Delta Lands $1.4B Construction Package for New $4B LaGuardia Terminal
By Mack Burke May 11, 2018 5:03 pm
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New York’s Empire State Development and Bank of New York Mellon have provided a roughly $1.4 billion construction financing package to Delta Airlines to fund the renovation of its LaGuardia Airport Terminals C and D, according to records posted yesterday by the New York City Department of Finance.
BNY Mellon purchased a series of bonds from Empire State Development, a subsidiary of the New York State Transportation Development Corporation (TDC), to fund the construction, records show.
The package comprises a $1.38 billion building loan leasehold mortgage as well as an additional $4 million project loan leasehold mortgage, both supplied through the issuance of TDC special facilities revenue bonds, as per records. BNY Mellon declined to comment on the financing.
In July 2017, the Port Authority of New York & New Jersey board voted to renew Delta’s ground lease at LaGuardia Airport through 2050, and it also announced that the airline’s financing partner, West Street Infrastructure Partners III, a Goldman Sachs-managed fund, had pulled its financing for the development of the airline’s new terminal at LGA.
Under the initial plan, the Goldman fund would invest $300 million in equity and provide $3.6 billion in debt to cover the airline’s portion of the $4 billion project. The abrupt exit of its financier forced Delta to take over.
In August 2017, transportation officials approved a $4 billion plan from Delta to renovate its terminal—a plan which called for the consolidation of the terminals into Terminal C. That month Delta broke ground on the 37-gate terminal project and pledged to fund $3.4 billion, with the Port Authority providing the remaining $600 million.
“Following a period of fiscal review, Delta has opted to directly fund and finance the costs of its LaGuardia redevelopment project, an arrangement that Delta and Goldman Sachs agree is in the best interest of both parties,” Delta told Reuters in a statement following Goldman’s exit from the deal.
The terminal’s $4 billion facelift is part of a push from Gov. Andrew Cuomo to revamp LGA and also improve the state’s infrastructure. The Delta construction is part of a roughly $8 billion plan to redevelop the entire airport, unifying all terminals under one roof.
“We know the new LaGuardia is one that New Yorkers will be proud to call their hometown airport,” Delta Air Lines CEO Ed Bastian said in a statement at the time of last year’s groundbreaking. “And we are confident that this investment will further cement Delta as the No. 1 airline in New York, with the best customer service and experience on the ground as well as in the air.”
Delta is set to occupy the eastern section of the new airport while American Airlines, United Airlines, JetBlue, Southwest Airlines and Air Canada will be housed in the western end, which underwent construction in June 2016. New operations will be phased in to Delta’s new terminal building by 2020, according to information from the governor’s office.
Ryan Marzullo, a managing director for design, construction and facilities at Delta Airlines, could not immediately be reached for comment. Empire State Development spokespeople could not immediately be reached.
