Bond sales to begin in 2025 for Austin's $4 billion airport expansion

Austin will start issuing bonds in late 2025 to help finance an estimated $4 billion airport expansion program to accommodate record-breaking passenger growth, according to the airport.

Last week, the Austin City Council authorized the negotiation and execution of design and construction contracts for an arrivals and departures hall at Austin-Bergstrom International Airport that will feature expanded check-in, ticketing, and baggage claim areas, as well as consolidated security checkpoints, and for a 20-gate midfield concourse and tunnel project.

The Journey with AUS expansion program also includes construction of parallel midfield taxiways ? that commenced last week and is expected to be completed in 2027 ? and upgrades to airport utilities.

An estimated 72% of project costs will be financed with general airport revenue bonds, according to the airport, which will also seek Federal Aviation Administration grants.

The city last issued airport system revenue bonds in 2022 with a $416 million deal that was subject to the alternative minimum tax. Outstanding airport debt totaled $1.34 billion as of Sept. 30, 2023.

The airport is rated A1 by Moody's Ratings, A-plus by S&P Global Ratings, and AA-minus by Kroll Bond Rating Agency, all with stable outlooks. In a May credit opinion, Moody's cited the airport's "significant capital expansion needs" to accommodate extreme local travel growth.

"Recent enplanement levels show that the growth potential for the airport is high and should offset the risks posed by the increase in debt that is agreed to by the airlines." Moody's said.

The airport, which serves 20 carriers, including Southwest Airlines (LUV), reported total passenger traffic hit an record for a second straight year of nearly 22.1 million in 2023, up 4.77% from 2022. The latest data showed passenger traffic of 12.8 million from January through July that included a monthly passenger record of 2.068 million in May.

Last year, the city approved a settlement with the operator of the airport's South Terminal, which will be demolished as part of the expansion program.