Miami International Airport maintains bond rating as it seeks $600 million toward multi-billion dollar expansion project
By Paola Iuspa
New York rating agencies are maintaining the current grade for Miami-Dade Aviation Department revenue bonds as the county prepares to finance $600 million of Miami International Airport's expansion program.
Agents of Moody's Investor Service, Standard & Poor's Corp. and Fitch Investors Service, announced Tuesday they will keep the upper-medium grade, four notches below the maximum safety grading that the aviation department acquired in May, said Ezequiel Orji, aviation department director of finance.
Most of the debt to be issued - the Series 2002A Dec. 9-10 - will go toward the $4.8 billion capital improvement project now under way. Bonds will mature in 2036, and interest will be paid April 1 and Oct. 1 of each year. The entire program will be completed by 2010 and is being financed through bonds, commercial paper notes, passenger fees and grants from the state and federal government, Mr. Orji said
James Gilliland, an agent with Fitch Ratings, said the New York agents inspected passenger-traffic statistics, construction progress and the aviation department leadership during a few days last week at Miami International.. Those elements are some of the many in determining the bond ratings, Mr. Orji said.
Mr. Gilliland said the rating outlook of the aviation bonds is negative for the future because of the challenges Miami's management team faces in completing the capital program on time and within the budget and the economic turmoil in Latin America. Since Miami is considered the gateway to Latin America, the airport's international traffic accounts for 48% of the total passenger traffic.
Miami's domestic and international traffic is down 10% from last year, nearing national averages, according to a Fitch report.
The $600 million to be issued during the next few months is part of $4 billion in debt the aviation department will incur through 2006 to finance the capital program, department officials said.
"About $300 million will go to refund aviation commercial paper notes that we used to finance other capital improvement projects," Mr. Orji said. "About $225 million will go toward construction of the North Terminal. The remaining will go to pay interest and transaction fees."
Carlos Bonzon, the aviation department deputy director of the capital program, said two of the biggest projects in the program are the $1.75 billion North Terminal, to be occupied by American Airlines, and the $833 million South Terminal for United Airlines and its Star Alliance partners as well as Delta Airlines and Sky Team partners.
Parsons-Odebrecht Joint Venture is the construction manager for the South Terminal, to be completed in 2005.
American, which manages construction of the North Terminal, scheduled for 2006 completion, will pitch in about $200 million, Mr. Bonzon said.
That terminal will be 1.3 miles long with a planned people-mover running on the rooftop to transport passengers to its 48 international and domestic gates, said Ron Milmed, senior vice president and director of technical services with Bliss & Nyitray, a Miami structural engineering firm in working on the project. His company works under the direction of the Corgan Team of Miami, the North Terminal program manager.
"About three-quarters of the concourse is under construction," Mr. Milmed said Monday. "The shell of the structure is up to the under-roof level. We did a lot of work in the apron area and rerouting underground utilities."
While construction will add one gate to the North Terminal's existing 47, its linear design will give carriers more efficiency, he said.
Current terminals have gates sticking out like extended fingers. The new layout will help reduce the connecting flight time. It will shorten the time planes wait at gates, allowing more carriers to use the same gates, he said.
Miami International Airport now has 113 gates; by 2010, it will have 122,
Mr. Bonzon said.
"The capital program is not a gate-driven project," he said, "but an efficiency-driven program."
While 60% of the North Terminal work is already under contract, about 27% is already in place, Mr. Bonzon said.
About $4 million worth of construction of the South Terminal is completed, and $325 million in contracts has been advertised, he said.
Other capital improvement program project under way include a $105 million new North Runway to be ready by June 2003, a $55 million chiller plant expansion and a $17 million re-roofing of the central terminal, covering concourses E, F and G, Mr. Bonzon said. Aviation officials are also replacing $4.3 million in fire-resistant glass in Gate H.
Aviation Director Angela Gittens is to re-evaluate the capital program in March to make sure it is up to date and meets passenger projections. In March, she reduced the 1994 program by $1.2 billion to the current $4.8 billion.