Newport News/Williamsburg International Airport burned through much of its reserves of cash and easy-to-cash-in investments last year, as it struggled with the aftermath of its bailout of People Express Airlines.
The airport’s cash holdings declined by $2.2 million during the year ended June 30, according to financial records it provided in response to a request from the Daily Press.
It used up all the $1 million of investments it held as current assets — that is, as securities that can be converted into cash within 12 months.
And a cut-off of state funds, after Daily Press reports that the Peninsula Airport Commission used $4.5 million of public funds to pay off People Express’ debt to TowneBank, slashed income from that source by $667,000, to $1.3 million, interim executive director Sandy Wanner said.
“We continue to meet our operating obligations,” he said. “In addition we have an outstanding FAA receivable of $815,000 for money spent on the Consolidated Security Checkpoint project.” That’s the new $14.6 million consolidation of the checkpoints that used to be located at the entrances to each of the airport terminal’s two concourses into a single facility in the center of the terminal.
Wanner said the airport’s budget for this year should deal with the cash drain. He declined to comment when asked if the airport would need to borrow money, cut back operations or shed assets.
Airport commission Chairman George Wallace said he was concerned about last year’s cash drain, but believes this year’s budget will bring stability.
“I’m confident this will restore us to financial and operational integrity,” he said.
One key to the commission’s financial plan is a projected 52 percent increase in revenue from its terminal operations, reflecting a 20 percent increase in the per-passenger rental rate for airlines’ office space in the terminal. Rent payments are based on the number of passengers boarding at the airport.
The increase in terminal revenue also reflects a 33 percent increase in counter and office rental rates for rental car companies. Fees for rental car lots and buildings will also rise.
Another key to the budget is a planned 20 percent — or $560,000 — cut in administrative expenses.
These ballooned last year because of big bills for consultants working on efforts to woo airlines, advertising and marketing expenses incurred with the since-postponed launch of Elite Airways, and legal bills.
Spending on professional services — mostly for the consultants — jumped by 69 percent, or $107,000 last year.
Advertising and marketing expenses rose by 18 percent, or $56,000, to $371,106. The airport’s plan for this year calls for a 47 percent drop in this spending.
The airport saw a 580 percent, or $290,000, increase in legal fees, to nearly $340,000, related to the People Express deal and efforts to recover those funds, the firing of former Executive Director Ken Spirito and a lawsuit challenging the commission’s decision to terminate the lease of its longtime restaurant and bar concessionaire.
The commission decided to go into the restaurant business itself, and expects to make about $32,000 from that operation this year, after covering expenses. Last year, its revenue from food concessions totaled just over $70,000.
The budget also projects operating costs of just under $135,000 for its new airline services operation — the new ground handling business it set up as part of the incentives offered to Elite, and that Spirito had said he hoped would eventually generate income from other airlines, too.
One financial strain that should ease soon involves the state funds.
Secretary of Transportation Aubrey Layne has said the state would resume paying half the funds the airport’s traffic entitles it to receive, putting the rest in escrow until the commission recovers the $3.5 million in previous state payments it used to pay off the bulk of the People Express IOU.
The airport has hired former U.S. District Court Judge Walter D. Kelley Jr., whose firm specializes in working for companies seeking recovery of funds, to help get the money back.
He is not related to former airport counsel and TowneBank Peninsula board member Herbert V. Kelly Jr., who had advised the commission that using public funds to guarantee a TowneBank loan to People Express was legal. It was because of that guarantee and that opinion that the commission paid off People Express’ debt to the bank. Attorney General Mark Herring has since held that the state constitution bans such guarantees.
Original article ➤ http://www.dailypress.com
ReplyDeleteLast time I checked, a CONSULTANT is someone you BRIBE to ESPOUSE your POINT of VIEW.