What investor s need to know about the massachusetts port authority or any other airport
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What Investor’s need to know about the Massachusetts Port Authority (or any other airport…) . Presentation by Betsy Taylor to MAGNY April 4, 2014. Topics. What investors’ should know about airport’s in general? What should investors’ know about Logan Airport?

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What Investor’s need to know about the Massachusetts Port Authority (or any other airport…)

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What investor s need to know about the massachusetts port authority or any other airport

What Investor’s need to know about the Massachusetts Port Authority(or any other airport…)

Presentation by Betsy Taylor

to MAGNY

April 4, 2014


Topics

Topics

  • What investors’ should know about airport’s in general?

  • What should investors’ know about Logan Airport?

  • What does Massport’s Director of Finance worry about?

  • Your questions


Key questions

Key Questions

  • What is the number of passengers & is that number increasing?

  • Is the Airport an Origin/Destination or a HUB?

  • What is the airport’s service area and what is that region’s capacity to generate ticket sales?

  • What is the airport’s competition?

  • What is the airport’s capital plan?

  • What are the airport’s debt policies and what protection is provided by the bond documents?


Massport overview

Massport Overview

  • Massport is a body politic and corporate and a public instrumentality of the Commonwealth of Massachusetts

  • Massport is governed by a seven- member Board appointed by the Governor of the Commonwealth, one of whom shall be the Secretary of Transportation

  • Massport owns, operates and manages Boston Logan Airport, Hanscom Field, Worcester Regional Airport, and Port Properties consisting of certain facilities in the Port of Boston and other properties


Key elements of massport s credit strength

Key elements of Massport’s Credit Strength

  • Massport’s credit profile remains strong as management continues to produce sound financial results to maintain AA/Aa3/AA-ratings

  • Logan’s traffic is over 90% O&D

  • Logan added 5 new international carriers in the past year: Copa, JAL, Emirates, Turkish and Hunan

  • Boston has a diverse economy with per capital income 30% above the national average

  • Manageable $1.2 billion capital plan with only $240M in new debt

  • Conservative debt profile with level debt payments, no derivatives and limited use of variable rate debt

  • Record of proactive management to successfully navigate in the dynamic airline industry


Logan s passenger g rowth to reach 31 million passengers by end of 2014

Logan’s passenger growth to reach 31 million passengers by end of 2014

  • Factors Contributing to Logan’s Passenger Growth

  • MA Economic Growth:

    • Employment growth is expected to be 1.4% in 2014 and 1.9% in 2015

    • MA economic growth, through 2017, is expected to grow 2.7% in real GDP and 3.6% in Personal Income.

  • Changes in Airline Service

    • Advanced airline schedules indicate a 2.4% increase in Logan’s seat capacity during the first half of 2014

    • Over the past 4 years, passenger traffic has outpaced the growth in airline seats

  • Logan Airport’s Regional Passenger Market Share:

    • Logan has steadily increased its share of the regional market, but at diminishing rates

Source: New England Economic Partnership Nov 2013: Massachusetts


Logan airport passenger growth to reach new record highs in 2014 with nearly 31m passengers

Logan Airport passenger growth to reach new record highs in 2014 with nearly 31M passengers

Passenger growth being boosted by JetBlue’s continued expansion at Logan Airport.

Note: Excludes GA passengers. CY 2013 passenger traffic including GA was 30.2M.

Source: Massport and ICF SH&E forecast


In 2013 jetblue expansion was largely responsible for the capacity growth at logan

In 2013, JetBlue Expansion was Largely Responsible for the Capacity Growth at Logan

Note: Top 10 carriers based on scheduled seats for CY2013

Source: OAG Schedules


What investor s need to know about the massachusetts port authority or any other airport

In 2013, Logan’s Share of Boston Region Passengers Increased by 0.5 Percentage Points

Total Passengers (BOS/PVD/MHT)

36.7M 36.9M 34.5M 33.0M34.1M35.5M 35.3M 35.5M*

Source: Airport Records -12 Months ending Nov 2013 for PVD & MHT; CY 2013 for BOS


Overview of logan s recent business activity

Overview of Logan’s recent business activity

  • 30.2 million passengers served by Logan Airport in CY 13, a 3.4% increase of 983,000 passenger over the previous year.

  • Airline operations and landed weights increased 1.9% and 3.5%, respectively, in CY 13 to keep pace with passenger demand.

  • Logan commercial parking revenue increased 3.5% due longer stays and higher Gold Pass revenue.

  • Rental car transactions days are up 8.2%. In Terminal concession revenues are $1.0 million, or 7% over budget driven by a 5% increase in enplanements and 4% increase in average sales per passenger.

  • HOV activity is trending ahead with Logan Express up 4.8% over budget and Blue Line T outbound turnstile counts 6.4% ahead of CY 2012.


What investor s need to know about the massachusetts port authority or any other airport

Massport’s 5-year net revenue generates $513 M to fund the Authority’s 5-year capital program

$590 Revenue

As of 2/2/12


What investor s need to know about the massachusetts port authority or any other airport

The Use of Bonds and Existing I & E Balances

Fund FY14-FY18 Capital Programs

UPDATED 2/2/12


Fy14 18 capital plan produces financial metrics consistent with massport s debt policy

FY14-18 Capital Plan produces financial metrics consistent with Massport’s debt policy

Note: Operating Ratio is expenses with PILOT/divided by operating revenue

*Large Hub Airports


Massport s conservative debt structure

Massport’s Conservative Debt Structure

  • Credit Rating Agency confidence reflected in Aa3/AA-/AA ratings

  • $1.6 Billion in debt: 90% is fixed rate

  • 10% of outstanding debt has been variable rate since 2003

  • No swaps or swaptions

  • 2013 debt service after the 2012A new issue and 2012B refunding.


Five year financing plan conclusions

Five year Financing Plan Conclusions

  • Massport’s Aviation, Port, and Real Estate businesses will grow in 2015:

    • Logan Airport to reach 31 million passengers in 2014 on the strength of the MA economy, new international service offerings, and continued growth in the N.E. market share

    • Maritime’s financial performance expected to improve from growth in container activity next year (113, 000 to be serviced) as exports to Europe grow and the local economy and employment in MA expands.

    • Commercial Real Estate expected to grow $1.5M from higher rents, new investments, and parking which will assist Maritime to meet its capital investment needs.

  • Priority investments and fiscal discipline required to advance Massport’s Ten Strategic goals

    • Management set a target of 5% budget growth next year, and subsequent years, based passenger activity, increases in flight operations, our growing infrastructure footprint, more HOV service offerings, real estate business activity, and increased Port operations.

  • Five-year financial plan adheres to Board’s Debt Policy and Preserves Massport AA bond rating

    • New revenue from rate adjustments for parking, GTU, cruise, and tariffs are essential to generate the $500M in capital investments incorporated in the FY 14-18 capital program.

    • Staff is planning to issue approximately $200 million in new Bonds in July.


What keeps the director of finance up at night

What keeps the Director of Finance up at night?

  • Impacts of airline mergers – Balancing need for new construction with impacts of vacant gates

  • Viability of airline special facility bonds

  • How much do we invest to accommodate changing international patterns? e.g: A380

  • Shifting attitude of FAA toward PFCs make timely access to those funds challenging


What investor s need to know about the massachusetts port authority or any other airport

  • Questions?

  • Contact information:

    • Betsy Taylor

    • Director of Finance & Treasury

    • 617-568-1047

    • [email protected]


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