Massachusetts Port Authority Board Meeting

Massachusetts Port Authority Board Meeting

January 21, 2021

Visual Materials for Massachusetts Port Authority Board Meeting January 21, 2021

Public Session

1


Report of the CEOLisa Wieland

2


Vaccines

• Pfizer and Moderna both had their vaccines approved by the FDA under Emergency Use Authorization

• They require two shots about 28 days apart

• AstraZeneca and Johnson & Johnson vaccines are likely weeks away

Distribution

• Cargo and commercial air carriers along with trucks began immediately transporting the vaccine to states

• While the CDC issued guidance on vaccine distribution, each state can follow their own distribution plan

• Massachusetts began next part of Phase 1 of its distribution plan:

o First Part: First responders, police, including firefighters and EMTs

o Next Part: A group of about 94,000 people living and working in group homes, shelters and correctional facilities

3

With Pfizer and Moderna vaccines approved, distribution is underway across state and nation


4

$908 billion Emergency Coronavirus Relief Act passed; new Biden administration proposes $1.9 trillion additional relief package

$1.9T American Rescue Plan Relief Package$908B Emergency Coronavirus Relief Act • National Vaccination Program: $416B to launch program with

a goal of providing 100M vaccine shots and reopening schools in the first 100 days of his administration

• State and Local Government: $350B in emergency funding for state, local, and territorial governments

• Small Business: $15B in grants to help the hardest hit businesses and $35B for small business financing program

• Unemployment Assistance: o $1,400 per person for those under certain income

thresholdso Extension of unemployment insurance programs through

the end of September and providing $400 per week supplement to help hard‐hit workers

• Minimum Wage: Increase federal minimum wage to $15/hour

• Airports: $1.8B for airports and $200M for concessionaires

• Airlines: $15B for airlines and $1B for airline contractors

• Other Transportation: o $14B for public transito $2B for private bus and ferry companies

• Small Business: $284B in new PPP funding for small businesses

• Rental Assistance: $25B in rental assistance and extension of CDC eviction moratorium through January 31, 2021

• Unemployment Assistance: o $166B for $600 checks to those who make up to $75,000 o $120B for additional $300 per week in federal

unemployment aid for 11 weeks


• “Although it seems likely to me that the economy will, at best, continue to grow modestly until there is widespread vaccination, I believe a more robust economic recovery –supported by expansionary monetary and fiscal policy – is likely to follow” – Boston Fed President Rosengren to Greater Boston Chamber of Commerce

• Rosengren highlighted several optimistic trends

o Stock prices are at near‐record levels as investors remain confident of a recovery

o Interest rates are low

o Housing market is healthy

o Consumer spending on goods has recovered

o Many businesses are increasing their capital spending

• However, he acknowledged that income inequality is a significant challenge to a strong economy

• He also believes that policymakers should do more to help the economy and supports President Biden’s proposed $1.9T American Rescue Plan – “It’s a big package, but I think it’s appropriate”

5

Boston Federal Reserve President Eric Rosengren expects a robust recovery in second half of 2021

Federal Reserve U.S. GDP ProjectionsFederal Reserve projects a robust recovery in U.S. GDP growth and employment

President Rosengren 2021 Forecast


Vaccinations and Pent‐Up Demand

• "The availability of vaccines and testing will get people comfortable with traveling…You'll see the leisure and the visiting friends and relative travel should come back, relatively quickly” – Raymond James Analysis

• Last summer, travel was down by 50%, but the Raymond James Analysis is estimating that this summer there will be a 70 to 80% return in leisure travel

• IATA Survey: 80% of travelers would return to air travel within six months of virus containment

• Kayak Survey: Nearly half of Americans said taking a trip is among the three top social activities they look forward to most once a vaccine is widely available

Low Fares

• Another factor that could generate a surge in travel is predicted cheap fares

• Kayak said domestic fares are almost 20% cheaper than they were this time last year

6

An uptick in air travel is expected this summer

Factors for Second Half 2021 Recovery


Despite positive signs, headwinds still remain for the aviation industry and Logan Airport

7

0.0 M

0.5 M

1.0 M

1.5 M

2.0 M

2.5 M

3.0 M

3.5 M

4.0 M

4.5 M

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

FY19 Actual

FY20/FY21 Actual

42 M

Revised Optimistic 10.4 M

Est. Jan‐Mar

RevisedWorst Case

7.8 M

Factors Slowing Recovery • COVID‐19 Uncertainty

• Uneven Economic Impacts

• Travel Restrictions

• Business Travel Demand

• Structural Changes to the Industry

Logan Passengers: Actual, Forecast and Short‐Term Outlook

Logan’s monthly passenger volumes are still tracking more than 50% below breakeven

