Australia Pacific Airports Corporation (APAC), operator of Melbourne and Launceston Airports, today announced a post-tax profit of $87 million, an increase of 10% on the previous year. APAC's earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 7% to $246 million. Overall revenue was up 8% to $348 million.

The strong financial results were driven by a range of factors, including a major expansion of the airport's car parking facilities and the addition of major new tenants into the airport's Business Park.

APAC Chairman Don Mercer said that the results reflected a strong diversity in the company'srevenue streams-with retail growth increasing by 12% to $138 million, and property growth increasing 4% to $46 million.

The 2005/2006 financial year was notable for modest passenger growth, with overallpassenger numbers for the company's major asset, Melbourne Airport, increasing by 3.1% to 21.43 million passengers, including just 2% growth internationally-compared to 14.4% in the previous financial year.

Mr Mercer said that this restrained international passenger growth was unexpected in a noncrisisyear, and was not helped by a lack of new airline services to Melbourne following severalnegotiations managed by the Federal Government for foreign airline access. These negotiations concluded without additional capacity being delivered.

"In a year with no major international health or security crises, international passenger growth to Victoria has slowed significantly", Mr Mercer said.

"We do not understand why, in the absence of Australian airlines stepping up to the mark, foreign airlines willing to serve Melbourne are denied access."

Mr Mercer also said that a confirmed takeover of one of the company's shareholders BAA by Spanish transport consortium Ferrovial would not impact negatively on APAC's development.

APAC's Board of Directors has arrangements in place to deal with a number of possible scenarios.

"Whatever the outcome it will be business as usual", said Mr Mercer.

Chris Barlow, CEO and Managing Director of APAC, said Melbourne Airport had achieved such strong financial results at a time it was making major investments that would ensure Victoria's long-term growth.

"We have recently completed our $220m series of infrastructure projects to ensure Victoria is ready for the new A380 aircraft", said Mr Barlow.

"We have identified a range of future infrastructure projects that will take out total investmentto over half a billion dollars over five years, ensuring Melbourne remains the leader in Australian airport developments", said Mr Barlow.

"That we have returned such strong results is a reflection of our ability to diversify our business and respond to the consistent challenges of the aviation and tourism sectors", he said.

In the last financial year Melbourne Airport opened a significant expansion to its car parking facilities and secured a new partnership with Duty Free retailer Nuance, operator of Downtown Duty Free.

Mr Barlow also today announced that he would be stepping down as CEO and Managing Director of APAC in March 2007.

He said, however, that the major priority for the company for the next twelve months was to increase airline seat capacity into Victoria.

"Our immediate task is to work with all the airport's Victorian stakeholders to claw back the half a million international seats lost from Melbourne Airport in the past twelve months", said Mr Barlow.

"Melbourne needs increased international capacity, served by major international airlines, with significant networks that connect Victoria to world hubs and on direct flights from Melbourne",he said.

FINANCIAL RESULTS - APAC