LOS ANGELES INTERNATIONAL AIRPORT. March 2016

Size: px

Start display at page:

Download "LOS ANGELES INTERNATIONAL AIRPORT. March 2016"

Brent Joseph
6 years ago
Views:

1 LOS ANGELES INTERNATIONAL AIRPORT March 2016

2 Disclaimer GENERAL This presentation you are about to view is provided as of March 16, If you are viewing this presentation after March 16, 2016, there may have been events that occurred subsequent to such date that would have a material adverse effect on the information that is presented in this presentation, and the Department of Airports of the City of Los Angeles (the Department ) does not undertake any obligation to update this presentation. The information provided in this presentation is not warranted as to completeness or accuracy and is subject to change without notice. All numbers contained in this presentation are approximate. ADDITIONAL INFORMATION For further information and a more complete description of the Department and the Department s securities, investors are referred to (i) the Official Statements of the Department related to the Department s securities and (ii) the Department s reports of annual financial information available on the Department s investor relations website at or all of which speak only as of their respective dates. This presentation is provided for your information and convenience only. Any investment decisions regarding the Department s securities should only be made after a careful review of an Official Statement of the Department related to such securities. Department financings are subject to, among other things, review and approval by the Department s governing board. The issuance of any securities, and the size and timing of any transaction are subject to market conditions and the approvals referenced above. The Department is under no obligation to pursue any transaction, any particular structure and reserves the right to change or modify its plans as it deems appropriate. NO OFFER OF SECURITIES This presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument, including the Department s securities, or to adopt any investment strategy. Any offer or solicitation with respect to the Department s securities will be made solely by means of an Official Statement of the Department related to such securities, which describes the actual terms of the Department s securities. In no event shall the Department be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained in this presentation and such information may not be relied upon by any party in evaluating the merits of participating in any transaction mentioned in this presentation. Nothing in these materials constitutes a commitment by the Department to enter into any transaction. No assurance can be given that any transaction mentioned in this presentation could in fact be executed. Past performance is not indicative of future returns, which will vary. Transactions involving the Department s securities may not be suitable for all investors. Each investor should consult with his, her or its own advisors as to the suitability of securities or other financial instruments for the investor s particular circumstances. FORWARD-LOOKING STATEMENTS Certain statements included in this presentation constitute forward looking statements. Such statements are generally identifiable by the terminology used, such as plan, expect, estimate, budget, or other similar words. The achievement of certain results or other expectations contained in such forward looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. No assurance can be given that any future results discussed in this presentation will be achieved, and actual results may differ materially from the expectations and forecasts described in this presentation. All projections, forecasts, assumptions, expressions of opinion, estimates and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this presentation. The Department does not plan to issue any updates or revisions to those forward looking statements if or when the expectations, or events, conditions or circumstances on which such statements are based, occur. Statements contained in this presentation which involve estimates, forecasts or other matters of opinion, whether or not expressly so described in this presentation, are intended solely as such and are not to be construed as representations of fact. Further, expressions of opinion contained in this presentation are subject to change without notice and the delivery of this presentation will not, under any circumstances, create any implication that there has been no change in the affairs of the Department. By providing the information in this presentation, the Department does not imply or represent (a) that all information provided in this presentation is material to investors decisions regarding investment in the Department s securities, (b) the completeness or accuracy of any financial, operational or other information not included in this presentation, (c) regarding any other financial, operating or other information about the Department or its outstanding securities, (d) that no changes, circumstances or events have occurred since the dated date of the information provided this presentation or (e) that no other circumstances or events have occurred or that no other information exists concerning the Department, its outstanding securities or the contemplated transactions which may have a bearing on Department financial condition, the security for the Department outstanding securities, or an investor s decision to buy, sell, or hold Department s securities. 2

3 Disclaimer Continued RESTRICTIONS ON USE This presentation may not be reproduced, disseminated, quoted or referred to, in whole or in part. By accessing or otherwise accepting this presentation, you agree not to duplicate, copy, screen capture, electronically store or record this presentation, nor to produce, publish or distribute this presentation in any form whatsoever. NO RELIANCE ON THE DEPARTMENT The Department makes no representations as to the legal, tax, credit or accounting treatment of any transactions mentioned in this presentation, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates. You should consult with your own advisors as to such matters and the consequences of the purchase and ownership of securities or other financial instruments. The Department does not provide tax advice. Any statements contained in this presentation as to tax matters were neither written nor intended to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. SUMMARIES NOT COMPREHENSIVE OR DEFINITIVE This presentation may include brief descriptions of the Department, LAWA, The Department s Bonds, t and summaries of the Department s indentures and certain other documents. Such summaries do not purport to be comprehensive or definitive. All references in this presentation to such documents and to any other documents, statutes, reports or other instruments described in this presentation are qualified in their entirety by reference to each such document, statute, report or other instrument. Copies of such documents are available from the Department upon written request. 3

