The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Lynden Pindling International Airport's (LPIA) operator has obtained 1,448 acres from the government for future runway expansion after recording its first-ever annual profit at $7.755m.

The Nassau Airport Development Company (NAD), in its 2019 annual report, revealed that the $134.7m refinancing of its participating debt in late 2018 will slash its annual interest bill by $7m as The Bahamas' record-setting tourism arrivals performance drove its financials into the black.

The 3.9m passengers who passed through LPIA's terminals in the 12 months to end-June 2019 drove increases in virtually every major revenue category, with NAD's total top-line for the period increasing by 21 percent year-over-year to $108.2m compared to $89.4m the year before.

The revenue increase was the major contributor to a more than-$11m bottom line swing, as a $4.371m loss for the 12 months to end-June 2018 was transformed into a $7.755m net profit - the first enjoyed by NAD since it agreed the 30-year LPIA lease with the government in 2007. Operating income was up year-over-year by 21.8 percent at $78.1m.

Walter Wells, NAD's chairman, wrote in the annual report that the combination of increased passenger revenue and reduced debt servicing costs had given the airport operator sufficient financial headway "to undertake significant investment projects that will help improve the operational efficiency of the airport and set it up for future growth".

He added that the first of these projects was the $20m runway and taxiway rehabilitation that was completed in December 2019 just prior to the peak Christmas and New Year season. He was backed by Vernice Walkine, NAD's president and chief executive, who described the airport operator as being in "an enviable position".

"We have gone from being in profit assurance mode to now being able to invest in capital projects that will shape the future of LPIA," she added. One of these is the ultimate addition of another runway "parallel" to the existing one that has now been facilitated by the government providing the necessary land.

"Since NAD would require additional land to complete such a project, a request was made to the Bahamian government to grant NAD 1,448 acres of land adjacent to the airport, which was ultimately approved. This additional land will give LPIA the necessary space to grow - both now and well into the future," the airport operator said.

NAD added that last year's debt refinancing, at significantly lower interest rates, had helped to reduce the debt servicing costs associated with its $500m debt burden while also ensuring that the payments went to Bahamas-based investors - thereby not impacting the foreign reserves.

"NAD refinanced its participating debt in December 2018, securing a lower rate of 7.5 per cent (down from 13 per cent) that will allow it to reduce its annual interest costs by $7m," the airport operator added.

"Unlike its previous debt structure, the $134.7m that NAD raised from this debt refinancing came exclusively from local institutional and individual investors, which means that all interest paid on this debt will go directly back into the Bahamian economy."

NAD added that it had also secured a new duty-free operator by signing a lease with Duty-Free Caribbean (Bahamas), which it described as "a partnership between the Bahamas-based Luxury Retail Group and world-renowned airport retailer Dufry".

They will open three retail locations in LPIA, including two duty-free retail outlets and one Hudson News store. :These three stores will allow for a substantial net increase in NAD's retail revenue and provide an expanded duty-free offering that is more in line with airports of this size," NAD said.

Aircraft movements at LPIA also increased by 7.1 percent to 90,182 in the 12 months to end-June 2019, while NAD's operating expenses grew by just under 20 percent - from $25.3m in 2018 to $30m. The airport operator's retained deficit shrunk from $60.9m to $53.1m as a result of the 2019 profit.

"Fiscal year 2019 was quite simply NAD's best year ever," Mr Wells wrote. "Over 3.9m passengers travelled through the airport - an increase of 14.4 per cent over last year. Revenues also rose to $108.2m with NAD finishing the year with a profit of $7.55m.

"The driver behind this breathtaking growth was undoubtedly the opening of Baha Mar and the significant marketing push that accompanied it.... This impressive growth was most felt during the first quarter of 2019 with passenger volumes growing by 29 per cent year-over-year in February and 12.8 per cent in March.

"Even with this unprecedented increase in passenger traffic, NAD was still able to maintain and even improve its customer service standards - earning its highest score ever for cleanliness."

He added: "While NAD's success this past year is something to celebrate, it is also important to recognise that such fast-paced growth cannot go on forever. Nassau hotels are already reporting close-to-capacity occupancy rates as the additional rooms created by Baha Mar have been absorbed by the market.

"Until more hotel capacity is brought online, we should expect passenger traffic growth to slow down to a more moderate level."