Airport sees shortfall in debt service ratio

Despite the implementation of new rates for airport activities, a shortfall is still projected this fiscal year, according to Commonwealth Ports Authority executive director Efrain S. Camacho.

During yesterday’s special board meeting, Camacho disclosed that the airport’s 2009 financial position is projected to realize a shortfall of about 25 percent in its debt service coverage ratio.

“The projected ratio is currently estimated to be 1.00 percent and thus not meeting the 1.25 bond covenant requirement,” Camacho reported.

He added that the airport revenues need to be increased or, alternatively, expenses reduced by about $375,000.

Camacho said the management is reviewing the operating budget for the remainder of the fiscal year to find where expenses can be lowered.

Compared to the 90 percent hike in seaport activities, CPA had approved a “nominal” rate increase at the airport ranging from 5 to 10 percent, as recommended by its bond consultant, Ricondo & Associates, which was commissioned to do an airport rate study in order to determine the best recovery efforts to prevent a default of its bond indenture agreement.

Coupled with some adjustments such as the termination of the airline incentive program and strict compliance with airport rates, fees and going aggressively on leases, the agency earlier forecast it could recover this year.

CPA, as part of its cost-cutting measures, is enforcing multi-tasking and cross-training of its personnel to prevent the agency from hiring more personnel.

It also monitors the air-conditioning units and lights in and around the airport to save on energy.

It was earlier disclosed that CPA is billed about $50,000 monthly in utility consumption—an amount Camacho wants to trim down to as low as $25,000.

Meantime, the executive director emphasized that the 2009 financial position for the seaport is projected to meet its debt service coverage ratio of 1.25 due to the tariff rates increase effective this month.

However, he said the management is aware of the volatility of the revenue tons and the continuing downward trend.

“For this reason, it will be necessary to lower expenses where practicable and ensure realized revenues are in compliance with the forecasted estimates,” Camacho said.

Although he outlined some positive notes for the Saipan operations—both seaport and airport—he, however, said that Rota and Tinian are in the “red,” thus lowering the overall financial position of CPA.

Camacho mentioned that the cut back by Delta/Northwest and Asiana Airlines will certainly have a significant impact on CPA’s operations.

He revealed that the number of flights per week will drop from 48 to 34 or from about 10,400 seats to only 5,800.