The confluence of the recent economic downturn, the terrorist attacks of September 11, and the financial struggles of the airline industry has created a particularly challenging situation for airports. Although the situation is improving, many airports have experienced reductions in airline service, declines in passenger traffic, corresponding declines in traffic-related revenues, payment defaults from concessionaires, pleas for rent relief from airline and concession tenants, increases in costs of security and insurance, uncertain additional costs of equipment and facilities to meet security requirements, and uncertain federal funding support for such additional costs. In some cases, airports have been concerned about meeting the most basic of financial objectives—liquidity and rate covenant compliance. In all cases, the perception of airport credit quality has been critical.
The Company has worked closely with our clients to understand the strategic implications of this “new reality” and to evaluate, as appropriate, the business and financial implications of cost cutting measures including layoffs or furloughs, reductions or deferrals in capital expenditures, restructuring fixed debt obligations, third-party financing to “buy out” existing facilities or to fund new facilities, de-funding of previously funded capital projects, reprogramming of capital resources to only the highest priority projects, strategies to maximize federal assistance, and strategies for offsetting potential airline rate increases.
To assist our clients in keeping pace with the rapid changes affecting the industry, the Company developed a newsletter that summarizes key events. These newsletters are posted below for your reference. If you would like to be included on our mailing list, please contact mail@johnfbrown.com.