"Branson Airport misses crucial payment"

Wednesday, July 4, 2012

Branson Airport misses crucial payment
A bit of good news: Southwest Airlines is coming next year
By Cliff Sain
The Springfield (MO) News-Leader


For the second time this year, the Branson Airport did not make its bond
payment, leaving the future of the facility up in the air.

In a letter sent to bondholders, the airport's trustee, MBA Bank, said it
did not make the $3.4 million interest payment to bondholders. The payment
was to be made by June 30. The airport's trustee also did not make a similar
payment on Jan.1. and, in the letter, said it could not determine whether it
would make the next payment on Jan. 1, 2013.

The airport, which has been in default on its bonds since January 2011, has
been operating since April 2011 under a forbearance agreement in which the
bondholders agreed not to impose remedies they could take against the
airport, such as foreclosure. The forbearance agreement was to last only
through June 30, but according to the bank letter, the airport is asking to
have the agreement extended.

Branson Airport Executive Director Jeff Bourk would not directly discuss the
bond issue, but he said the airport has more passengers this year than last.
He did not immediately have numbers available for this year, but he said the
airport had 110,000 passengers in 2011, and 92,000 in 2010.

"We are up significantly this year," he said.

Airport analyst and Branson resident Michael Hynes said bondholders have the
option of taking over the airport and selling it or attempting to run it
themselves. He said those options are unlikely because the bondholders do
not want to run an airport.

"The question at this point is not whether they pay the bondholders, it's
how do they keep open?" Hynes said.

Because the airport used tax-exempt municipal bonds to finance its
construction, reports documenting the airport's finances are required to be
publicly posted at the Municipal Securities Rulemaking Board's Electronic
Municipal Market Access website, www.emma.msrb.org.

According to public documents, the airport lost $17.2 million in 2011. That
was after losing $14 million in 2009 and $13.4 million in 2010. So far the
airport has lost $4.6 million in 2012. Hynes said it is projected to lose
about $18 million.

Hynes said the airport has about $160,000 in the bank, which represents less
than three days' operating expenses. The average for American airports is
489 days, he said. At the same time, the airport owes about $2 million to
its suppliers.

The airport did receive a shot in the arm Tuesday when Southwest Airlines
announced that it will begin serving the airport in 2013. The airline
recently merged with AirTran Airlines, which is already serving Branson. In
January, Southwest announced that it will continue to serve Branson but did
not give a timeline. Tuesday's announcement said Southwest will start
serving the airport in early 2013 and has signed a multi-year deal.

"Southwest will be here quite a while, if not forever," Bourk said. "We're
excited."

The city of Branson on June 26 approved a $361,754 payment to the airport.
The semi-annual payments are part of a 2006 agreement in which the city pays
the airport more than $8 for each unique visitor it brings to Branson.
Kruithof said that while the forbearance agreement shows the airport is not
in a good place, he also said the intent of the agreement was to give the
airport time to prove itself.

"Nobody's ever done this before," Kruithof said of the nation's first
privately owned commercial airport.

Kruithof said the city is managing to make the airport payments without
putting its budget at risk, although he said he could not say if that would
continue indefinitely. The city tries to keep a cash reserve equal to 30
percent of the general fund. After making the latest payment, that reserve
is at 29.3 percent. A city ordinance requires the city to keep a 20 percent
reserve.