June 17, 2002

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The Guam International Airport Authority (GIAA) had a net loss of $5 million in fiscal year 2001, according to the audited financial statements prepared by Deloitte & Touche.

This was the third year in a row that GIAA has had a net loss. In FY 2000 the net loss was $2.2 million and in FY 1999 the loss was $7.2 million.

Although GIAA had operating earnings of $4.6 million, it was not sufficient to prevent the net loss of $5 million. Operating earnings in prior years were $6.8 million in FY 2000 and $6.4 million in FY 1999.

Operating revenues at GIAA have dropped over the last five years from $53.5 million in 1997 to $47.1 million in 2001. Facilities revenues accounted for most of the decline, going from $28.6 million in FY 1997 TO $18.3 million in 2001. In those same five years, concession fees and rental income increased by more than $5 million, from $19 million in 1997 to $24 million in 2001.

GIAA has two major customers, Continental Airlines and Duty Free Shoppers LTD. Continental contributes 35% of operating revenues while Duty Free adds 25% to revenues.

Operating expenses over the last five years have increased from $32.6 million in 1997 to $42.5 million or $9.9 million. Depreciation and contractual expenses accounted for most of the increase. Depreciation was $11.2 million in 1997 and now has grown to $15.7 million. Contractual expenses were up from $10.3 million in 1997 to $14.4 million. Personnel costs increased from $9.9 million to $11 million during the five years.

Among the major components of contractual expenses of $14.4 million were $5 million for repairs and maintenance, $4.7 for utilities and telephone; $1.8 million for professional services (down from $2.1 million the previous year); $869,000 for advertising and promotions (up from $825,000 last year and $206,000 in 1997); $692,000 for travel (up from $443,000 in 2001 and $130,000 in 1997); $623,000 for insurance and $672,000 for miscellaneous.

Interest expense on bonds was $13.3 million or 28% of operating revenues. In 1997 interest expense was $11.8 million or 22% of revenues.