Independent Auditor Ernst & Young presented the results of the Fiscal Year (FY) 2018 Financial Statements of the A. B. Won Pat International Airport Authority, Guam (GIAA) to the Board of Directors during a Special Board meeting held March 25, 2019.
FY 2018 was an eventful year for Airport Operations. US international relations in our region touched our shores with the heightened North Korean Missile Threat negatively influencing travel to Guam as a safe destination. Delta Air Lines announced its corporate decision for a complete withdrawal of service on Guam. Low cost carrier HK Express followed with its suspension of direct services to Hong Kong and Cape Air’s code share operations with United Airlines was terminated for service to Saipan, CNMI. As a result, the number of enplaned passenger arrivals decreased from 1.86M to 1.76M in FY 2018, a 4.2% decrease from the previous year.
Less passenger traffic and fewer flights negatively affected operational revenue derived from facilities and system use charges assessed per passenger and concession fees that include retail, ground transportation, food and beverage and in flight catering. The audit recorded operational revenue of $69.4M in FY 2018 from $70.5M in FY 2017, reflecting a 1.6% decrease.
Mitigating the projected decrease in passenger traffic, expenses were held in check and is reflected in the audit results of a decrease of 2.45% in operating expenses from $48.05M in FY 2017 to $46.87M in FY 2018.
Summarily, GIAA was able to maintain Debt Service Coverage of 1.51, sufficiently covering the 1.25 DSC required under Bond Covenants, and ended with slight increase in the Airport’s net position posting $280.5M in FY2018, up from $280.2M in FY 2017.
The audit also identified material weakness in internal control and financial reporting with no questioned cost and recommended: 1) internal controls over Work In Progress for timely reporting, relative to the Authority’s Capital Improvement Projects and 2) proper collection of Passenger Facility Charges.