Delta to back JFK expansion bonds

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Delta Air Lines will back an up to $175 million bond issue to finance the second phase expansion of terminal 4 at New York's John F. Kennedy (JFK) airport.

The New York City Industrial Development Agency (NYCIDA) will issue the tax-exempt bonds that will be repaid by the Atlanta-based carrier, according to recent Port Authority of New York and New Jersey (PANYNJ) board meeting minutes. Delta will finance the expansion on balance sheet if the bonds are unsuccessful.

The 11-gate, 6,968-square metre (75,000 square foot) phase two expansion of terminal 4 will house Delta's regional jet operation at JFK. It will replace terminal 2, which will be demolished.

The airline removed a planned secure connector passageway between terminal 4 and terminal 2 as part of the expansion.

NYCIDA issued bonds were used to finance terminal 1 at JFK, which is backed by a consortium made up of Air France-KLM, Japan Airlines, Korean Air and Lufthansa, in 1997.

Delta declines to comment on the financing for terminal 4.

The airline plans to conclude the $1.2 billion, nine-gate phase one expansion to terminal 4 for its mainline operation in May. Construction of the second phase will begin at that time.

Phase one was financed with a $796.3 million bond issue by the PANYNJ that was guaranteed by Delta in December 2010. The airline contributed $403.7 million in equity to the project. Bank of America Merrill Lynch, Barclays Capital, Citi, Goldman Sachs, JP Morgan, M.R. Beal & Company and Rice Financial Products underwrote the deal.