Detroit Airport Prepares To Sell New Silver As Prospects Improve
The Wayne County Airport Authority is going into the market Wednesday for a sale of new silver benefiting from a more stable fiscal position thanks to federal support and a rebound in passenger numbers.
On Wednesday, the authority will borrow $ 163 million in senior lien airport revenue bonds to fund projects already approved by airlines at the Detroit Wayne County Metro Airport.
The projects are part of a five-year capital improvement program and will finance upgrades and improvements to the airfield, power and electricity distribution, parking and ground transportation, roads and communications assets.
The transaction is offered in two series with the first tranche of $ 131 million not subject to alternative minimum tax and the second of $ 32 million subject to AMT.
Two minority-owned companies will lead the deal with Siebert Williams Shank & Co. LLC as book manager and Loop Capital Markets LLC as co-manager.
The bonds are rated A by Fitch Ratings, AA-less by Kroll Bond Rating Agency and A1 by Moody’s Investors Service. All attribute a stable outlook after Fitch changed the outlook late last month from stable to negative as part of his review of the deal.
The airport has approximately $ 2 billion in debt, most of which is issued under the first lien and $ 122 million under a second lien.
“The revised outlook… reflects the continued progression of passenger recovery to nearly 50% of pre-pandemic levels, the effective defensive strategies implemented by management with the benefit of federal funds, and the importance continues from the airport as the main hub “for Delta Air Lines,” says Fitch. Delta accounted for 71% of passengers using the airport in 2020.
The full recovery to reach record levels of 18.4 million passengers in 2019 will take a few years, but the airport benefits from its hub status and long-term airline agreements that ensure short-term financial performance, Fitch said.
The number of passengers fell 61% to seven million in FY2020 and in the first four months of FY2021 they are on the mend but remained depressed by around 52% compared to pre-2019 pandemic levels. Airlines revenues for fiscal 2020 fell 18% to $ 146 million, while non-airline revenues increased 1.9% to $ 219 million thanks to federal aid in the CARES law of March 2020.
The airport received $ 174 million, of which approximately $ 113 million was to offset terminal and landing fees, CARES, and the December 2020 federal program, and will use the remainder in FY2021. additional funds are expected from the American Rescue Plan Act. The airport has also cut management costs, postponed some projects and last month opened a one-year $ 25 million line of credit that has yet to be used.
The cost per passenger was $ 20.71 in 2020, up from $ 9.84 in 2019, but that was due to the blows of the pandemic. The FY2021 level is projected at $ 16.08 and will drop below $ 10 after a full rebound.
The authority was created by state statute in 2002 and operates as a separate legal entity from Wayne County, although the county holds fee simple title to major airport property. The airport is located on 6,255 acres, 20 miles southwest of downtown Detroit, and has four parallel north-south runways and two crosswind runways and two terminals.