Breakeven


8

Slow federal vaccine distribution and new COVID‐19 variant weigh down air travel recovery

New COVID‐19 Variant

• While the variant does not cause more severe illness, it can cause more hospitalizations simply because it spreads more easily

• CDC predicts new COVID‐19 variant to be dominant strain in U.S. by March

Slow Vaccine Distribution

• COVID‐19 vaccine distribution has been slower than expected, as the number of immunizations remained far below the government’s goal of 20M by the end of the year

• The rollout launch has been marred by a lack of coordination and continued uncertainty over when and how many vaccines states will receive over time


• Tech: Apple, Google, Microsoft, Zoom, Facebook

• Streaming Services: Netflix, Hulu, Disney

• E‐Commerce: Amazon, Walmart, Target

• Delivery Services: DoorDash, Uber Eats, Grubhub

• Shipping: Container shipping, trucking, air cargo

• Grocery: Kroger's, Trader Joes, Wholefoods

• Cleaning and Home Improvement: P&G, Clorox, Home Depot, Lowe’s

9

Some sectors are seeing increased demand as individuals have adjusted their living habits in response to the COVID‐19 pandemic

Thriving Sectors

Example: Delivery vs Restaurants Activity


• Travel and Tourism: Airlines, cruise lines, tour companieso Out of all countries, the U.S. has experienced the biggest tourism

revenue loss due to the pandemic, missing out on $147B in the first ten months of 2020

• Hospitality: Hotels, restaurant, events/conferenceso CBRE’s expects a return to 2019 occupancy, average daily room

rates, and revenue per available room levels in 2024o The restaurant industry has shed 2.5M jobs since February – one in

four of the 10M jobs lost in the overall economy

• Real Estate: Office and retail spaceo The Greater Boston region has witnessed sublease space nearly

double since the onset of the pandemic

• Small Businesseso Weekly initial jobless claims soar to 965,000

10

However, other sectors are struggling as the COVID‐19 pandemic and restrictions have significantly hurt business

Struggling Sectors

Example: Commercial Real Estate Collapse


11

Travel restrictions continue to change rapidly, impeding rebound in passenger demand

Travel Restrictions

Just This Month: New Restrictions

• The CDC has imposed an order for universal testing of all passengers, including U.S. citizens returning from abroad

• President Biden is extending an order that currently bars nearly all non‐U.S. citizens who within the last 14 days have been in Brazil, the UK, Ireland and 26 EU countries

• The Canadian government recently began requiring international passengers to show proof of a negative COVID‐19 test before boarding a flight to Canada

Travel Demand Decline

Swelbar‐Zhong Consultancy Analysis

• “The international component will not match its 2019 totals until 2028”

• “The ramifications [of COVID‐19 cases and restrictions] will lead to much slower international recovery which will hold down U.S. system demand”


Logan Airport will be disproportionately affected by these restrictions due to its reliance on international travel

50%

2%

18%

15%

15%

Logan Airport: Breakdown of International Travel (2019)

12

80%Domestic

20%Int’l

Logan Airport: Share of International vs Domestic Travel (2019)

• Logan served 8.3M international passengers in 2019 and only 1.8M in 2020

• Over the past few years, growth in international passengers has been a key driver in Logan’s overall growth

• Logan has been harder hit than other airports because its international travel focuses on highly restricted countries, including Canada, UK, and the EU


Given efficiencies developed during COVID‐19, business travel may not return to previous levels

13

Logan Airport Passengers by Trip Purpose

Leisure60%

Business40%

Business Trip Share of Business Travel

Estimated Loss

Internal Corporate 20% 40% to 60%

Commuting 5% 40% to 60%

Sales/Client Service 25% 0% to 20%

Convention & Trade 20% 10% to 20%

Other 30% Uncertain

WSJ Details: IdeaWorks Consultancy Survey

WSJ: Delta’s hubs in Boston and New York, historically important to business travel, are still among its weakest areas because leisure accounts for the bulk of travel that has returned


14

Overall, passengers have indicated that even post‐COVID‐19 they will be less likely to travel

Close to a third of travelers expect to travel less frequently in the future


15

Structural changes in the aviation industry in response to COVID‐19 will impede aviation industry growth going forward

• Deutsche Bank: “For 2021 and beyond, we anticipate a major deleveraging cycle as the industry will have no choice but to address its significant debt load”

• PWC: “The crippling debt burden that is building across much of the airline industry will require root and branch restructuring in order to bring long‐term solvency and profitability”

• S&P: In 2020, S&P lowered its credit ratings on 11 U.S. airlines, reflecting weakened financial conditions and heightened risk

