CPA reports increased net revenue in FY2004

The Commonwealth Ports Authority showed significant financial improvement in fiscal year 2004, surpassing by 12 percent the net income it was required to generate by the bondholders for the airport division.

CPA comptroller George Palican reported yesterday that the three CNMI airports had a combined net income of $2 million in FY 2004. This amount resulted in a bond coverage ratio of 1.40 for the airport division; in other words, the division generated an income that is 40 percent greater than its required bond payment.

The airport division needs only a 1.25 bond ratio to comply with the bondholders’ requirement.

Palican attributed CPA’s improved financial standing to the increased number of passengers, as well as austerity measures implemented by the ports authority.

He also expressed hope that the airport division will be taken off “negative credit watch” status, following CPA’s scheduled meeting with Fitch Ratings on Dec. 15.

The rating agency has twice given the airport division an investment grade rating of “BBB minus” since May 2003. CPA was placed on “negative credit watch” status for its failure to meet the 1.25 bond ratio requirement in FY 2002 [due to the impact of the 9/11 terrorist attacks on the travel industry] and in FY2003 [due to the Iraq war and the SARS epidemic].

In his latest financial report, Palican said the airports generated total revenues of $12.3 million last fiscal year, a 17-percent increase from revenues collected in FY 2003.

Aviation revenues composed $8.3 million of the total collection, while the remaining $4 million came from non-aviation sources.

Operating expenses also increased by about 10 percent, from $9.3 million last year to $10.3 million this year. Palican’s report showed the increase was caused by urgent repair work that needed to be done at the Saipan International Airport’s air-conditioning system, along with other maintenance projects.

Nevertheless, the airports managed to post a net income of $2 million, which is 73 percent greater than the net income generated in FY 2003.

However, Palican stressed that the net income does not mean extra money for the ports authority, as the amount is needed for bond payments and compliance with the bond coverage ratio.