The Little Rock Municipal Airport Commission voted Tuesday (Dec. 15) to pay the remaining debt service on 2007 bonds 10 years ahead of schedule, making the Bill and Hillary National Airport one of just six other airports with enplanements of 500,000 or more to be debt free.
“I’d like to entertain a celebratory motion to get this done,” said former Army General Wesley Clark, who serves as the commission chair.
The airport had maintained $8.8 million in aggregate debt service for the Series 2007A and 2007B bonds, with annual debt service of $1.6 million. By paying off the bonds a decade early, the airport saves more than $2 million in amortized interest. The commission unanimously voted to authorize Executive Director Ronald Mathieu to send payment to the trustee to be held in reserve until the bonds are called in November 2016. Tuesday’s action is the final action necessary on the part of the airport commission to pay off the bonds.
“Little Rock has done a lot with the resources you have,” said Mark McBryde of Stephens Inc., who along with Leigh Ann Beirnat presented the commission with a third-party overview of the financial health of the airport before the vote. “This is a capital poor state, in general. You’ve done a good job making smart decisions with what we have.”
In 2010, the commission adopted an aggressive debt-reduction plan. In 2012, it redeemed $9.7 million in debt for the Series 1999A bonds,seven years ahead of schedule, saving the airport $5 million in future bond interest payments.
The bonds on the agenda Tuesday were issued in 2007 to restructure old debt and “for the purposes of financing the costs of acquiring real property for expansion of the Airport, constructing additions to existing ramps, taxiways and other related improvements,” according to the city ordinance that authorized them. This was in conjunction with the construction of Supermarine Fixed Base Operation that provides hangar and refueling space at the airport. TAC Air purchased Supermarine LLC for an undisclosed amount in 2014.
McBryde was part of the consulting group in 2007 when the most recent bonds were issued. He spoke optimistically about the general economic condition of the airport.
“The airport continues to do better,” McBryde said, when asked to compare its financial health to 2007. “In terms of operations, revenue and growth, it’s in a favorable position. The only thing that concerns us is the number of enplanements.”
Enplanements have been declining since 2012, when 1.147 million people flew out of the airport. In 2013, there was a 5% decline in passengers, and 2014 saw another 4% decline. The year to date tally in 2015 is down 5%. The decline is attributed to a change in the Wright Amendment and many airlines moving away from small- and medium-sized hubs.
The Wright Amendment was a federal law that governed air traffic out of Love Field in Dallas. It originally limited non-stop flights from Love Field to Texas and neighboring states. The law was amended over time, but a full repeal took effect October 2014. Without the restrictions of flight destinations from Love Field, Little Rock lost some flights.
At the meeting, commissioners also adopted the 2016 budget. Mathieu told commissioners that the staff believed the enplanements in 2016 would hold at their 2015 levels, and for the first time in two years, did not predict a decrease in passenger traffic.