N.O. Aviation Board OKs bond sale of $88 million; Cash to help pay off runway, buy loading bridges

By August 2005, managers at the Louis Armstrong International Airport were basking in a financial coup: the complete revamping of a massive 10,080-foot runway paid for with loans from four local banks.

Then came the worst storm in regional history. Though the rains of Hurricane Katrina slid swiftly from the runway's new surface, they were less kind to the airport's financial standing. When the weather cleared, Armstrong's bond ratings tanked, investors became scarce, and the airport's future grew cloudy.

The airport's outlook changed dramatically last week. Its Aviation Board approved the sale of $88 million in bonds to pay back the banks, refinance other outstanding debt and buy 17 new passenger loading bridges. The vote both signaled a renewed faith by two Wall Street bond commissions in the airport's future but also became a bellwether for the region's continued recovery more than two years after the storm, officials said.

"This is a real milestone for us," board Chairman Daniel Packer said after the vote.

The two commissions, Fitch and Standard & Poor's, improved their ratings of the airport as more passengers began to fly and the region's economic recovery showed promise. The tipping point came when the airport earned the approval of Financial Security Assurance, a major insurer of airports. The company agreed to insure the bonds.

Now flush with new bond money, the board is expected to pay the four banks -- Whitney, Capital One, Dryades and Liberty -- the $49.6 million they pumped into the runway project before the storm. That 2004 contract came with the possibility of a two-year extension, a clause that gave the airport time to right itself in the bond market, said Ken Fullerton of Fullerton & Friar Inc., the board's financial adviser.

The board also plans to use its new standing to refinance more than $25 million borrowed in 1999 at a lower interest rate. Overall, the airport is more than $170.6 million in debt: an amalgam of other bonds along with borrowed federal and state financing, according to the board's financial estimates.

The new loading bridges are projected to cost about $10 million, officials said.

The new bonds will be repaid through passenger facility charges, which strictly cover capital improvement projects. Airport Director Sean Hunter estimated the $4.50 fee for each passenger boarding an airplane in New Orleans translates to about $15 million a year.

Passenger traffic is about 80 percent of what it was before Katrina, Hunter said, with the number of flights slowly increasing. The airport had 123 flights in September: 15 more than in 2006.

"This sends a signal to Wall Street that the airport is looking better in the future," Hunter said.

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Richard Rainey can be reached at [email protected] or (504) 883-7052.