Financial Planning & Business Advisory
Over the last decade, airports have been operating in a challenging financial environment. Ricondo has extensive experience assisting airport operators in identifying and evaluating their objectives in developing viable financial operations, including feasible capital improvement programs(CIPs). Ricondo has assisted airport operators in identifying ways to decrease their short- and long-term debt exposure, lower operating expenses, and examine strategies for increasing revenues from nonaeronautical sources to enable them to continue funding needed improvements and maintain reasonable airline costs.
Ricondo's core group of financial planning professionals work exclusively on financial planning and business advisory services at numerous airports, including those serving Boise, Boston, Chicago, Dayton, Denver, El Paso, Las Vegas, Los Angeles, New York, Oakland, Phoenix, Salt Lake City, San Antonio, and Washington, D.C. Since the inception of Ricondo's financial planning practice in 1996, we have provided the following financial planning services for our airport clients.
- Airline and Other Tenant Agreement Development and Negotiations – Ricondo assists airport management in airline and other tenant negotiations to evaluate the operational and financial requirements of the parties and develop an airport use and lease agreement that addresses their specific needs. To assist in preparing airline, rental car company, and other tenant use and lease agreements, Ricondo develops comprehensive financial models to assess alternative rate-making or business arrangement methodologies to help determine the approach that best meets the objectives of the airport enterprise while also considering the needs of other parties.
- Airport Capital Planning, Affordability, and Justification Analyses – Capital planning and affordability analyses assist airport operators in appropriately sizing and prioritizing their development programs. Ricondo analyzes and measures the financial effects of an airport CIP. We also evaluate affordability by analyzing whether or not the annual financial requirements of the CIP can be satisfied through the airport enterprise's revenue stream. Once a CIP has been defined, Ricondo assists with the appropriate analyses to justify the CIP to key airport stakeholders, such as the airlines, the Federal Aviation Administration (FAA), airport board members, and other airport tenants. These analyses can be traditional benefit/cost analyses for the purposes of applying for an FAA Letter of Intent or other grants, or they can be geared to a specific stakeholder to demonstrate, for example, how a project's operational benefits justify the financial commitment to implement the project.
- Airport Financial Modeling – Ricondo has extensive capabilities in modeling airport financial operations. Airport operational and accounting structures can change over time with general airport growth, changes to airport use and lease agreements with the airlines and other tenants, changes in airport or political administrations, and with the provision of new and previously unplanned services. Ricondo models various airport financial operational methodologies and airline rate-setting methodologies, depending on the airport operator's unique situation, and assists in selecting and implementing the methodology that best meets the operator's goals and objectives.
- Revenue Bond Feasibility Study Preparation – Feasibility studies are prepared to support the issuance of airport revenue bonds. Ricondo prepares bond feasibility study reports specifically with credit analysts, underwriters, and investors in mind. The primary purpose of these reports is to present prospective bondholders with information that demonstrates the ability of the airport enterprise to support the repayment of the proposed bonds, including the ability to generate sufficient revenues to satisfy the covenants of the bond enabling legislation.
- Passenger Facility Charge (PFC) Planning and Implementation – With the uncertainties in federal funding authorization, airport operators must secure additional revenue sources to fund their CIPs. Ricondo evaluates PFC project eligibility and analyzes whether PFC revenues are best used on a "pay-as-you-go" basis or in some form of "leveraging" against debt issuance. Ricondo also prepares PFC impose and use applications and applications that meet the FAA's Significant Contribution Test for increasing a PFC above $3.00 per eligible enplaned passenger. We have good working relationships with the FAA and have significant experience preparing PFC applications and amendments.
- Rental Car Business and Financial Planning – Often the second or third largest source of nonairline revenues at airports, rental car companies are crucial to airport facility, business, and financial planning. Ricondo provides comprehensive facility, operational, business, and financial planning services for airport rental car operations. In particular, Ricondo's rental car financial planning and business advisory services include concession program development, concession policy and objectives formulation, requests for proposals/qualifications/bid document development, lease agreement development and negotiations, special facility or revenue bond feasibility study preparation, customer facility charge (CFC) strategy development, and financial analyses to support the calculation of CFC rates and other rental fees.