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And in the face of what it described as an undervalued security price, MAL today announced a A$1 billion buyback, a revaluation of assets, and a "deleveraging" of the company, including partial sales of the company's holdings in Copenhagen and Brussels airports.
MAL said that, despite poor economic conditions, long term traffic growth was expected at four per cent to five per cent.
It confirmed earlier guidance of distributions over the 2008 year of 27 cents per security.
In first half results announced today, Macquarie Airports said proportionate consolidated pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) were up 9.6 per cent on the first half of 2007.
Proportionate earnings per security were 10.2 cents, up 12.1 per cent on the prior corresponding period.
While MAp chief executive officer Kerrie Mather said the group's outlook was "solid", she said that "despite the strong performance and excellent positioning of our airports ... security price performance has been disappointing so far in 2008.
"Whilst this is primarily a consequence of external factors beyond MAp's control, action has nonetheless been taken to address this security price underperformance," she said.
"Feedback from our active program of engagement with investors has highlighted a changed attitude towards acceptable levels of leverage.
"Boards and management are also seeking to address the gap between the current security price and the security value implied by directors valuations, reaffirm the quality and sustainability of distributions and reinforce MAp's commitment to its traditional investment discipline."
As a result, the company also announced today a A$1 billion buyback of MAp securities, the divestment of 26.9 per cent of Copenhagen airport and 26.1 per cent of Brussels airport to Macquarie European Infrastructure Fund 3, and the repayment of MAp's TICkETS hybrid capital instrument, with full repayment by January 1, 2010.
Ms Mather said the company's first half performance "confirms the resilience of our operating model.
"Proportionate EBITDA growth of 9.6 per cent in the face of the current external environment represents an excellent achievement and demonstrates the significant value which has been generated by the aeronautical and commercial initiatives MAp has underway at our airports," she said.
"We recognise that our airline customers face challenging conditions but the first half result is evidence of the importance of investing in airports with attractive characteristics and opportunities across the aviation and commercial businesses.
"Whilst our financial position is very sound, we recognise that attitudes towards leverage have changed, if not permanently, then for the foreseeable future.
"Consequently, we are applying our surplus cash to the repayment of our hybrid capital instrument, TICkETS, which will simplify MAp's capital structure.
"Whilst there is no provision for early redemption, we are offering TICkETS holders a withdrawal option, with any remaining balance to be defeased and repaid on 1 January 2010."
Ms Mather said the company's intended A$1 billion buyback reinforced its belief in the value of its airport holdings.
"The discount to valuation which the current security price represents remains near record levels," she said.
"A buyback of this scale also aids the quality and sustainability of our distributions and our commitment to achieve broad convergence between our regular distribution and proportionate earnings by 2010."
The Copenhagen and Brussels divestments would be "conducted at prices that reflect our full directors' valuations, generating substantial premia to the prices for MAp's original investment, of 49 per cent for Copenhagen and 47 per cent for Brussels.
"Importantly, MAp will exercise joint control over both investments whilst retaining exposure to their future growth."
Ms Mather said MAp had taken an economic interest in ASUR, the owner and operator of nine airports in south eastern Mexico, including Cancun Airport, Mexico's second largest airport, located in one of the fastest growing tourism destinations in Mexico and the Caribbean
"ASUR meets MAps key investment criteria and we expect the returns from this investment to be well above that offered by current and proposed major airport privatisations," Ms Mather said.
"We believe this investment demonstrates MAp's continued ability to source attractive growth opportunities."
"The strong first half result is evidence of the stability of our earnings despite a volatile external backdrop and, coupled with our proactive Portfolio and Capital Review, places MAp on the firmest possible footing for the future," Ms Mather said.
In the six months, the value of MAp's investments fell to A$7.6571 billion from A$9.581 billion in the corresponding period in 2007.
Asset backing fell from A$4.92 per stapled security to A$4.57, and from A$5.06 at December 31, 2007.
"The decrease over December 31, 2007, reflects a comprehensive review of business and financing plans to incorporate all announced airline capacity reductions and the directors view of financing outcomes in both the short and long term," Ms Mather said.
"In addition, asset specific risk premia have been increased to reflect the uncertainties created by the current external environment."
Looking ahead, Ms Mather said, "MAp and its airports are in a strong operational and financial position.
"The boards and management of MAp consider the outlook for the rest of 2008 to be solid.
"Notwithstanding the near term impact of the external environment, a long term traffic growth forecast of 4 per cent to 5 per cent is maintained with an intention to enhance revenue yields through commercial initiatives and deliver further increments to EBITDA via operational efficiencies."
(AAP)
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