High Debt Loads and Interest Expenses


16

Structural changes in the aviation industry in response to COVID‐19 will impede aviation industry growth going forward (continued)

Retrenchment to Hubs

• Airlines such as JetBlue, Delta, United, and American are focusing service out of their hub airports and retreating from secondary airports as they seek operational efficiencies and shed unprofitable flights

• Given COVID‐19, passengers are choosing non‐stop flights which are mostly available at hubs, resulting in a shift in demand and thereby service

Aircraft Retirement

• To shed costs, airlines have retired much of their aircraft fleet early, not renewed leases, and deferred new aircraft deliveries – with U.S. airlines entering 2021 with a 19% smaller fleet

• This will hamper the ability of airlines to increase capacity going forward as new airplanes take years to build and deliver

Example: JetBlue


17

Experts project that it will take several years for a full recovery

Other GroupsMIT International Center for Air Transportation

• Recovery to 2019 levels expected in 2027

• The square root symbol ( ) defines the shape of this current forecast in recovery

2023‐2024

2024

Q4 2024

2023‐2025

2023‐2024


18

Massport forecasts a slow road to recovery for Logan Airport as well with full recovery at least 3‐5 years away

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

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4,500,000

JulAugSepOct

Nov

DecJanFebMar

AprMay

JunJulAugSepOct

Nov

DecJanFebMar

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JunJulAugSepOct

Nov

DecJanFebMar

AprMay

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2019 Actual 2020 Actual High Low

FY21

10.4 M

7.8 M

FY22

17.6 M

12.5 M

FY2328.3 M

21.2 M

FY21 FY22 FY23

Forecast Logan Passengers FY21 (Revised), FY22 and FY 23


Chartable Contributions Program • The Charitable Contributions Program is a Board voted program that awards grants monthly to local organizations

• Requests are reviewed by an Employee Evaluation Committee

• Grants of up to $10,000 are awarded to fund programs for youth & education, athletics & recreation, social services, and arts & culture

Commitment to DE&I• Massport set two DE&I goals for the Charitable Contributions Program:

1. Award 40% of the program budget to organizations that serve people of color

2. Award grants to non‐profits and community organizations that are run by people of color

19

FY2021 YTD: Massport Charitable Contributions Program

John F. Kennedy Center, Charlestown

FY2021 YTD Awards• As of FY2021 YTD, Massport awarded a total of over $77k to 18 organizations

o 11 of the organizations predominately serve people of color

o 70% of the total spend was awarded to organizations that serve people of color


20

Airport

• Terminal A – Gate A4

• Terminal B – Gate B8

• Terminal B – Gate B28

• Terminal C – Retail Corridor

• Terminal E – Gate E9

MMT

• Quality Control Center

Seaport

• Legal Harborside (sub‐tenant)

Impact to Massport

PPX Hospitality Brands acquired Legal Sea Foods


21

BPDA Board approved revised project Master Plan for 776 Summer Street on January 14th

Current Proposal Original 2018Proposal

1.68M sf 2.1M sf

65% Office/Lab35% Residential

65% Residential35% Commercial

636 Units46% Rental54% Condo

1,344 Units57% Rental42% Condo

240 Key Hotel 344 Key Hotel

5.7 acres Open Space 4.8 acres Open Space

• General Concept Plan and Uses

• Revised substantially over past 4 years due to community input

• Each individual project/building will undergo separate future review

• Residential use still requires modification of Massport Deed Restriction


• Arrowstreet won Architect of the Year 2020 (Residential) for Ora Seaport

o International competition by The Architecture Community

o First project in Boston to use passive flood barrier gate technology

o Features monumental outdoor staircase, terrace and outdoor seating that doubles as flood protection

• CREW Boston awarded Ora project for its high level of female leadership

• Project Descriptiono 304‐unit apartment developmento Shared 420‐space below grade garageo Approx. 1,500 SF of retailo Completed: September 2020

22

Massport tenant, Ora Seaport, receives awards for design and diverse project leadership


23

The Logan Airport Terminal B Optimization Project receives award from the American Council of Engineering Companies

Terminal B Optimization Project Award

• The Massachusetts chapter of the American Council of Engineering Companies (ACEC) awarded the Engineering Excellence Award for Transportation Facilities to the Logan Airport Terminal B Optimization (TBO) Project

• The TBO was an extremely complicated project that required reconstruction of 21 Gates and hold rooms, two major building additions, a new consolidated TSA security checkpoint, two prefabricated modular roof top fan rooms, a brand new outbound bag room, 21 brand new concessions, two new airline offices, new and renovated restrooms, and excavation of a 400 foot long utility tunnel under the length of Pier B

• All of this construction occurred while the terminal and the airlines remained fully operational


