport operations purposes are classified as property, plant and equipment.
Property, plant and equipment are initially recognised at cost.
Vehicles, plant and equipment are carried at cost less accumulated depreciation and impairment losses.
Land, buildings and services, runway, taxiways and aprons and infrastructural assets are carried at fair value, as determined by an independent registered valuer, less accumulated depreciation and any impairment losses recognised after the date of any revaluation. Land, buildings and services, runway, taxiways and aprons and infrastructural assets acquired or constructed after the date of the latest revaluation are carried at cost, which approximates fair value. Revaluations are carried out with sufficient regularity to ensure the carrying amount does not differ materially from fair value at the balance date.
Revaluations
Revaluation increases are recognised in other comprehensive income and accumulated as a separate component of equity in the property, plant and equipment revaluation reserve, except to the extent they reverse a revaluation decrease of the same asset previously recognised in the income statement, in which case the increase is recognised in the income statement.
Revaluation decreases are recognised in the income statement, except to the extent they offset a previous revaluation increase for the same asset, in which case the decrease is recognised in other comprehensive income and accumulated as a separate component of equity in the property, plant and equipment revaluation reserve.
Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the assets and the net amounts are restated to the revalued amounts of the assets.
Revaluation surpluses are transferred from the property, plant and equipment revaluation reserve to retained earnings on derecognition of the asset or if the asset is transferred to investment properties.
Depreciation
Depreciation is calculated on a straight-line basis to allocate the cost or revalued amount of an asset, less any residual value, over its estimated useful life, except for certain land-based quarry assets that are depreciated using a units of production method based on proven and probable reserves.
The estimated useful lives of property, plant and equipment are as follows:
Land Indefinite
Buildings and services 5 – 50 years
Infrastructural assets 5 – 80 years
Runway, taxiways and aprons 12 – 40 years
Vehicles, plant and equipment 3 – 10 years
Leased assets
Space within the terminals and certain properties used for aeronautical purposes, where the group acts as a lessor, are leased to tenants under operating leases with rentals payable monthly. Lease payments for some contracts include CPI increases, sales-based concession fees and adjustments to rentals depending on the passenger numbers.
To manage credit risk exposure where considered necessary, the group may obtain bank guarantees for the term of the lease.
Although the group is exposed to changes in the residual value at the end of the current leases, the group typically enters into new operating leases and therefore will not immediately realise any reduction in residual value at the end of these leases. Expectations about the future residual values are reflected in the fair value of the properties.
3. Significant accounting judgements, estimates and assumptions (extract)
(b) Carrying value of property, plant and equipment
Judgement is required to determine whether the fair value of land, buildings and services, runway, taxiways and aprons and infrastructural assets has changed materially from the last independent revaluation. The determination of fair value at the time of the revaluation requires estimates and assumptions based on market conditions at that time. Changes to estimates, assumptions or market conditions subsequent to a revaluation will result in changes to the fair value of property, plant and equipment.
Remaining useful lives and residual values are estimated based on management’s judgement, previous experience and supported by registered valuers. Changes in those estimates affect the carrying value and the depreciation expense in the income statement.
The carrying value of property, plant and equipment and the valuation methodologies and assumptions are disclosed in note 11(a) and note 11(c) respectively.
(c) Movements in the carrying value of property, plant and equipment
When revaluations are carried out by independent valuers, the valuer determines a value for individual assets. This may involve allocations to individual assets from projects and allocations to individual assets within a class of assets. The allocations to individual assets may be different to the allocations performed at the time a project was completed, or different to the allocations to the individual asset made at the previous asset revaluation. These differences at an asset level may be material and can impact the income statement.
(e) Flood-related insurance matters
On 27 January 2023, Auckland experienced widespread flash flooding caused by record-breaking rainfall. Auckland Airport experienced flooding and suffered damage to assets across its precinct, particularly check-in, baggage, and vertical transportation at the international terminal building. The repair and replacement of damaged assets has now been completed.
Insurance recovery income
Auckland Airport lodged a claim under its material damage, business interruption and construction works insurance policies. During the year ended 30 June 2026, the claim was finalised with a settlement of $40.5 million. The group recognised $12.5 million of insurance recovery income during the year ended 30 June 2026, in addition to the $28.0 million recognised in prior years.
(f) Climate change
Judgement is required to determine the extent to which climate change may impact the amounts recognised in these financial statements.
The group considers that assets within the property, plant and equipment and investment property portfolios are of most significance when assessing the potential impact of climate change. The group ensures consistency between the potential future scenarios outlined within the Climate-Related Disclosure and the assumptions and estimates applied in the carrying value of property, plant and equipment and investment property assets. In particular, the group has considered:
- Useful lives for existing assets that will be replaced as the group transitions to reduce its carbon emissions, in line with the decarbonisation pathway and infrastructure planning that supports future low-emissions technologies;
- Risk of damage to existing assets and operational impacts associated with changing weather patterns and sea level rise, including the expected time frames that existing assets would be affected in, informed by physical risk modelling and long-term stormwater strategies;
- Potential changes in customer demand and regulation that may affect the future economic benefits assumed in the carrying value of assets, reflecting transition risks such as evolving policy, stakeholder expectations, and the pace of aviation sector decarbonisation.
The independent valuations of property, plant and equipment, and investment property have taken into account the potential impact of climate change in determining their fair value.
The Group continues to mitigate near-term risks associated with extreme weather events through targeted investment in stormwater infrastructure, enhancing the resilience of critical assets against flooding. Auckland Airport is gradually transitioning its precinct infrastructure to electric systems, including food and beverage facilities, and heating, ventilation and air conditioning (HVAC).
