Sky Harbour Announces Two New Developments Aimed at Serving the New York and Connecticut Business Aviation Markets and Provides an Update on Construction Activities
- The new campuses at Bradley International Airport and Hudson Valley Regional Airport will create hundreds of local jobs and generate significant economic benefits to their communities.
- The new campuses will address the large and growing hangar deficit impacting the New York metro area, the #1 business aviation market in the world.
- Sky Harbour has a strong track record of delivering on commitments and is committed to maximizing the long-term benefits of the new campuses to Connecticut, Dutchess County, and the New York metro area.
- The cost of retrofitting certain structural elements in the SH16C prototype at Denver and Phoenix campuses is projected to be approximately $3.2 million and $2.0 million, respectively, leading to a schedule delay for completion.
- The company anticipates a similar schedule delay at the Dallas campus, albeit with a significantly lower budget impact.
Insights
The announcement by Sky Harbour Group Corporation of new ground leases for the development of Home Base campuses at Bradley International Airport and Hudson Valley Regional Airport is a significant strategic move. The development is poised to capitalize on the underserved New York metro area's business aviation market. Economically, the creation of local jobs and the attraction of corporate and private jets can stimulate regional growth. This initiative may lead to an uptick in SKYH's stock as investors react to the potential for increased revenue streams and asset value appreciation from these developments.
However, the updates on construction activities reveal cost overruns and schedule delays, which are critical factors for investors to consider. The retrofitting costs and extended completion dates at Denver and Phoenix campuses could strain short-term finances and delay revenue generation. While the company's commitment to fund these overruns from unrestricted funds may reassure investors of its liquidity, it also signals that future earnings may be impacted. Long-term, the enhanced SH16C prototype design could result in reduced maintenance costs and increased resilience, potentially improving the company's competitive edge.
The technical update regarding the Sky Harbour SH16C Prototype hangar design indicates a proactive approach to infrastructure resilience. Enhancing structural elements to exceed national load requirements is a forward-thinking decision, especially in light of increasing climate-related events. From an engineering perspective, the retrofitting of existing structures and the integration of improved designs in new constructions are indicative of the company's commitment to safety and longevity of its assets.
However, the financial implications of such enhancements, including the $3.2 million and $2.0 million retrofit costs at Denver and Phoenix campuses respectively, must be weighed against the benefits. These modifications will likely increase the overall quality and attractiveness of the facilities, potentially leading to higher demand and rental rates. For stakeholders, this translates to a balance between immediate financial impact and long-term asset performance.
The expansion of Sky Harbour's campus network into the New York metro area addresses a significant market need for business aviation infrastructure. The ground leases at Bradley International and Hudson Valley Regional Airports signify a strategic investment in commercial real estate with a specialized focus. The emphasis on 'the best home base in business aviation' and 'the shortest time to wheels-up' suggests a premium service offering that could command higher lease rates and strengthen Sky Harbour's market position.
In the commercial real estate sector, such developments can act as catalysts for regional economic growth, attracting ancillary businesses and fostering an ecosystem around aviation services. Over time, this can enhance property values and create a ripple effect on the local real estate market. Investors should monitor the execution of these projects closely, as successful delivery can lead to significant returns, while any setbacks could affect market confidence and investment attractiveness.
New Ground Leases
The new Sky Harbour campuses will be developed on approximately 8 acres at BDL and 7 acres at POU. Both will be a catalyst to create hundreds of local jobs and generate significant economic benefits to their local communities. These campuses will offer “the best home base in business aviation” to house some of the
Connecticut Airport Authority Executive Director Kevin A. Dillon, A.A.E., said, “As we diversify our partner portfolio and bolster aviation activity at
Tal Keinan, Sky Harbour’s Chairman and Chief Executive Officer, commented, “Bradley International Airport and Hudson Valley Regional are among the best-managed airports in
The
Update on Construction Activities
Sky Harbour campuses are constructed in accordance with the Sky Harbour SH16C Prototype hangar design, which is subjected to constant refinement and improvement processes. In consultation with the company’s structural engineers and an independent peer review, Sky Harbour will be fortifying certain structural elements in the SH16C prototype in order to enhance stability, safety, and standardization to accommodate and exceed the nation’s highest wind, snow and seismic load requirements. As Sky Harbour’s
In Q1 2024, the Company intends to contribute in cash the amount necessary to mitigate the increased costs associated with these modifications from unrestricted funds on hand at the corporate level into Sky Harbour Capital and the Obligated Group’s construction fund. As in the past, the Company will protect and support the funding sufficiency of the 2021 Sky Harbour Capital LLC Aviation Facilities Project as amended.
About
About Connecticut Airport Authority
The CAA was established in 2011 to develop, improve, and operate
About Hudson Valley Regional Airport
Hudson Valley Regional Airport is a Part 139 Certified Airport with an FAA staffed and operated control tower and nearly 70,000 annual operations. The airport includes a two-megawatt solar array and an Aviation Science Center with a state-of-the-art hangar operated by
About Sky Harbour Group Corporation
Sky Harbour Group Corporation is an aviation infrastructure company developing the first nationwide network of Home-Basing campuses for business aircraft. The company develops, leases, and manages general aviation hangars across
Forward Looking Statements
Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995, including statements about the financial condition, results of operations, earnings outlook, benefits of the new ground leases, expectations regarding construction costs and timing and prospects of SHG may include statements for the period following the consummation of the business combination. When used in this press release, the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements are based on the current expectations of the management of SHG as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those discussed and identified in the public filings made or to be made with the SEC by SHG, including the filings described above, regarding the following: expectations regarding SHG’s strategies and future financial performance, including its future business plans, expansion plans or objectives, prospective performance and opportunities and competitors, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and SHG’s ability to invest in growth initiatives; SHG’s ability to scale and build the hangars currently under development or planned in a timely and cost-effective manner; the implementation, market acceptance and success of SHG’s business model and growth strategy; the success or profitability of SHG’s hangar facilities; SHG’s future capital requirements and sources and uses of cash; SHG’s ability to obtain funding for its operations and future growth; developments and projections relating to SHG’s competitors and industry; the ability to recognize the anticipated benefits of the business combination; geopolitical risk and changes in applicable laws or regulations; the possibility that SHG may be adversely affected by other economic, business, and/or competitive factors; operational risk;. Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of SHG prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. SHG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231218480965/en/
Connecticut Airport Authority: media@ctairports.org
Hudson Valley Regional Airport: rhicks@dutchessny.gov
Sky Harbour Airport Relations: nszymczak@skyharbour.group
Sky Harbour Resident Relations: asigourney@skyharbour.group
Sky Harbour Investor Relations: investors@skyharbour.group Attn: Francisco Gonzalez
Source: Sky Harbour Group Corporation
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