A $4 billion renovation of the Delta Air Lines terminal at New York's LaGuardia Airport will be the airline's financial responsibility now that Goldman Sachs is no longer a financial partner.

The Port Authority of New York and New Jersey approved a revised plan Thursday for the final piece of a LaGuardia overhaul that now calls for Delta to fund nearly the entire project with Goldman, Sachs & Co. no longer involved.

Delta committed to providing $3.4 billion and assuming responsibility for cost overruns with the Port Authority committing up to $600 million in bonds for the 37-gate facility. The original plan, approved in January, assigned the primary financing role to West Street Infrastructure Partners III, a fund managed by Goldman.

The project includes an improved roadway system, expanded garage with pedestrian bridge, new electrical substation and vehicle staging lot.

“Following a period of fiscal review, Delta has opted to directly fund and finance the costs of its LaGuardia redevelopment project, an arrangement that Delta and Goldman Sachs agree is in the best interest of both parties,” a Delta spokeswoman said in a statement.

A rendering of the planned Delta Air Lines terminal at LaGuardia Airport.
A rendering of the planned Delta Air Lines terminal at LaGuardia Airport. Office of Gov. Andrew Cuomo

Market observers suggest that Goldman may still play a role in the project either through equity financing or corporate bonds. A Goldman Sachs spokesman declined to comment.

“From my perspective I think this increases accountability at the airport and is probably a net benefit to the Port Authority in terms of dealing with Delta directly as a lease,” said Port Authority Chairman John Degnan during Thursday’s meeting. “I think it’s a beneficial change.”

Huntley Lawrence, the Port Authority’s aviation director, said during a presentation at Thursday’s meeting that the design and construction costs will be funded entirely by Delta through an expected combination of direct investment and debt financing.

Delta’s reconfigured LaGuardia terminal slated to be completed in 2026 follows a separate $4 billion public-private partnership at the 1939-built airport in Queens that lifted off last year. Conduit issuer New York Transportation Development Corp. sold $2.4 billion in special facilities bonds last year for the project, which includes plans for a new central terminal and a connecting concourse.

The 2016 LaGuardia sale led by Citi, Wells Fargo and Barclays was touted as the largest P3, airport transaction and alternative minimum tax deal brought to the municipal market. The bonds, which are backed by airline and concession revenues, were in high demand at nearly 10 times oversubscribed on average.

The two LaGuardia P3 redevelopment projects are among $12 billion of transportation initiatives utilizing private sector help that shift construction risks away from the Port Authority, according to executive director Pat Foye. The agency has also undertaken design-build strategies for replacing the Goethals Bridge and a planned new $2.4 billion terminal at Newark Liberty International Airport.

“In each case a strong credit-worthy party with significant investment at risk has protected the Port Authority against cost overruns,” said Foye during Thursday’s meeting. “With many additional large projects in our capital plan… we intend to take a similar approach where it makes sense looking to leverage our investments and mitigate and transfer risk however it makes sense.”

The Port Authority has around $20 billion in outstanding debt. The agency’s bonds are rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.