Further information on climate-related risks, opportunities, and the Group’s transition planning is available in the Climate-Related Disclosure section of the Annual Report.
11. Property, plant and equipment
(a) Reconciliation of carrying amounts at the beginning and end of the year
Additions for the year ended 30 June 2026 include capitalised interest of $55.4 million (2025: $60.9 million).
During the year, the group opened a new area for aircraft parking, including taxiway, six remote stands and upgraded stormwater systems. Additionally, elements of the terminal integration programme such as the eastern end of the international terminal and the inner terminal road reached completion. The disaggregation of completed projects into depreciable assets resulted in a reallocation of cost from the runways, taxiways and aprons class to the infrastructure class.
The group also acquired quarry land, plant and equipment for $19.5 million, including $5.2 million relating to estimated environmental remediation obligations. A corresponding provision has been recognised and capitalised as part of the cost of the asset. Quarry land is depreciated on a units of production method based on proven and probable reserves. The group also acquired vacant land adjacent to the quarry, which is being held for a currently undetermined future use within investment property (refer to note 12).
During the year, estimated useful lives were revised for assets impacted by airfield renewals and regional stands projects. This change in estimate resulted in an increase in depreciation expense of $9.3 million for the year ended 30 June 2026 (2025: $7.0 million).
The group includes leased properties within property, plant and equipment when the properties are held for the purpose of airport operations.
The following categories of property, plant and equipment are leased to tenants:
- Aeronautical land, including land associated with aircraft, freight and terminal use carried at $355.9 million (30 June 2025: $355.9 million);
- Land associated with retail facilities within terminal buildings carried at $1,795.9 million (30 June 2025: $1,795.9 million); and
- Terminal building premises (within buildings and services), being 14% of total floor area and carried at $419.2 million (30 June 2025: 15% of total floor area or $369.0 million).
(b) Carrying amounts measured at historical cost less accumulated depreciation
(c) Revaluation of land, buildings and services, infrastructure, runway, taxiways and aprons
At the end of each reporting period, the group makes an assessment of whether the carrying amounts differ materially from fair value and whether a revaluation is required. The assessment considers movements in the capital goods price index since the previous valuation, mid-year desktop reviews by the previous valuers, and changes in valuations of investment property as an indicator of property, plant and equipment valuation movement.
Valuations are completed in accordance with the company’s asset valuation handbook, which is prepared in accordance with financial reporting and valuation standards. Management reviews the key inputs, assesses valuation movements and holds discussions with the valuers as part of the process. Discussions about the valuation processes and results are held between the group’s management and the Board.
Infrastructure and runway, taxiways and aprons were independently valued by Beca Limited (Beca) as at 30 June 2026.
Land assets and buildings and services assets were not revalued at 30 June 2026. The assessment is that there is no material difference between the carrying value and the fair value of those asset classes at 30 June 2026.
The assessment on land, to determine whether a revaluation was likely to be required at 30 June 2026, was supported by management’s review of fair value changes for comparable land within the investment property portfolio. Land assets were independently valued by Savills Limited (Savills), Colliers International (Colliers), CB Richard Ellis Limited (CBRE) and Aon Risk Solutions (AON) as at 30 June 2025.
The valuation approach for buildings and services is the optimised depreciated replacement cost method. The assessment of fair value was supported by an independent review of potential changes in the replacement cost for those assets as at 30 June 2026. The independent review considered movements in relevant capital goods price index subcategories. Building and services assets were independently valued by Beca at 30 June 2024.
Fair value measurement
The valuers use different approaches for valuing different asset groups. Where the fair value of an asset is able to be determined by reference to market-based evidence, such as sales of comparable assets, the fair value is determined using this information. Where fair value of the asset is not able to be reliably determined using market-based evidence, discounted cash flows or optimised depreciated replacement cost is used to determine fair value. Assets acquired or constructed after the date of the latest revaluation are carried at cost, which approximates fair value.
The group’s land, buildings and services, infrastructure, runway, taxiways and aprons are all categorised as Level 3 in the fair value hierarchy as described in note 2(e). During the year, there were no transfers between the levels of the fair value hierarchy.
The table below summarises the valuation approach and the principal assumptions used in establishing the fair values:
The valuation inputs for infrastructure and runways, taxiways and aprons are from the 2026 valuation, while the prior year’s comparatives are from the 2023 valuation of these assets.
The valuation inputs for land are unchanged from the 2025 valuation. The valuation inputs for buildings and services are unchanged from the 2024 valuation. These asset classes were not revalued in 2026 because the carrying value was not assessed to be materially different from fair value.
The table below includes descriptions of different valuation approaches:
The table below summarises each registered valuer’s valuation of property, plant and equipment:
1 At 30 June 2026, the assessment is there is no material change in the fair value of land assets compared with carrying values. This class was last revalued at 30 June 2025.
2 At 30 June 2026, the assessment is there is no material change in the fair value of buildings and services assets compared with carrying values. This class was last revalued at 30 June 2024.
3 Infrastructure assets were revalued at 30 June 2026. This class was last revalued at 30 June 2023.
4 Runway, taxiways and aprons were revalued at 30 June 2026. This class was last revalued at 30 June 2023. The carrying value includes a net transfer of $119.6 million to infrastructure related asset classes, following the disaggregation of completed airfield assets into their component classes. The following table shows the impact on the fair value due to a change in a significant unobservable input:
Accounts examples 