A.B. Won Pat International Airport Authority, Guam

GIAA commended for Achieving “Low Risk” Auditee status for FY 2015

Results of the Fiscal Year (FY) 2015 Financial Statements of the A. B. Won Pat International Airport Authority, Guam (GIAA) were presented and approved by their Board of Directors today at its regular meeting of March 3, 2016 meeting. The audit was performed by independent auditors, Ernst & Young, and gave GIAA a “clean” opinion on its compliance report for FY 2015 financial statements and major federal programs.  FY 2015 marks the third year of “no findings” pertaining to federal programs.  The Office of Public Accountability highlighted in its report that GIAA should be commended for achieving low risk auditee status for FY 2015 as it had been over 22 years since the Authority achieved that status.  Moody’s Investors Services also affirmed GIAA’s Baa2 rating with a stable outlook, a confirmation of the investment grade rating for Airport General Revenue Bonds. 

Passenger Activity on the cusp of 1.7M annually; 2 new airlines service Guam

Passenger enplanements for FY 2015 surpassed the 1.69 million mark, for a third year in a row, at 1,692,943.  The Authority’s passenger activity correlates with data from the Guam Visitors Bureau showing strong growth in our secondary markets of Korea and China, reflecting an increase in visitor arrivals of 30.9% and 62.2%, respectively over FY 2014.  The increases are attributed to upgauged capacity and added sections by United Airlines and its direct service to Shanghai, Eva Air’s added sections on its Taiwan services, and the new services introduced by Air Busan in July 2015 and T’way Air in September 2015, adding to the capacity of passenger seats from Korea established by Korean Airlines, Jin Air and Jeju Airlines in prior years.  Counter to increases in the Korea and China visitor markets, Japanese visitor numbers decreased by 5.6% due to its multi-year increases in sales taxes and deficit spending; Russian visitors significantly decreased by 80.7% in FY2015 which may be credited to the fall of oil prices which accounts for half of that country’s economic activity and plunging currency issues.

Revenues up by 5.6%; Expenses increases by 4.3%

Total revenues increased to $90.3M, up 5.6% from $85.5M in FY 2014.  Operating income accounted for 70.5% of revenue, with the remaining 29.5% comprised of non operating income that include interest income, passenger facility charges, US federal grants and transfers form the government of Guam.   Non- Operating Income increased by 13.5% attributed to the increase in US grants that were used to complete the extension and rehabilitation of primary runway 6L/24R, installation of a new instrument landing system, noise mitigation, construction of the airport perimeter fence and acquisition of a new fire fighting vehicle for the Authority’s Aircraft Rescue and Firefighting Unit.

Total expenses increased by 4.3% in FY 2015, to $77.2M from $74.0M in FY 2014, attributable to increases in operational expenses that encompass personnel costs, contractual services, retirement contributions, depreciation and amortization.  The increases in these expenses countered the reduction of 12.4% in materials and supplies and 27.8% decrease in bad debt expense.

Net Assets up by 1.74%; Net Position increases by  $13.1M

The Authority ended FY 2015 with a 1.7% increase in net assets, up to $619,959,269 from $609,372,532 in FY 2014.  The increase is due to an increase in receivables from the US Government of $11.2M in FY2015, and an increase of 30.1% in avigation easements that are required by the FAA as a condition of development for the eleven homes that were mitigated in FY 2015 as part of the Authority’s Sound Solution program.

In FY 2015, the Authority adopted and implemented the Government Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, and GASB Statement No. 71, Pension Transition for Contributions made Subsequent to the Measurement Date.  As a result of adopting these standards, the Authority was required to record a net pension liability of $30.6M, deferred inflows of resources for pension of $2.3M and deferred outflows of resources for pension of $3.9M. Despite the recording of liability required under GASB No. 68, the Authority’s net position increased by $13.1M, resulting in the net position, end of year at $313,058,779.

Other FY 2015 Highlights

• GIAA maintained a competitive cost structure with a debt service coverage ratio of 1.57 well over the required ratio of 1.25 under the Airport’s 2013 General Revenue bonds.
• Eleven signatory airlines operated in FY 2015. (Please check accuracy of this statement)  may want to add 99.4% of passenger activity came from the Signatory airlines.  This status as a “ Signatory airline” allows for airlines to enter into a mutually beneficial agreement with the Authority, which shares the risk of operating Guam’s only commercial airport in exchange for favorable rates and prioritized utilization of the airport facility.  They include United Airlines, Delta Airlines, China Airlines, Japan Airlines, Korean Airlines, Philippine Airlines, Jin Air, Eva Air, Jeju Airlines, and Air Busan and T’way Air, two of the newest airlines joining the Guam Airport family in 2015.

“We closed the year with a healthy debt service coverage (DSC) ratio of 1.57, well over the required 1.25 DSC required by our 2013 General Revenue Bonds,” continued Mr. Ada. “That ratio is a true reflection of our strong fiscal performance and adherence to our fiduciary responsibilities. Our focus for Fiscal Year 2016 is moving aggressively forward with our capital improvement projects.”

Most notable of the $167 million slated for capital improvement projects at the airport is the construction of a new international arrivals corridor for efficient passenger facilitation, a new facility for our Aircraft Fire Fighting crew, a new cargo apron adjacent to the integrated cargo facility and many other upgrades, improvement and enhancements.  “We are committed to aggressive marketing to grow our business and will continue to remain financially prudent to safeguard Guam’s most valuable asset,” Mr. Ada concluded.

• Download: Three Years Running – Clean Audit for GIAA