Sydney Airport's chief executive to retire

Sydney Airport is searching for a new chief executive after announcing that Kerrie Mather would be retiring after 15 years in the job. Mather presided over the airport's privatisation in 2002, as well as various controversial expansion plans – which pegged the airport against local councils – and she has been central to the ongoing consultation with the Government over the new Western Sydney Airport.

Mather will leave the airport in good standing. In its recent full-year result, strong international passenger numbers helped the company increase revenue 6% for the year to December, while earnings before interest, tax, depreciation and amortisation (EBITDA) was 10% higher.

Mather's deep, long-term knowledge of the airport's operations, as well as her relationships with governments, airlines, regulators and retailers will make her a tough act to follow. However, Sydney Airport is one of Australia's best assets and – not to play down Mather's contribution – essentially runs itself. We don't expect the transition to a new chief to be disruptive.

Nonetheless, the timing of Mather's retirement does raise an eyebrow – the airport has until next month to accept or reject the Government's formal offer for the company to build and operate Sydney's second airport. Given that planning and consultation has lasted almost three years, it seems odd that Mather would choose to retire now, right before the official decision is made.

Management expects 2017 distributions of 33.5 cents per share, an 8% increase on 2016. The stock is up 13% since we upgraded it in Who pays for Sydney's second airport? on 5 Jan 17 (Buy – $5.89). With an unfranked distribution yield of 5.0% based on 2017 estimates, we're sticking with HOLD.

Note: The Intelligent Investor Growth and Equity Income portfolios own shares in Sydney Airport. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.

Disclosure: The author owns shares in Sydney Airport.