File Photo / Tim Greenway
Airport Director Paul Bradbury of the Portland International Jetport.
Updated: November 22, 2019
Jetport sells $58M in bonds to shave debt burden, free up funds for projects
Courtesy / Portland International Jetport
A bond sale this week by Portland International Jetport will allow it to shave nearly $15 million off its debt.
Taking advantage of lower borrowing costs to shrink its debt burden, Portland International Jetport will reap close to $15 million in savings from a bond sale this week that was 5.7 times oversubscribed.
The city of Portland raised a total of $58.4 million from the sale of General Airport Refunding Revenue Bonds at an interest cost of 2.99%.
That amount will be used to refund around $67.7 million in old debt issued at an interest cost of 5.27%, resulting in net present value savings of $14.8 million.
Rather than raise new cash, the Jetport now reduces its debt burden. The Jetport gets $4.39 in revenue per passenger from the $4.50 Passenger Facility Charge, capped by law for nearly two decades.
Because all the revenue from the passenger charge over a specific period had been pledged to the bonds, a lower debt service frees up cash for airport improvement and expansion projects, according to airport director Paul Bradbury.
"It's just like a homeowner refinancing their house," he told Mainebiz, noting that the new bond issue was sized to fully refund the prior funds outstanding.
"There's no new cash coming into the airport but it will help us fund other projects," he added.
He also noted that while sales to retail investors accounted for only 1% of this week's bond sale, they were important to the issuance. Maine investors accounted for 68% of the retail sales.
Jetport's to-do list
Bradbury said there were two big projects at the top of the Jetport's to-do list: setting up federal inspection services for U.S. Customs and Border Patrol to allow for international charter flights, and the building of passenger boarding bridges for gates 11, 12 and 14.
The estimated cost for federal inspection services is around $9.7 million, while the estimated cost for building the three new passenger boarding bridges is under $2 million, he said.
In an interview with Mainebiz last year, Bradbury already spoke of plans to open up possibilities to fly internationally again — in the past there were flights to Toronto — to places like Reykjavik, Iceland, or the Caribbean, including on low-cost carriers.
At that time, he said that if the money were immediately available, the Jetport could have customs capabilities set up in as few as six months.
On the domestic travel front, the Jetport on Thursday announced that American Airlines (Nasdaq: AAL) will start summer seasonal service to Dallas-Fort Worth starting next June.
Already the largest carrier at the Jetport, American currently flies nonstop to Charlotte, Chicago, New York (LaGuardia Airport), Philadelphia and Washington, D.C.
Bradbury said in a statement that the Jetport has been focused on adding more connectivity to the west, and American's move "opens up many opportunities to get to and from Maine via American's hub" at Dallas-Fort Worth.
'Eternally hopeful'
For some time, airport executives nationwide have been pressing federal lawmakers for an increase in the $4.50 cap on the Passenger Facility Charge to $8.50 to fund expansion. That cap has been in place since 2001.
On Thursday, Bradbury told Mainebiz that he is optimistic of an increase getting the green light at some point.
"We are eternally hopeful," he said. "In this day and age where baggage fees can be 30 bucks, a reasonable increase would make up for all the lost buying power."
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