Airport financing | A new structure to help Montreal-Trudeau, asks the CCMM

A “financial wall” stands in front of Montreal-Trudeau, and Ottawa must help the airport overcome it by allowing it to obtain financing from “private partners,” says the Chamber of Commerce of Metropolitan Montreal (CCMM). There is “urgency to decide”, pleads its president and CEO, Michel Leblanc.

The organization decided to advocate for a new funding structure in its brief sent to the Trudeau government for the presentation of its spring budget. The nine-page document includes only one other recommendation: the establishment of a special program to improve the housing supply in three “high potential” sectors: Bridge-Bonaventure, Namur-Hippodrome and the east. from Montreal.

“We are talking about years of decisions for the airport,” summarizes Mr. Leblanc. There will be complex work to be done. You have to be able to sequence them. This is why we must resolve the issue of the financing structure in the coming year. »

In the 1980s, the federal government decided to transform airports into non-profit organizations that must pay for the occupancy and use of federal lands. In the vast majority of cases, leases are spread over decades – until 2072 for Montreal. The law prohibits them from raising share capital.

“When we want to borrow and amortize the investment over 30 or 40 years, we will get closer to the maturities which will limit the ability to borrow in the long term,” observes Mr. Leblanc, recalling that the asset must be released free of debts to the federal government at the end of the lease.

In the same vein

The CCMM takes up a plea that came from Aéroports de Montréal (ADM), responsible for Montreal-Trudeau and Mirabel airports, namely the ability to welcome private investors, such as pension plan managers, ready to be patient.

The Press had pointed out, last July, that ADM had retained the services of lobbyists to increase pressure on the Trudeau government on the issue of airport financing.

By email, ADM clarified that it had not sent a memorandum to the Trudeau government as part of the pre-budget consultations, but that its president and CEO, Yves Beauchamp, was able to assert the organization’s position on several occasions to federal authorities. .

Travelers have experienced congestion problems to get to Montreal-Trudeau. This demonstrates the scale of the investments to be made on the “town” side with the landing stage. ADM must also complete the station which will host the Réseau express métropolitain (REM).

According to the NPO’s most recent annual report, after 2028, a “series of projects” are planned on the “airside” to increase the capacity of barriers and baggage handling.

In the short term, Ottawa could quickly give ADM some relief by revising its rent charges to allow it to invest more in its infrastructure.

“In 2022, rental costs absorbed approximately 11% of ADM’s revenue,” underlines the Chamber in its brief. This is therefore an annual sum of 68.3 million which was not available to support maintenance and expansion work. »

Other solutions

In his work The saga of Mirabel and Dorval airports: lessons to be learned now and for the futureprofessor of operations and logistics management at HEC Montréal Jacques Roy also addressed ADM’s financial challenges.

The expert believed that Montreal-Trudeau’s lifeline did not lie in its privatization or the arrival of private investors. He proposed a renegotiation of the terms of the lease between ADM and Ottawa. For example, the lease could be extended. For its part, rent would be capped at the current level and indexed to inflation rather than on the basis of gross income.

After the first nine months of 2023, passenger traffic was slightly higher than before COVID-19 hit. This allowed ADM to generate a surplus of 157 million as of September 30. Its net debt amounted to 2.2 billion, down 100 million compared to its level at the end of 2022.