Report of the Director of AviationEd Freni

24


• Airlines required to call back more than 32,000 workers who were furloughed this fall

o Recalled workers must be retained until March 30, 2021

• Airlines are subject to the CARES Act minimum service requirements through March 30, 2021

o U.S. DOT to maintain prior exemptions

25

As part of the second stimulus package, airlines will receive $15B in federal relief


Phase 1

• Will look like 2020, with travel demand deeply depressed and the airline focused on the health and safety of passengers and employees

Phase 2

• Will begin only when vaccines are widely available and passengers, particularly business travelers, return to travel in significant numbers

“While I am optimistic this will be a year of recovery, the continued uncertainty of the pandemic means we'll need to be nimble, ready to adjust our course and adapt to an ever‐changing environment" Ed Bastian, Delta CEO

26

Delta is planning for a two‐phased business cycle for the aviation industry in 2021

Delta’s 2021 Outlook


27

IATA: In near‐term, passenger bookings indicate a weak Q1 before any vaccine boost

Forward bookings down more than 80% year‐over‐year in February/March


Norwegian Insolvency Plan

• Norwegian Air will end all long‐haul services and focus solely on its short‐haul network

• The carrier rapidly expanded into several U.S. markets including Logan Airport

Impact to Massport

• Norwegian Air’s competitive low‐cost services to popular European destinations helped fuel Logan’s international passenger growth

• In 2019, Norwegian Air served over 400,000 Logan Airport passengers

28

The permanent departure of the low‐cost carrier Norwegian Air will affect Logan Airport passengers’ international travel options


New Service to Brazil

• Belo Horizonte is Brazil’s third‐largest metropolitan area, after São Paulo and Rio de Janeiro, with 5.8 M residents

• Eastern Airlines previously announced new flights from Logan Airport to Haiti and the Dominican Republic

• Massachusetts has the second largest Brazilian population in the U.S.

o Around 90,000 individuals according to some estimates

Impact to Massport

• All Eastern services from Logan targeted to start the end of March

• Eastern’s service will complement Logan’s current nonstop service to São Paulo

29

Eastern Airlines continues to grow its network by planning new service from Logan Airport to Belo Horizonte, Brazil


A220‐300 Fleet Replacement

• The aircraft is expected to enter scheduled service by mid‐June

• JetBlue plans to fly the aircraft first on the Boston to Fort Lauderdale route

• The new, innovative A220‐300, which will replace JetBlue’s existing fleet of Embraers, will be an integral part of JetBlue’s fleet and service at Logan Airport

Benefits

• Range and Capacity: Allows JetBlue to not only upgauge at Logan but also increase flight range, enabling it to potentially reach further destinations and new markets

• Customer Experience: Many features will enhance the customer experience including:

o Enhanced cushion comfort and adjustable headrests o Advanced entertainment systemso The widest seats available for a single aisle aircrafto More spacious overhead bins for additional carry‐on bag

capacity

• Fuel and Emissions: The new aircraft are powered by engines that deliver double‐digit improvements in fuel and carbon emissions

30

JetBlue has put into service its new state‐of‐the‐art A220s with initial flights to begin out of Logan Airport

Added Range of A220‐300 from Boston


31

Logan Airport activity levels continue to be impacted by the pandemic – CY 2020 passenger volume down 70%

Logan Airport Activity November, December and CY 2020

November YOY % December YOY % CYTD 2020 YOY %

Passengers 755,877 ‐77% 804,517 ‐76% 12,617,813 ‐70%

Aircraft Operations 14,204 ‐59% 14,174 ‐58% 206,694 ‐52%


590,850546,390

389,844

168,038 170,445134,185

0

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200,000

300,000

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500,000

600,000

700,000

Thanksgiving Christmas New Year's

2019 2020

‐72%‐66%

Saturday before holiday to Monday after (10‐days)

Friday before holiday to Sunday after (10‐days)

‐69%

12/30 to 1/3 (5‐days)

32

Holiday travel through Logan Airport was down about 70% this year

Logan Airport Passengers


33

Logan Airport passenger volumes are declining as we enter a slow winter travel period• 77,940 passengers screened last week (w/e 1/17)• Down 14% over last week• Down 76% over last year• Down 42% over Holiday Peak

Weekly TSA Screened Passengers Since Mid‐April

Actual Psgrs:

Apr 95,000

May 203,000

Jun 438,000

Jul738,000

Aug 702,000

Sep634,000

Oct 782,000

Nov755,877

Dec805,000

• Approximately 66% below break‐even (230,000 weekly passengers)

