King-Hinds said goal is to keep everybody on board
The Commonwealth Ports Authority expects its airports to earn $7.8 million in fiscal year 2021, but foresees expenses to reach $14.2 million—which means CPA is already expecting to post a net operating loss of $6.4 million next fiscal year.
The saving grace at this time is that this loss of $6.4 million will be covered by the Coronavirus Aid, Relief, and Economic Security, or CARES, Act, funds that CPA has received, according to CPA board chair Kimberlyn King-Hinds yesterday.
Both aviation and non-aviation revenues of the Francisco C. Ada/Saipan International Airport in fiscal year 2018 was $17.2 million. This dropped to $13.5 million in fiscal year 2019. In fiscal year 2020, this has so far amounted to just $7.6 million.
On the seaport side, King-Hinds said that CPA expects revenue in fiscal year 2021 to amount to $6.8 million, with projected operating expenses at $2.9 million. “This results in a net operating income of $3.8 million, which will be used to fund CPA’s debt service requirements,” she said.
This picture of CPA’s precarious financial situation comes as it is working out its budget for the next fiscal year. CPA is proposing a budget of only $7.8 million in for fiscal year 2021. This is about half of the agency’s $15 million budget in fiscal year 2020.
King-Hinds said that CPA’s Financial Affairs Committee has already adopted the proposed budget, and it will go back to the airport tenants for review and input pursuant to the Airline Use Agreement.
“They have 30 days to comment. If [there are] no objections, it goes to the full board for adoption,” King-Hinds said.
Speaking at a recent interview, King-Hinds said that they adjusted for the expected drop in revenues, focusing on just paying the bond and personnel and taking out a lot of operational costs.
“And now it’s down to $7.8 million and $6.1 million of that is just for salaries,” she said.
She said the board knows that austerity measures imposed on personnel is hurting the staff, but that they want to make sure that they don’t furlough anybody. “That’s the goal: Just to keep everybody on board,” she said.
CPA personnel are now down to 64 hours bi-weekly.
In her fiscal year 2021 airport budget narrative, CPA comptroller Skye Lynn L. Aldan Hofschneider said that actual revenues for the past three fiscal years have been decreasing for aviation and were volatile for non-aviation activities.
Hofschneider said total revenues decreased by 22% from fiscal year 2018 to 2019 due to the effects of Super Typhoon Yutu on airport operations and are forecasted to decrease by 43% from fiscal years 2019 to 2020 due to the ongoing COVID-19 pandemic.
She said projected revenues in fiscal year 2021 are budgeted on the assumption that airlines will gradually increase operations throughout the year but China routes will remain suspended.
With operational funds alone, CPA has a net revenue loss of $6.2 million, she said.
“Although we exceed the required debt ratio coverage, caution must always be taken and expenses must be continually monitored in order to stay in compliance with CPA’s bond indenture,” the comptroller said.
In her seaport budget report, Hofschneider said that actual consolidated revenue trends for harbor and non-harbor activities have been volatile in the past three fiscal years. She attributed this to the reduction in inbound revenue tonnage and the effects of storms/typhoons that have passed through the CNMI and the current pandemic.
She said revenues decreased by 1% from fiscal years 2018 to 2019 and a decrease of 16% is anticipated from fiscal years 2019 to 2020.
The comptroller said projected revenues for fiscal year 2021 as compared to fiscal year 2020 show a forecasted 8% decrease in harbor revenues and a 1% increase in non-harbor revenues.