Bonds

Airports land $289 million of federal infrastructure grants

Another $289 million in Airport Infrastructure Grants is flowing to 129 airports across 40 states as air travel in the US breaks new records.

“This latest round of funding will support key improvements to terminals, runways, and baggage systems and build on the work this administration is doing to modernize our aviation infrastructure,” said Transportation Secretary Pete Buttigieg.

On June 23, the Transportation Security Administration broke its record for most air travelers screened on a single day, screening 2,996,193 people.

Hartsfield-Jackson Atlanta International Airport was among the many recipients of the latest round of federal airport grants.

Bloomberg News

The TSA expects 32 million to pass through the process over the 4th of July weekend. The numbers are up 5.4% compared to last year. 

The airport grants, which are funded by the Infrastructure Investment and Jobs Act of 2021, the Bipartisan Infrastructure Law as the Biden Administration terms it, are going to a cross section of regional and international airports.

The mix includes $30.1 million for a runway at Hartsfield-Jackson Atlanta International Airport in Georgia, the world’s busiest airport by passenger count, to $1.3 million going to Knox County Regional Airport in Maine for taxi lane reconstruction. 

Phoenix Sky Harbor International Airport in Arizona is teed up for $66.7 million to cover demolition costs on old terminals and a new 2,100-foot taxiway. Traffic is up in Phoenix and expansion plans already on the books include about $935 million of bonds that are expected to be issued around 2026. 

Hollywood Burbank Airport in California is netting $8.2 million for the third phase of construction for a new terminal building.

The terminal is part of $1.3 billion makeover which brought a Fitch Ratings downgrade in April to A-minus from A for the Burbank-Glendale-Pasadena Airport Authority’s general airport revenue bond credit, citing a larger debt load.

In May, the authority closed $724.78 million of 2024 Series A, B and C Airport Senior Revenue Bonds. 

“The Authority and its financing team believe the overwhelming reception for the bonds by the investment community provides a strong foundation for a second bond issue, anticipated to occur in 2026,” said Felicia Williams, president of the authority, said in a statement.

U.S. airline passenger traffic overall is up over 6% year-over-year with travel demand looking robust headed into the summer, Fitch Ratings said in a June 17 comment piece. “However, several West Coast large market airports are still struggling to get back to pre-pandemic activity,” Fitch said.

S&P Global Ratings is mostly bullish. In its June analysis of the airport sector, it said “U.S. air travel demand has fully recovered for most airport operators and performance has even exceeded pre-pandemic levels for some. This recovery and other factors have contributed to issuer upgrades for approximately 27% of S&P Global Ratings’ airport ratings.”

A Moody’s analysis in June predicted continued growth for the industry and bond issuance.

“Bond issuance will continue to pick up,” the analysis said. ”We rated five transactions in April and May with average par amounts above the post-pandemic level. With airports’ significant capital needs, issuance is set to continue its acceleration following a lull.”  

The FAA also opened the application period for airports to submit projects for the fiscal year 2025 Airport Terminal Program, another product of the infrastructure law. That money is intended to improve terminals, traffic control towers, and on-airport rail and bus projects that improve multimodal connections. 

“I encourage airports to take advantage of this opportunity to build modern facilities that are accessible, safe, resilient to climate change impacts and achieve environmental sustainability,” said FAA Associate Administrator for Airports Shannetta R. Griffin.

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