77K

134K

78K

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

4/19

/202

04/26

/202

05/3/20

205/10

/202

05/17

/202

05/24

/202

05/31

/202

06/7/20

206/14

/202

06/21

/202

06/28

/202

07/5/20

207/12

/202

07/19

/202

07/26

/202

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208/9/20

208/16

/202

08/23

/202

08/30

/202

09/6/20

209/13

/202

09/20

/202

09/27

/202

010

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/11/20

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/25/20

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/6/202

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2012

/27/20

201/3/20

211/10

/202

11/17

/202

1

80,000

Holiday Peak

W/E Sep 27Last Week

Holiday Peak


34

Logan’s passenger recovery still lags the national trend because of its greater reliance on business and international travel

0%5%

10%15%20%25%30%35%40%45%50%55%60%65%70%75%80%85%90%95%

100%

3/1/2020

3/15/2020

3/29/2020

4/12/2020

4/26/2020

5/10/2020

5/24/2020

6/7/2020

6/21/2020

7/5/2020

7/19/2020

8/2/2020

8/16/2020

8/30/2020

9/13/2020

9/27/2020

10/11/2020

10/25/2020

11/8/2020

11/22/2020

12/6/2020

12/20/2020

1/3/2021

U.S.36%Logan25%

• Logan’s relative performance improved during the holiday periods

• However, the recovery gap is re‐emerging post holiday travel: 25% vs 35%

TSA Passengers Screened: 2020 as Percent of 2019

Thanksgiving

Christmas & New Year’s


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

08/01/2020

08/08/2020

08/15/2020

08/22/2020

08/29/2020

09/05/2020

09/12/2020

09/19/2020

09/26/2020

10/03/2020

10/10/2020

10/17/2020

10/24/2020

10/31/2020

11/07/2020

11/14/2020

11/21/2020

11/28/2020

12/05/2020

12/12/2020

12/19/2020

12/26/2020

01/02/2021

01/09/2021

01/16/2021

01/23/2021

01/30/2021

02/06/2021

02/13/2021

02/20/2021

02/27/2021

35

Jan/Feb airline capacity is down approximately 14% compared to December

Daily and Monthly Scheduled Airline Seats at Logan (August 1, 2020 to February 28, 2021)

AUG 1.7M SEP 1.4M OCT 1.5M NOV 1.6M

• Holiday capacity added Nov‐early Jan

DEC 1.7M

• Subject to change• Most bookings within 30 days

JAN 1.4M FEB 1.4M

• January down 14% vs. December


36

Hanscom Field activity continues to slowly rebound

Monthly Aircraft Operations

• December activity benefitted from holiday travel demand and increased by 3% over last year

• Most of the private jet activity continues to be leisure

• Hanscom finished CY2020 with 99,654 operations, down 23% over the prior year

Y‐O‐Y Change ‐75% ‐70% ‐33% ‐22% ‐13% ‐17% ‐9% ‐8% +3%

10.5K

8.4K

9.7K8.7K

0

2,000

4,000

6,000

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10,000

12,000

14,000

April

May

June July

Augu

st

Septem

ber

Octob

er

Nov

embe

r

Decembe

r

2019 2020


• Signature is a Fixed Base Operator (FBO) with headquarters in the UK

• Signature has a large U.S. presence providing aviation services to General Aviation users at airports, including Logan Airport and Hanscom Field

• Global Infrastructure Partners (GIP) is an infrastructure investment fund

Agreement

• Requires support from 75% of GIP shareholders

• GIP has experience in long‐term infrastructure investments making it an “ideal partner” for Signature

• GIP has investments in many aviation and maritime assets overseas including London Gatwick Airport, Edinburgh Airport (owner), and the Port of Melbourne

37

Global Infrastructure Partners (GIP) has agreed to buy Signature Aviation for $4.6B


38

Logan Airport concessions continue to re‐open, but adjust schedules in line with flight activity

150

55

71

Pre‐COVID‐19 October Mid‐January

Open Concession UnitsLegal’s Test Kitchen

New Balance Hugo Boss

Sullivan’s

Monica’s Mercato


“The steep decline in airport traffic because of COVID‐19, coupled with all of the new ways that people are consuming content on their personal devices, has lessened the need for the CNN Airport Network, and we had to make the very difficult decision to end its operation” CNN

39

The CNN Airport Network will be shut permanently on March 31


Report of the Director of MaritimeMike Meyran

40


• Carriers’ pulled capacity throughout 2020 to respond to unforeseen changes in demand by rapidly adjusting capacity

• Shipping lines are likely to keep capacity in check into 2021 to minimize the impact from slowing global trade

• Warehouses are at capacity with increased demands of next‐day delivery

• In Southern California, 100,000 TEUs of cargo on 40+ ships are at anchor waiting to unload

