August 31, 2010 / 9:00 PM / in 7 years

UPDATE 1-Atlanta, airlines reach deal on airport rent

* Delta, AirTran to pay $30 million supplementary rent

* Deal to help fund bond issue for new terminal building

* Bond offering planned for around $620 million (Adds byline, details on bonds, paragraphs 6-7)

By Matthew Bigg

ATLANTA, Aug 31 (Reuters) - Airlines will pay increased rent at Atlanta’s Hartsfield-Jackson Airport under a deal with the city that will help fund a new international terminal, Mayor Kasim Reed announced on Tuesday.

Under the deal, Delta Air Lines Inc (DAL.N) -- the current industry leader -- AirTran Airways AAI.N and other carriers will pay a supplementary fee of $30 million spread over four years from fiscal year 2013 to 2016.

That money will help fund an international terminal due to be completed in early 2012 and enable the airport to retain adequate financial reserves to maintain its credit rating, Reed said.

“The deal ... will be another key element of our effort to ensure Atlanta’s airport remains the world’s busiest passenger airport,” he said of the deal, which revised an agreement reached in 2009.

The airport is a major source of economic dynamism in Atlanta, one of the fastest-growing cities in the United States.

Later this year, the city will start a roadshow ahead of a bond issue of around $620 million intended to complete capital needs for the terminal.

    The closing date for the offering of bonds is tentatively set for mid-November and there will be two additional offerings in early 2011 for other purposes, according to city communications director Sonji Jacobs Dade.

    The airport would make contractual payments to the airlines contingent on the strength of the recovery and the airport’s financial indicators in fiscal 2015-17.

    Those payments would range from zero to $30 million, contingent upon the airport achieving debt service coverage of more than 1.5 for fiscal 2015-17, Reed said. The ratio is a measure of the airport’s ability to cover its monthly commitments.

    The terminal will serve passengers arriving from outside the United States and open an eastern access to the airport.

    It will also obviate the need for arriving international passengers to recheck their bags once they have passed through immigration and customs and before leaving the airport, a system unpopular with passengers. (Editing by Kevin Gray and Gary Crosse))

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