CPA faces $1M loss by end of fiscal year

The Commonwealth Ports Authority disclosed that it is facing a sizable loss of up to $1 million by the end of the fiscal year, just for subsidizing both the Tinian and Rota airports’ operations.

The agency’s management reported to the CPA board of directors that from October last year to March 2009, the Rota airport posted $385,775 in operating expenses, compared to revenue of only $129,399 for the same period.

The Tinian airport incurred expenses totaling $363,242 in six months, compared to only $104,325 in total revenue generated during the same period.

Of the CNMI’s three major islands, only Saipan is showing a positive trend in the six-month period, showing a total of $5.1 million revenue compared to operating expenses of $3.7 million.

In the first six months of this fiscal year, the CPA Airport Division reported a $1.6 million increase in revenue as a result of increased airport fees and the termination of the airline incentive program last year.

The total airport operating costs decreased by $97,000, reflecting austerity programs offset by increased maintenance costs.

Last year’s operating income was $917,000, which jumped to nearly $1.8 million in the current fiscal year.

“It should be noted that despite this overall increase, Rota and Tinian continue to generate sizable losses which are estimated to reach $1 million for the full year,” a CPA report obtained by Saipan Tribune showed.

The management expressed concern about this continuous subsidy of the Rota and Tinian operations, saying this could result in CPA not meeting its required ratio under the bond indenture agreement.

At present, CPA’s ratio stands at .90, far behind the required 1.25 ratio.

“While progress has been made, based upon the available data, CPA will still not meet the required ratios contained in the bond indenture,” the same report said.

The CPA management hopes that additional flights would boost the agency’s efforts to comply with the requirement.

Meantime, in the first six months of the current fiscal year, it was reported that seaport revenues are down 12 percent, even though total operating costs declined by 30 percent.

Records show that in the first six months of FY 2008, seaports revenue was at $2.8 million compared to FY 2009’s $2.5 million—a difference of $352,000.

Saipan recorded $2.3 million in operating revenues; Tinian, $95,177; and Rota, $76,485.

Both airports and seaports of Rota and Tinian vastly underperformed the Saipan facility due to limited revenues and the high cost of personnel.

“While the importance of airports and seaports on these two islands is unquestioned, the financial subsidy paid by Saipan is growing,” the report stated, adding that the management and the board need to consider strategies that can reduce this subsidy amount.