By Jacob Saulwick
Sydney Airport Corporation, the owner of the city's airport at Mascot, is unlikely to participate in the construction or running of the new airport at Badgerys Creek, a global ratings agency says.
If the ratings agency is proved right, that would mean the federal government would have to build the airport itself or contract with a rival to Sydney's existing airport operator.
The likelihood of Sydney Airport also operating the Badgerys Creek airport took a hit late last year when the Turnbull government said it would not make extra funds available for doing so.
The government had intimated to Sydney Airport, which owns a contractual right to be given the first chance to build and run a Badgerys airport, that it would provide billions in concessional loans.
Sydney Airport chief executive Kerrie Mather has been given four months to consider whether to take on Badgerys Creek.Credit: Anthony Johnson
But in December, federal Minister for Urban Infrastructure Paul Fletcher said the government would not be providing extra money to Sydney Airport Corporation, beyond the money it was already spending on roads and surrounding infrastructure in the Badgerys Creek area.
"What Sydney Airport would be getting is the valuable opportunity to operate an airport at Badgerys Creek and to receive all of the revenue of that airport," over a 99-year lease, Mr Fletcher said.
In response, Sydney Airport said that exercising its right to run a Badgerys Creek airport, which the government wants open by 2026, would be a "challenging investment proposition".
On Tuesday, the ratings agency S&P Global Ratings said it had a more positive outlook on Sydney Airport as an investment proposition because it did not think it would take on the responsibility of the new airport.
"The outlook revision reflects our view that Sydney Airport is unlikely to participate in the development of Western Sydney Airport, enabling it to continue generating strong financial metrics," S&P Global Ratings credit analyst Thomas Jacquot said in a release.
According to the ratings agency, building the new airport would require an investment of about $5 billion. But even then, relatively small traffic numbers would generate little return in the early years of operation.
Sydney Airport was handed the right to be given the first chance of operating a second airport in the city when it was privatised in 2002.
According to Mr Fletcher, Sydney Airport has four months to decide to exercise its right of operation; Sydney Airport says it has nine months to make a decision.
If Sydney Airport decides not to participate, Mr Fletcher has said the government could either build the airport, or seek other interested parties.