LAX Core Credit Factors LAX has strong financial metrics, stable and experienced management, diverse air service and dynamic passenger growth International gateway airport serving numerous markets

4 LAX Core Credit Factors LAX has strong financial metrics, stable and experienced management, diverse air service and dynamic passenger growth International gateway airport serving numerous markets around the world. Consistent growth of predominantly O&D traffic that is supported by a diverse base of carriers. LAX Core Credit Factors Core Credit Factors Large airport serving a region with favorable demographics and a robust economic environment. Experienced management team is successfully implementing the Capital Program that is expanding and modernizing LAX for the benefit of its stakeholders. Conservative financial management and strong financial metrics that are expected to persist through the capital program. Healthy liquidity and robust debt service coverage that help mitigate investor risk and preserve financial strength. 4

5 Prudent Management Vision Management s strategic vision has set the foundation for LAX s ability to meet traffic demand The Groundwork Accomplishments The Current Program Future Terminal leasehold acquisitions Critical rehabilitation and renewal projects Controlled measures to efficiently improve facilities Landside improvements to facilitate passenger access and alleviate congestion Adopted new ratesetting methodology and 10 year (through 2022) airline agreements to enable terminal redevelopment Reconstruction and expansion of Tom Bradley International Terminal Airline & concessionaire supported and managed terminal improvement projects Ongoing program of facility repair and maintenance New concessionaire agreements in all terminals Support facilities Central Utility Plant, utilities connections, airfield improvements Balance gate capacity with passenger demand (Midfield Terminal) Maintain efficient utilization of landside, terminal and airside facilities to meet demand 5

6 Operating, Financial, and Capital LAX has continued its strong operational and financial performance: Air Service Market In CY2015, LAX added service to 14 new destinations (6 domestic; 8 international) Additional service added in CY2016 Operational Results Over 36.1 million enplanements in FY2015 (76.5% O&D), 5.2% more than FY2014 Trend has continued into FY2016 Financial For FY2015: Senior Lien Debt Service Coverage = 3.82x; Total Debt Service Coverage = 2.54x Operating Income (before depreciation and amortization) was up 13.9% from FY2014 to over $400 million Capital Development 2nd Level Roadway work completed as scheduled Terminal 5 Improvements and Bradley West Interior Enhancements are substantially completed Design-Build contract for Midfield Satellite Concourse has been secured 6

Los Angeles Air Trade Area LAX serves the Los Angeles Metropolitan Combined Statistical Area (the Air Trade Area), a vast, diverse, and dynamic market Competitive Advantages of the Air Trade Area

7 Los Angeles Air Trade Area LAX serves the Los Angeles Metropolitan Combined Statistical Area (the Air Trade Area), a vast, diverse, and dynamic market Competitive Advantages of the Air Trade Area Population of 18.6 million (2014): Diverse culture Educated workforce with high personal income Diverse local economy Headquarters 19 Fortune 500 companies with global business presence Home to many prestigious higher education and research institutions Robust tourism industry Leader in Regional Air Traffic LAX accounted for 62% of all traffic in Southern California and 76% of all enplaned passengers in the Air Trade Area International Gateway As of FY2015, LAX is ranked #1 in the West by number of international enplanements, accounting for 93% of all international traffic in Southern California LAX serves a large base of international O&D passengers and is an international hub for the mainline carriers Markets include destinations in Central and South America, the Caribbean, Europe, Asia, Middle East, and the Pacific Non-stop service to 157 markets, including 68 international destinations Source: U.S. Department of Commerce, Bureau of the Census; Fortune Magazine, Fortune 500 Companies, 2015; Los Angeles Tourism & Convention Board; U.S. Department of Commerce, ITA, National Travel and Tourism Office; Non stop service statistics as of August

