Winnipeg Airports Authority’s debt soars to $646.3 million

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This article was published 28/11/2014 (4210 days ago), so information in it may no longer be current.

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The debt load on Winnipeg’s still-shiny new airport is soaring up to the value of the facility itself.

The Winnipeg Airports Authority borrowed an additional $100 million last year and is now carrying a total of $646.3 million worth of debt.

That burden is equal to 92 per cent of the value of the property and equipment at Richardson International Airport, which had a net book value of $700.1 million last year.

Most of the non-profit organization’s debt was incurred well before 2013, when the airports authority embarked on a $672-million expansion that included a new terminal, parkade, utility building and groundwork. The $672-million figure included $585 million worth of capital costs and finance charges pegged at $87 million in 2009.

In 2012, the WAA’s long-term debt stood at $554 million. It rose another $92 million the following year.

In April 2013, the airports authority issued $100 million worth of bonds paying 3.3 per cent interest.

The WAA paid $800,000 to issue those bonds, used $10 million of the proceeds to pay off a line of credit and invested the remaining $89.2 million in cash and medium-term bonds, according to the organization’s annual report.

President and CEO Barry Rempel said the airports authority wanted access to cash in order to withstand the next five years, when the corporation expects to operate at a loss.

“It gives us a good cushion if something untoward happens,” Rempel said. “We always knew there was going to be a requirement for another tranche. The debt markets looked like the right time to do that.”

While the airport’s new terminal opened in 2011, Rempel said it may be expanded in the coming years with lower-profile wings to service smaller aircraft. The cash on hand could be used for the terminal expansion.

The money may also be used to cover the cost of any settlements or judgments emanating from airport-construction lawsuits involving the WAA and contractor Ellis Don.

“That’ll be 2018 before that gets through the courts. But it’s a good observation. If there was a requirement that ever came out of one of those court cases — and I’m not convinced there is — that would be a part of it,” Rempel said.

The WAA has no problem meeting its debt-financing obligations, said Rempel, citing revenue streams that include a $25 airport-improvement fee tacked onto tickets for outgoing flights.

In April 2013, the same month the WAA issued the new bonds, it increased that airport improvement fee by $5, from $20. The fee generated a total of $34.2 million in 2013.

That revenue alone exceeds the WAA’s annual interest burden, which was $32.5 million in 2013. Airport-improvement fees constitute the single largest component of WAA operating revenues, which totalled $93.2 million against $78.1 million in expenses.

The WAA nonetheless reported a loss of $17.2 million last year, mainly because of the finance charges on its long-term debt, which are expected to decline to $604 million by 2019.

The airports authority paid $7.5 million in principal in 2013 and plans to pay back $7.7 million this year and $8.1 million in 2015 before annual principal payments peak at $9.1 million in 2016, according to the WAA annual report.

Like all of Canada’s major airports, the Winnipeg Airports Authority does not own the land below its facilities. The WAA expects to pay Ottawa $6.8 million in rent this year.

bartley.kives@freepress.mb.ca

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