Airport International News - July 2012
Branson Airport Future Unclear
Posted by Ben Morgan - Airport International on 04/07/2012 - 03:15:00
Branson airport has failed to make its bond payment for a second time in 2012, casting doubts over the future of the facility.
In a recent correspondence with bondholders, MBA Bank, trustee of Branson Airport, confirmed that it was unable to make the $3.4 million interest pay-outs, which were due to be made by the 30th of June.
The trustee also failed to make a previous pay-out on the 1st of January and were unable to confirm whether they could meet the following installment in January, 2013.
Branson Airport Bonds
Branson Airport, has failed to pay out on its bonds since the start of 2011 and since April 2011, it has only been functioning due to the bondholders' forebearance agreement in which they promised not to take action against the airport (including foreclosure) until the 30th of June. Now, Branson airport is requesting to extend the agreement.
Jeff Bourk, Executive Director of Branson airport was not willing to comment on the bonds directly, but advised that the passenger numbers have increased this year compared to the previous year. The exact figures were not immediately to hand but he said that the airport had 92 thousand passengers in 2010 rising to 110 thousand in 2011. He advised "We are up significantly this year".
Michael Hynes, a resident of Branson City and an airport analyst, advised that bondholders could potentially take over Branson Airport themselves - either to operate it, or sell it. However, he believes this is improbable, as bondholders do not wish to run it themselves.
He told journalists: "The question at this point is not whether they pay the bondholders, it's how do they keep open?"
Since construction of the airport was paid for using tax-exempt municipal bonds, details of its financial affairs must be made available to the public at the Electronic Municipal Market Access website of the Municipal Securities Rulemaking Board.
Reports confirm that Branson Airport lost $14 M in 2009, $13.4M in 2010, and $17.2M in 2011. It has lost $4.6M so far in 2012, and is expected to lose $18M.
The airport currently has around $160,000 in the bank - under 3 days of operating expenses compared with 489 for the average US airport. It also owes around $2M to suppliers.
Southwest Airlines at Branson Airport
The airport received a boost on the 3rd of July when Southwest Airlines indicated they would be operating from Branson Airport in 2013. Southwest recently merged with AirTran Airlines, which already operates from the airport. They had already pledged to continue operations from the airport in January, but had not specified the dates. The statement confirmed they would begin operations in early 2013 and had made a multi-year agreement.
Bourk was pleased to say "Southwest will be here quite a while, if not forever".
On the 26th of June, the City of Branson agreed to give Branson Airport $361,754. This is the result of a pledge in 2006 for the city to give over $8 for every unique visitor that the airport attracts to the city. Dean Kruithof, city administrator, commented that whilst the forebearance agreement with bondholders indicates the airport is not doing well, the aim of the agreement was to allow the airport the time it needed to prove itself.
Kruitholf explained that Branson was the country's first commercial, privately owned airport: "Nobody's ever done this before."
Kruithof advised that Branson City was successfully paying the airport without risking its budget, but was unable to confirm if these pay-outs could continue forever. Branson attempts to maintain a cash reserve of 30% of the general fund, but it is currently down to 29.3% and the city is mandated to maintain a reserve of at least 20%.
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