New Airline Business Arrangements at Los Angeles International Airport (LAX)

Since 2007, Warren Adams, Managing Partner of WJ Advisors, has assisted senior management of Los Angeles World Airports (LAWA) in developing a strategy to implement new airline rate-making methodologies and business arrangements for the LAX terminal area. The overarching goal of the Board of Airport Commissioners was to develop a financial platform that would support the renovation, expansion, and improvement of terminal facilities at LAX. Some of the terminal buildings were owned and operated by the airlines or airline consortiums; other terminal buildings were owned and operated by LAWA. Different business arrangements and cost structures were in place in each terminal, making it difficult to reach consensus with the airlines on many issues. Warren assisted LAWA senior management in preparing a valuation analysis that led to the acquisition of four LAX terminal buildings from the airlines. The four terminals are now under LAWA ownership and operation, which was key to reaching consensus with the airlines on new and common business arrangements in all LAWA-owned terminals. After years of negotiations with the airlines, in late 2012, the Board formally adopted a new tariff, new rate-setting methodology, and a new rate agreement. Warren worked with LAWA senior management to and outside legal counsel in developing the strategy for reaching consensus with the airlines, as well as the airline business arrangements.

Reaching Commercial Agreement for the Largest Rental Car Facility in the U.S.

In November 2016, Los Angeles World Airports distributed a non-binding Memorandum of Understanding (MOU) for the financing, development, and operation of a new rental car center (RCC) at Los Angeles International Airport (LAX).  The new RCC is expected to have approximately 5.5 million square feet, and a cost of over $1.0 billion dollars.  As of January 2017, rental car companies representing over 60% of gross revenue market share have signed the MOU.

In collaboration with LAWA executive management, WJ Advisors assisted in the development of proposed business arrangements that were included in the MOU as well as preparation of the MOU.  Over a period of approximately 2 years, WJ Advisors participated in and with LAWA, led commercial discussions with the rental car companies serving LAX regarding proposed business terms.

Successful Issuance of Los Angeles International Airport Series 2016A and Series 2016B Bonds

In May 2016 and again in November 2016, the Los Angeles World Airports issued approximately $289.2 million and $451.1 million, respectively, in Subordinate Revenue Bonds to fund the cost of projects in the airport’s multi-year capital improvement program.  Credit ratings for both series of bonds were reaffirmed.

Los Angeles International Airport is the third-largest airport in the United States as measured by total passengers in 2015 and the third busiest international gateway in the U.S. as measured by international enplaned passengers for the 12-month period ended February 2016.

WJ Advisors prepared financial feasibility reports for the issuance of both series of 2016 Bonds.