• Strong demand for Chinese exports continued through October and November, picking up pace over past years

• Ocean freight rates hit record levels in January as strong demand overwhelmed carriers and worsened an equipment imbalance

41

Surging demand in recent months has led to port congestion, unreliable ship schedules, and a lack of empty containers in Asia

Outlook 2021: Supply chains searching for a ‘new normal’ after volatile 2020


42

Importers adapted to higher tariffs and trade restrictions in 2020 by evolving their products and distribution channels

Wine & Spirits

• Wine importers are importing bulk wine and bottling domestically

• Conley volumes from the Mediterranean are being closely monitored as wine importers are starting to increase sourcing to other regions such as South America

Wastepaper & Pulp

• Companies are now converting wastepaper into pulp, not subject to the Chinese import ban

• Wastepaper import shifts into new countries in Southeast Asia, Middle East and South America

• These shifts have resulted in Conley’s Y‐O‐Y increase of export pulp shipments to China


43

Conley finished December up 8%, due to extended peak season driven by local consumer demand and exports to China & SE Asia

*January 2021 through June 2021 volumes based on forecasted scenarios

90‐Day Outlook Y‐O‐Y

JAN‐9%

FEB+3%

MAR25%

Conley volumes trending 19% above “Most Likely” forecast for FY2021 December 2020 Y‐O‐Y

Total: 8%

Imports: 6%

Exports: 27%

CY 2020 Results

Total: ‐11%

Imports: ‐8%

Exports ‐3%

Monthly Containers – Actual and Forecast

6,000

8,000

10,000

12,000

14,000

16,000

18,000

FY21 Most Likely133,012

FY21 Budgeted104,000

FY20 Actuals161,171 FY21

Actual + Forecast


44

A strong New England export market in 2020 helped support one leg of the Port’s value proposition – balanced trade

1.8 : 1

3 : 1 3.1 : 12.7 : 1

5.1 : 1

1.6 : 1

1.2 : 1

1.7: 1

3.4 : 1 3.6 : 1

3.0 : 1

6.6 : 1

1.7 : 11.3 : 1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

BOSTON,MA LONG BEACH,CA LOS ANGELES,CA NEW YORK/NEWJERSEY

PHILADELPHIA, PA SAVANNAH,GA WILMINGTON,NC

Import : Export Ratios of U.S. Ports of ArrivalYTD 2019 vs YTD 2020 (Jan. 1 through Nov. 30)

2019 2020


• Since June, over two dozen smaller capacity, luxury cruises failed new safety protocols with 200 positive passengers, and one crew fatality

• Cruise Lines continue to streamline fleets, control burn rate, and delay ship orders to protect their financial future

• The hope is resumption of paid cruises from the U.S. start in early 2021

• More guidance from the CDC will be provided in coming months

45

The cruise industry continues to test sailings on smaller lines in other countries


• The Cruise Passenger Protection Act mandates all cruise ships have a trained doctor on board at all times

• Lines must apply at least 30 days in advance to operate at least one “simulated voyage” for each ship to demonstrate ability to mitigate any onboard risks

• The cruise line must have agreements with ports and local health authorities regarding testing, quarantine and vessels & passengers allowed per day

• CDC order limiting ship sailings to no more than 7 days through November 2021, significantly decreasing port of calls

• U.S. and Canadian government implementation of mandatory COVID test prior to entry

46

In addition to testing, social distancing and PPE, new mandate from Congress and CDC added to cruise resumption criteria


• Carnival March 31, 2021

• Norwegian March 31, 2021

• Princess May 14, 2021

• Holland America April 30, 2021

o Zaandam Boston‐Montreal cruises paused through August

47

Cruise lines are extending their pause on sailings further into the 2021 cruise season, including in the Canada‐New England market

Pause on sailings extended through:


Strategic Plan Implementation

48


Logan Forward Construction Update(Luciana Burdi)

49Visual Materials for Massachusetts Port Authority Board Meeting January 21, 2021

50

Terminal C Canopy & Upper Deck Project –Major Features and Benefits

• Three new faster elevators have replaced the two previous slower elevators

• Added vehicle lanes to reduce traffic congestion and enhance safety

• New translucent modern canopy

• New paving, sidewalks, lighting and architectural finishes at both arrivals and departures levels


51

Terminal C Canopy & Upper Deck Project – Positive Environmental Impacts

• 10,000 sq ft solar panels estimated to generate approximately 152,500kWh annually; enough to power 12 homes and equal to removing 23 cars from the road each year

• Lightweight, long‐span ETFE canopy roofing system saves over 259 tons of structural steel compared to heavier glass roofing systems

• Manufacturing and reduced shipping weight of lightweight roofing system also saves 2,531 metric tons of CO2 compared to heavier glass roofing systems


