Salt Lake City International Airport to Issue $ 900 Million
As air travel quickly returns to pre-pandemic standards, Salt Lake City is offering $ 900 million in revenue bonds for its airport redevelopment.
“This is truly the only major international airport that Utah is going to have,” said Bill Wyatt, general manager of Salt Lake City International Airport in a presentation on the redevelopment plan. “So getting it right is really important.”
In 2017 and 2018, the airport issued approximately $ 1.7 billion in bonds to fund the construction costs of Phase 1 which are now in service, said Brian Butler, the airport’s chief financial officer.
“With this transaction, we are proposing approximately $ 900 million in additional tax obligations for airports to continue Phase 2 of the project, which would leave approximately $ 600 million to be funded in 2023,” said Butler.
Of the $ 4.45 billion budget for the entire project, 85% is complete or under contract at guaranteed maximum price, said Kevin Robbins, chief engineer at the airport.
“In light of the decline in passenger traffic due to the pandemic, the department, in consultation with the signatory airlines, has changed the phase schedule for the remainder of the construction of the new SLC,” Wyatt said.
“Rather than completing Halls A and B in phases while leaving elements of the previous halls in service, the new plan demolishes all existing facilities and builds Hall A East in one phase,” Wyatt said.
“The traffic recovery is rapid, reaching 88% of May 2019 levels by June,” Wyatt said on a pre-sales roadshow.
Bob DeMichael, chief executive of Citi and chief banker for the deal, said pricing is slated for next week with Goldman Sachs as a co-manager.
The bonds come in two series, with $ 710 million subject to alternative minimum tax. Series B will consist of non-AMT bonds.
The bonds are rated A2 by Moody’s Investors Service, A by S&P Global Ratings and AA-less by Kroll Bond Ratings Agency. The outlook is stable.
“Construction risk was significantly reduced when the airport opened the first half of its $ 4.5 billion New SLC program in fall 2020,” said Earl Heffintrayer, chief analyst at Moody’s. “But increasing labor and material costs and maintaining rapid readjustment operations pose a risk to adherence to the updated program estimate.”
The Salt Lake City Department of Aviation has been working on updating the master plan since 2018 and held the last public briefing on June 17.
Wyatt and other officials described the airport’s vision for the next 20 years.
“Our new airport was envisioned over 20 years ago in the airport’s previous master plan,” Wyatt told attendees.
“When, COVID hit, and we haven’t really had a chance to present our new airport to the public.”
The airport opened Phase 1 of redevelopment in fall 2020 and is now in Phase 2, which is expected to open in 2023-24.
“April 2020 was the low point for passenger volumes here in Salt Lake City,” Butler said. “We were down about 92% from our April 2019 levels.”
Federal grants and scholarships of nearly $ 200 million helped offset declining income during the pandemic, Butler said.
“If you move quickly to May 2021, that was the very first month the airport exceeded 1 million boardings on a monthly basis. You would have to go back to February 2020 to see when the airport had any. more than one million embarkations on a monthly basis. “
The Ministry of Aviation hired the RS&H consultant to prepare the study. RS&H is an architectural, engineering and consulting firm specializing in the design, planning and environmental services for airports in the United States.
Salt Lake City Enterprise Airport operates two other airports, the South Valley Regional Airport in West Jordan and the Tooele Valley Airport.
Salt Lake City International is a major hub for Delta Airlines.
Salt Lake City International Airport was debt-free in 2017 when it issued its first $ 900 million in tax bonds for the redevelopment plan which was set at $ 3 billion at the time.
The 2017 show was the airport’s first since selling a $ 62 million tax liability in 2004.
“It was a repayment issue, so it’s been even longer since we’ve sold a new issue of money for the airport,” said then manager Maureen Riley, who has since retired.
“To my knowledge, we are the largest airport in the country with no outstanding debt,” said Riley.
Delta said in its latest earnings report that adjusted operating revenue for the June quarter improved 76% from the March quarter.
“Domestic leisure travel is fully back to 2019 levels and there are encouraging signs of improvement in business and international travel,” said Managing Director Ed Bastian.
“With the recovery accelerating, we are making investments to support our peak business,” he added. “We are also opportunistically acquiring aircraft and creating upward flexibility to accelerate the restoration of our capacity in 2022 and beyond in a disciplined manner by capital.”
Delta is investing more than $ 12 billion in airport projects that modernize the airline’s hub infrastructure and customer experience, including new construction at Los Angeles International Airport and New York’s LaGuardia Airport with SLC.
Salt Lake City will remain an important part of Delta’s overall network strategy as the airline recovers from the global pandemic, the airline said.
“Over the past 60 years, Delta has remained a constant strategic partner of Salt Lake City International Airport,” said Scott Santoro, Delta’s vice president of sales for the West Coast. “This incredible space is more than the largest new build in the western United States in over 25 years,” he said. “This solidifies Delta as the airline of choice for passengers traveling to, from and via Salt Lake for business and leisure travel for years to come.”
Salt Lake City is one of many multi-billion dollar airport projects that continued during the pandemic.
In neighboring Colorado, Denver International Airport is undergoing the biggest redevelopment in its history. Other major redevelopments include Los Angeles International Airport and LaGuardia in New York City.
The Federal Aviation Administration of the United States Department of Transportation recently awarded more than $ 845 million for projects at approximately 388 airports in 49 states and the District of Columbia.
Funding from the fourth round of FY2021 Airport Improvement Program grants will support projects, which aim to increase airport capacity, improve accessibility and mitigate environmental impact.
“We don’t want to just rebuild our airports like before the pandemic,” said US Transportation Secretary Pete Buttigieg. “We want our airports to be more accessible than ever to everyone, providing maximum benefits to their communities and helping, directly and indirectly, to create jobs for millions of Americans.”