Airport Board Approves Leaner Budget While Receiving Favorable Bond Report

Press Release

ORLANDO, FL. — The Greater Orlando Aviation Authority (GOAA) Board voted unanimously to approve the FY2021 budget for Orlando International Airport (MCO) and Orlando Executive Airport (ORL). Due to the negative effects of COVID-19, the $443,356,263 budget stands in stark contrast to last year’s budget when MCO was on track for 50 million annual passengers.

Notable items of interest in the FY2021 budget include:

  • $150.2 million decrease in gross revenues from FY2020
  • $83.4 million infusion of CARES Act reimbursements
  • $30.3 million decrease in expenditures
  • $1.2 million increase in janitorial & cleaning services
  • Increase in Cost Per Enplaned (CPE) passenger for participating airlines from $5.32 to $13.90
  • ORL budget of $4.083 million is $217,000 less than FY2020

“We’ve adjusted to the economic realities of the Covid-19 pandemic,” said Carson Good, Greater Orlando Aviation Authority Board Chairman. “This budget reflects the current fiscal challenges in the travel industry and allows us to continue meeting our financial obligations.”

Airline and Non-Airline revenue both showed significant decreases from the previous year. Airline revenues are derived from fees paid to use the airfield and terminal facilities. Non-Airline revenues include rental car fees, parking, concessionaire rents and the hotel. The Aviation Authority receives no ad valorem tax dollars to fund airport operations.

Maintaining Bond Rating

The Authority also received some positive news from one of the nation’s top bond ratings agencies. The Kroll Bond Rating Agency (KBRA) affirmed the AA rating on the Greater Orlando Aviation Authority’s Airport Facilities Revenue Bonds, Series 2019A and placed the rating on Watch-Developing.

The rating reflects Orlando International Airport’s unique air service market which features a substantial leisure and hospitality component, a rapidly growing population, and an expanding and diversifying economy.

The Watch-Developing designation reflects the drastic COVID-19 related reductions in passenger activity and airline and non-airline revenues recorded at MCO and other U.S. airports.

In response to actual and projected declines in passenger activity and revenue, the Authority took immediate cost cutting measures including an $18.4 million reduction to the budget for the second half of the 2020 fiscal year, a hiring freeze, facility consolidations, cessation of non-essential projects and over $28 million of project deferrals.

Key Credit Considerations:

Positives

  • Historically favorable airline traffic growth pattern, supported by unique market position as premier global tourist destination, rapidly expanding metropolitan population, and diversifying economic base.
  • Mainly O&D (95% of travelers) passenger base with highly varied airline market share.
  • Sound financial operations derive significant support from non-airline sources.

Challenges

  • Unprecedented decline in passenger traffic related to the COVID-19 pandemic pressures operating revenue. Potential for slower than average recovery given the primarily discretionary nature of enplanements.
  • The continued dominance of the Authority’s leisure and hospitality base represents a vulnerability during a severe economic downturn or exogenous event such as the COVID-19 pandemic.
  • The Authority is in the middle of a sizeable capital program.

In KBRA’s opinion, Authority management was also one of the key rating determinants. Led by CEO Phil Brown and CFO Kathleen Sharman, the agency cited GOAA executive structure as exhibiting strong capabilities in operating one of the nation’s fastest growing airports. Management is long-tenured, with MCO experience supplemented by time at other airports and other transportation sector agencies.

The information herein is provided as of the dates specified. Due to the outbreak and continuation of COVID-19 subsequent to the date of such information, the information contained herein may differ materially from the current operational and financial data.