8 Diverse Carrier Mix and Distribution LAX has a diverse air carrier mix with 21 domestic and 45 foreign flag carriers* Enplanement Carrier Mix as of FY2015 (1) Delta 16.7% American 18.8% Southwest 11.7% United 17.2% Alaska 4.6% Other 26.7% Virgin America 4.2% Air Carriers Serving LAX* Scheduled U.S. Carriers (21) Foreign Flag Carriers (45) Alaska Airlines Aeroflot Eva Airw ays Allegiant Air AeroMexico Iberia American Airlines Avianca/TACA Japan Airlines Compass Air Berlin KLM Royal Dutch Delta Air Lines Air Canada Korean Airlines Dynamic Airw ays Air China LATAM Express Jet Air France Lan Peru Frontier Airlines Update with Air New Table Zealand 6 from OS LACSA Great Lakes Aviation Air Pacific (Fiji Airw ays) Lufthansa German Haw aiian Airlines Air Tahiti Nui Norw egian Air Shuttle JetBlue Airw ays Alitalia OJSC Transaero Airlines Mesa Airlines All Nippon Philippine Airlines MN Airlines (Sun Country) Asiana Qantas Republic British Airw ays Saudi Arabian Airlines SkyWest Airlines Cathay Pacific Singapore Airlines Southw est Airlines China Airlines SWISS Spirit Airlines China Eastern Thai Airw ays Ultimate Jetcharters China Southern Turkish Airlines United Airlines Copa Virgin Atlantic Airw ays US Airw ays El Al Israel Virgin Australia Virgin America Emirates Volaris Etihad Airw ays Westjet Ethiopian Airlines *As of August 1, 2015 (1) Passengers reported by regional code-sharing affiliates have been grouped with their respective code-sharing partners. American Airline includes US Airways Source: Los Angeles International Airport records; LeighFisher 8

9 Airline Alliance Network Prevalence and diversity of airline alliances support LAX s role as a competitive international gateway FY2015 Airline Alliance Mix* Other/ Non-Affiliated 32% 24% 23% 21% *Percentages are of enplanements. Source: OAG Aviation Worldwide Ltd, OAG Analyser database, accessed October

Millions Traffic Growth 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 In FY2015, LAX continued to experience strong traffic growth and

10 Millions Traffic Growth In FY2015, LAX continued to experience strong traffic growth and a healthy passenger mix (76.5% O&D) There were 36.1 million enplaned passengers (EPAX) in FY2015, an increase of 5.2% over FY Historical Enplanements (FY ) Total EPAX 5-Year CAGR ( ): 4.5% Enplanements for FY2014 & FY2015 Enplaned Passengers FY2014 FY2015 % Change Domestic 25,016,409 26,237, % International 9,316,116 9,883, % Total 34,332,525 36,121, % 0 Domestic International Total CAGR: Compound Annual Growth Rate Source: Los Angeles International Airport records. 10

Midfield Satellite Concourse North MSC - North will improve terminal operations, add concessions facilities, and enhance overall passenger experience at

via underground tunnel to TBIT/Bradley West Approximately 760,000 ft 2 Site Plan # of New ADG V Aircraft Boeing 777/787; Airbus 330 Aircraft Type Gates

11 Midfield Satellite Concourse North MSC - North will improve terminal operations, add concessions facilities, and enhance overall passenger experience at LAX Current Plans: 12 new gates 2 for ADG-VI aircraft and 10 for ADG-V aircraft All gates capable of both domestic and international operations Connection via underground tunnel to TBIT/Bradley West Approximately 760,000 ft 2 Site Plan # of New ADG V Aircraft Boeing 777/787; Airbus 330 Aircraft Type Gates Categorization ADG V1 Boeing 747-8; Airbus 380 Boeing 777/787; 10 ADG V Airbus ADG V1 Proposed Facility Boeing 747-8; Airbus 380 ADG: Aircraft Design Group 11

Tenant Managed Projects Many of the Terminal Improvement Projects are being managed by the Airlines and Concessionaires Terminal 1 The terminal

and enhancing the passenger experience The Department will purchase the improvements at an agreed upon price in phases when they are complete

12 Tenant Managed Projects Many of the Terminal Improvement Projects are being managed by the Airlines and Concessionaires Terminal 1 The terminal improvement projects will be managed and financed by the airlines Tenants control design and construction and are focused on improving efficiencies and enhancing the passenger experience The Department will purchase the improvements at an agreed upon price in phases when they are complete Certain public area improvements will be funded and managed by Westfield Concessions Management, LLC and purchased by the Department when they are complete. The total cost of these projects is estimated at $145 million Terminal Improvements in the Capital Plan Terminal 7 Terminal Manager Total Amount 1 Southwest $526 million 2 LAWA $216 million TBIT/1/2/3/6 Westfield $145 million 4 American $220 million 5 Delta $201 million 6/7/8 United $538 million 12

CONRAC, APM and Associated Facilities The Landside Access Modernization Program (LAMP) seeks to address LAX s challenge of being the busiest O&D airport in the world by relieving traffic congestion

13 CONRAC, APM and Associated Facilities The Landside Access Modernization Program (LAMP) seeks to address LAX s challenge of being the busiest O&D airport in the world by relieving traffic congestion and improving passenger experience LAMP is part of the Department s long-term strategic plan and will be managed through the same meticulous, conservative process Initial estimates of total costs are in the range of $4.5 billion to $5.5 billion, which includes approximately $1 billion for the Consolidated Rent-A-Car project (CONRAC).* The CONRAC project and portions of the Automated People Mover may be funded through CFC Revenues and CFC Revenue Bonds. Status: Timing: In February, 2016, LAWA held an Industry Forum for various stakeholder groups including potential investors and contractors Projects expected to be completed after Fiscal Year 2021** **Subject to environmental and other approvals. Construction of some components could begin prior to June 30, 2021 *Scopes, costs, and timing of implementation are subject to substantial revision as project planning and preliminary design proceed. 13