52

Terminal C Canopy & Upper Deck Project – Completed Project Milestones and M/WBE Participation

Completed Milestones:

• Three new elevators opened for use in June 2020

• Demolition of the former departures level entrance into Terminal C was completed in October 2020

• An additional arrivals curb opened to vehicle traffic in November 2020

• Permanent elevator corridor opened in November 2020

M/WBE Stats:

• Design:o Goal >15%o Current 19.9%

• Construction:o Goal >3.5%o Current 7.1%


53

Terminal C Canopy & Upper Deck Project – Upcoming Milestones

Upcoming Milestones:

• Deliveries for the new canopy steel are scheduled to start arriving at the end of January 2021

• Underground utility scope at the arrivals curbside area will be complete in first quarter of 2021

• Additional arrivals curbs will open to traffic in Spring 2021

• Construction of columns for new departures level roadway entrance into Terminal C are ongoing; new entrance detour to be open to traffic late spring 2021

• Substantial Completion: Late fall 2021

01/12/202112/10/2019


54

Terminal C Canopy & Upper Deck Project


Safety and Security Update

55


COVID‐19 Update(Hank Shaw)


MA Reporting Record High Infections

• Jan 8 had a record high 6,226 confirmed cases vs. a 156.7 low 7‐ day average on July 4

• Current 7‐day average daily deaths is 56.1 vs. 3.7 on 9/9/20

Massport Trends Mirror State

• December was the highest month ever for tests and positive cases

• Most transmissions outside of work

• No operational impact at this time; monitoring and procuring PPE

Vaccine Planning

• Working with Commonwealth to clarify vaccine process for MPA personnel

• Coordinating First Responder vaccine appointments for Massport Police and Fire‐Rescue

57

Record‐setting COVID‐19 Infections for MA, Vaccines Delivered

Commonwealth Cases Average


• Located in the Terminal C Departures Level, pre‐security

• Opened on January 12

• Terminal C location offers PCR and Rapid test, but not blood antibody tests (offered at Terminal E site)

• Open to all passengers and airport staff from 10:00am to 6:00pm Monday‐Friday by appointment

• With the opening of this new site and the existing site in Terminal E, testing is now available 7 days a week at Logan

58

XpresCheck opens second COVID‐19 testing site at Logan Airport


Community Outreach

59


Massport CAC Update(Alaina Coppola and Flavio Leo)


Massport CAC Update

61


• MCAC motion approved for a reduced pandemic budget

• FAA provided a New England Region Update

o Appointment of new Community Engagement Officer

To maintain consistent engagement and communication with communities on aircraft noise concerns in accordance with regional and national policies

To collaborate with airport sponsors on aircraft related noise complaints and issues

o Updated MCAC on RNAV Study, R4L RNAV Environmental Assessment

o Committed to hold a separate, information meeting for the MCAC on the Noise Annoyance Survey before end of comment period

62

Massport CAC – January 14th General Meeting


FAA Noise Annoyance Survey

63


1. Effects of Aircraft Noise on Individuals and Communities• Speech Interference and Children’s Learning• Health and Human Impacts Research

o Impacts to Cardiovascular Health o Sleep Disturbance o Economic Impacts o Noise Annoyance Survey – Released

2. Noise Modeling, Noise Metrics and Environmental Visualization• AEDT noise and air modeling• Noise Screening for NEPA• Environmental Visualization Tool• Supplemental Noise Metrics

3. Reduction, Abatement, and Mitigation of Aviation Noise• Aircraft Source Noise Reduction• RNAV/PBN – Massport/MIT/FAA • Flight Procedures – Massport/MIT/FAA• Helicopter Noise‐ Volpe/NASA

64

On January 14th, the FAA released critical research on noise and community annoyanceNoise Annoyance Survey is part of a broader portfolio of research sponsored by the FAA on Noise and Emissions including research at Logan Airport


65

Overview of FAA Report Analysis of Neighborhood Environmental Survey or the “Noise Annoyance Survey”

• Purpose: update research underpinning the DNL noise metric which informs soundproofing eligibility and environmental triggers

• Conducted 2016/2017: Nationwide survey, largest of this type, using latest scientific methodology

o Included communities around 20 airports (statistically selected)

o Logan was used to help design/pilot survey but not one of the 20 airports included in the survey

o Received 10,000 mail and 2,000 telephone responses


The Study provides curves of community annoyance for different noise exposure levels for each airport in the survey

66


An overall noise annoyance curve was derived from the individual airport annoyance curves

