Austin Airport secures $400 million of funding for Airport Expansion

Staff Reports

AUSTIN – Austin-Bergstrom International Airport has secured $400 million of funding after a successful Airport System Revenue Bond sale to investors. The funds will support near-term Airport Expansion and Development Program (AEDP) projects.

Over the lifetime of the Program, an estimated $3.5 to $4 billion will be invested in airport improvements to support more passengers and more flights.
 
“Securing this funding is a milestone for the Airport Expansion and Development Program,” said Gina Fiandaca, Assistant City Manager for Mobility. “I commend the City of Austin Department of Aviation and Financial Services teams for working tirelessly over the last several months to prepare for this bond sale and secure this financing. This bond sale moves us closer to breaking ground on exciting new airport improvement projects that will modernize AUS.”
 
Earlier this year, S&P Global upgraded the Airport’s credit rating from an A to an A+, making AUS one of only seven airports in the US to receive a credit upgrade from S&P in 2022. The Airport’s upgraded credit rating, overall financial outlook, and strong pandemic recovery led to strong investor interest.

This strong interest from investors allowed the Airport to lower its borrowing yields up to nine basis points, which in return creates approximately $5 million of debt service savings for AUS over the lifetime of the bonds.
 
“We are grateful for the strong interest from investors,” said Jacqueline Yaft, AUS Chief Executive Officer. “Through our pandemic recovery efforts, we prioritized financial stability and through those efforts, our financial outlook is not only stable but strong. This bond sale allows us to leverage our strong financial health into delivering an improved airport experience for all.”
 
The Department of Aviation’s robust financial management has allowed the airport to fund design work for the AEDP to date with cash on hand. The bond funding will support construction for gate capacity increases at the Barbara Jordan Terminal, the new baggage handling system, security enhancements and additional airfield infrastructure.
 
Airport revenue bonds are a traditional financing method for airports to deliver infrastructure and improvement projects. AUS most recently secured this kind of funding for the 2019 nine-gate terminal expansion and plans to pursue this financing model for the AEDP again in the future. Airport cash reserves, current revenue, future airport revenue and Federal Aviation Administration grants will also be used to fund the Program.