14 Financial Performance $Million In FY2015: Total operating revenues increased by 8.7%; concession revenues increased by 6.9% Operating expenses increased by 5.8% Net operating income increased by 13.9% $1,200 Actual and Budgeted Financial Results $1,000 $800 $600 $400 Other Operating Revenue Concession revenue Aviation revenue Operating Expenses $200 $- FY2014 FY2015 FY2016 Budget Notes: Revenue include interest income, anticipated BABs subsidy on Series 2009C and 2010C, and Non-Operating TSA Revenue, which are part of Pledged Revenue Source: Department of Airports of the City of Los Angeles 14

15 Debt Service Coverage Debt service coverage has remained strong The Airline Agreements, Terminal Tariff and Airfield Operating Permits, along with robust nonaeronautical revenue ensure that debt service coverage will remain strong Historical Debt Service Coverage ($000 s) Amounts in thousands Actual (except for coverage ratios) FY2011 FY2012 FY2013 FY2014 FY2015 Net Pledged Revenues (1) $256,273 $277,237 $288,143 $375,936 $421,023 Senior Lien Aggregate Annual Debt Service (2) $ 60,095 $ 60,577 $ 45,486 $ 62,560 $110,237 Senior Lien Coverage 4.26x 4.58x 6.33x 6.01x 3.82x Subordinate Lien Debt Service (3) $ 40,649 $ 45,508 $ 49,904 $ 52,067 $ 55,439 Subordinate Lien Coverage 4.83x 4.76x 4.86x 6.02x 5.61x Total Debt Service Coverage 2.54x 2.61x 3.02x 3.28x 2.54x Notes: (1) As defined in Senior Indenture. Equals Pledged Revenues less LAX Maintenance and Operating Expenses (2) Net of approximately $19 million, approximately $25.2 million, approximately $34.4 million, approximately $96.5 million and approximately $91.0 million passenger facility charge reimbursements for Fiscal Years 2011, 2012, 2013, 2014 and 2015 debt service payments, respectively, pursuant to the Senior Indenture. Presentations of PFC reimbursements in this table differ from those in the audited financial statements of the Department due to differences in accounting practices. (3) Includes actual debt service on Subordinate Commercial Paper Notes Source: City of Los Angeles, Department of Airports 15

16 Liquidity, Cash on Hand, and DSRF Liquidity is strong, even during a major capital program LAX had approximately $729.0 million in available funds on hand to pay operating expenses at the end of FY2015, representing 412 days cash on hand LAX s $500 million Commercial Paper Program has a remaining capacity of $449.8 million with $50.2 million currently outstanding 1 LAX had approximately $507.7 million in PFC funds on hand at the end of FY2015 Debt Service Reserve Funds are fully cash funded The Operating Permits and Terminal Tariff/Airline Rate Agreements are designed to provide the Department with future funding and discretionary cash 1. As of December 1, 2015 Source: Department of Airports of the City of Los Angeles. Figures are preliminary, unaudited. 16

17 $Millions Debt Overview LAX has $4.43 billion of long-term bonds outstanding 1 100% fixed-rate, with final maturity in 2045 The average life of the bonds is 16.1 years 82% of long-term debt outstanding are on the Senior Lien In addition, LAX currently has $50.2 million 2 of Subordinate Lien Commercial Paper outstanding Long Term Bonds Debt Service 1 (FY) Current Ratings $500 $400 Subordinate Lien Debt Service Senior Lien Debt Service S&P Moody s Fitch Senior Lien AA Aa3 AA Subordinate Lien AA- A1 AA- $300 $200 $100 $- 1. As of December 1, 2015; does not include subordinate commercial paper; debt service schedule are net of capitalized interest 2. Outstanding Commercial Paper as of December 1, 2015; the Commercial Paper Program has a total capacity of $500 million Source: Financial Advisors 17

18 Calendar 2016 Planned Bond Issuances The Department is planning to issue Revenue Bonds in Spring and Fall of 2016 to fund capital projects* *Preliminary, subject to change Source: Department of Airports of the City of Los Angeles 18

LOS ANGELES INTERNATIONAL AIRPORT

LOS ANGELES INTERNATIONAL AIRPORT INVESTOR PRESENTATION May 15, 2018 Disclaimer GENERAL This presentation you are about to view is provided as of May 15, 2018. If you are viewing this presentation after