SARASOTA MANATEE AIRPORT AUTHORITY NOVEMBER 17, 2020 MEETING STAFF NARRATIVE REQUEST FOR APPROVAL: AMENDMENT NO. 4 TO THE SCHEDULED AIRLINE OPERATING AGREEMENT AND TERMINAL BUILDING LEASE

EXECUTIVE SUMMARY: Airport management has met and discussed an amendment to the signatory airline agreement, which will provide the two positive provisions for the Airport Authority. The amendment will extend the agreement with the four existing signatory carriers an additional year to September 30, 2024 and exclude all CARES Act funds or any subsequent, federal, state, or local funds from the year-end reconciliation. In return the Airport Authority will waive the previously deferred six-month fixed rents, waive an additional 12 months of fixed rents, and waive any shortfalls in year-end reconciliation calculations until September 30, 2023. The normal reconciliation process returns in the final year of the agreement.

NARRATIVE: Management briefly discussed a possible amendment to the present Signatory Airline Agreement when the FY 2021 budget with the airlines in August given the tremendous impacts Covid-19 has had on airline business. Subsequently, the President, CEO began more intense discussions with the signatory airlines to see if a mutually beneficial amendment to the existing agreement could be worked out to assist both parties during this crisis.

All airlines agreed that the present Agreement was working well and were generally pleased with the performance of the Agreement. The negotiation continued over the last sixty days and the following provisions were agreed to subject to Airline Executive Management and SMAA Board approval.

The provision helpful to the Airport Authority is an additional year extension of the present agreement that will take the agreement out to September 30, 2024, affording ample time for the full impacts of the Covid-19 pandemic to hopefully dissipate. In addition, all CARES Act funds, or any subsequent federal, state, or local relief funds are exempted from the year-end reconciliation process. This allows the Airport Authority to utilize the entire $23.3 million of CARES Act funds or any additional relief funds strictly for airport operating or capital purposes without having to add those funds into the revenue totals for reconciliation. If that provision were not included, that could result in airlines receiving airport CARES Act funds, which is not its purpose.

The Board previously approved the waiver of signatory airlines fixed rents only (Exclusive Use and Preferential Use Space) for a period of six months covering April 2020 through September 2020, which would become due in April 2021. The signatory airlines still paid and continue to pay all variable rentals and fees (Joint Use and Common Use Space). The amendment waives the deferred fixed rents and provides for an additional 12 months waiver for fixed rents. The amendment also waives the collection of any shortfall because of the year-end reconciliation process. Given the CARES Act funds are not included in the calculation under this amendment it would be unfair to send the airlines additional invoices when the airport is exempting any relief funds from the calculation. Should the airport generate an operating surplus without the benefit of using relief funds, the signatory airlines would receive the appropriate refund of excess fees paid as normally occurs pre-pandemic.

The President, Chief Executive Officer recommends approval.

RECOMMENDATION: Staff recommends approval of Amendment No. 4 to the Scheduled Airline Operating Agreement and Terminal Building Lease and that Staff be authorized to prepare any documents to implement this action.

ATTACHMENTS: Amendment No. 4