67


68

Several factors may help explain the change seen in the Survey

• FAA attributes change to the following possible factors:

o Updated survey methodology

o Change in the way aircraft operate

o Urbanization

o Increase in‐home work

o Rise of Social Media

0%

10%

20%

30%

40%

50%

60%

70%

50 55 60 65

Percent Highly Annoyedvs. Noise Exposure

Schultz Curve New Research


• Extensive interest by community (including the MCAC) and political leaders

• Along with the Survey Report, the FAA has issued a Notice for Proposed Rule Making (NPRM) to solicit community and industry feedback on their overall research portfolio including the Annoyance Survey

• FAA will take no action until the NPRM process is completedo 60‐day comment periodo Comments due March 15

• No near‐term changes to current regulations or policy related to environmental review and soundproofing eligibility

• In the long run, changes may be made to regulations and policy guidance

Next steps

69


Real Estate and Strategic Initiatives

70


88 Black Falcon Update(Andrew Hargens)


Schedule• Permitting underway (2020‐21)

o Voluntary Article 80: LOI filed 12/10/20o Upcoming MEPA, DEP, TAA

• Construction (2022‐2025)• Certificate of Occupancy (2025)

72

The Davis Companies files 88 Black Falcon Expansion LOI with BPDA

Development Program Gross Floor Area

Existing 376,000

New commercial / lab 339,000

Total proposed 715,000


Significant maritime and transportation improvements included in project

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Operational


Commonwealth Pier Redevelopment Update(Andrew Hargens)


• Total Project Size: 750,000 SF

• Current Redevelopment Schedule:o Commencement: September 2020 o Completion: Summer 2024

• General Contractor:o Turner Construction / Janey (MBE)

75

Commonwealth Pier Redevelopment Progress Report

Fidelity Development: Demolition on schedule (completion in Feb/Mar) –construction of expanded apron, a key design element, has begun (top right photo)


601 Congress Street Update(Andrew Hargens)


Asset Status• Building unoccupied since 2018 when John

Hancock moved to the Back Bay

• Approximately 500,000 SF

Transaction Details• Buyer: BioMed Realty/Blackstone

o Best‐in‐class lab developero Global RE portfolio value: $341 billiono Strong existing relationships should fill

building quickly post‐conversion

• Purchase Price: $362 million

• Closing Date: December 30, 2020

• Use: Labo Full building conversiono 12‐14 month build‐outo Projected completion fall 2022

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Sale of 601 Congress Street: Experienced investor, Blackstone, plans complete lab conversion


The addition of significant life science use in multiple projects will diversify and strengthen Massport’s real estate portfolio

78

28%

21%21%

3%

27%

Office

Lab

Residential

Hotel/Convention

Retail/Restaurant

Maritime & GeneralIndustrial

23%

11%

24%

17%

3%

22%

Projects with significant life science use:• 401 Congress Street, 601 Congress Street, 88 Black Falcon and 645 Summer Street

Existing Portfolio by Sector (9M sf)• Office: 2,180,000 sf • Lab: 100,000 sf• Residential: 1,784 units• Hotel: 1,191 rooms• Restaurant / Retail: 240,000 sf• Maritime & General Industrial: 2,400,000 sf

Future Build Out (12M sf)• Office: 2,780,000 sf• Lab: 1,250,000 sf • Residential: 2,134 units• Hotel: 2,245 rooms• Restaurant / Retail: 350,000 sf• Maritime & General Industrial: 2,600,00 sf

Lab ‐ less than 1%


Audit and Finance

79


Financial Sustainability Plan Update(Lisa Wieland)


Potential Options Targets

1. Federal Coronavirus Relief(in addition to 2020 CARES Act funding)

$ 200 M

2. Revenue Enhancements

3. Liquidity Strategies

4. Expense Reductions

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Massport is pursuing all options to close a $400 million budget gap and achieve financial sustainability

$200 Million with Federal

Coronavirus Relief

Or

$400 Millionwithout Federal Coronavirus Relief


• $27M to $33M is Massport’s estimated share, falling far short of the $200M target

o Funds can be spent on operations, personnel, cleaning, sanitization, janitorial, combatting the spread of the virus at the airports and debt service

o Funds must be obligated by September 30, 2021 and must be used within four years

o Must retain 90% of airport employment after adjustments for retirements and voluntary separations

• $4M to $5M is the estimated share for rent/MAG relief for Massport’s airport concessions

o Must be distributed to airport concessions proportionately based on rent/MAG

o Available until expended

Emergency Coronavirus Relief Act allocated $2B for airports and airport concessions compared to $10B in the CARES Act

Note: Final amounts to be determined by FAA82


Since November, Massport has advanced several options towards closing the financial gap

$0M

$50M

$100M

$150M

$200M

$250M

$300M

$350M

$400M

$450M

Start FY21 FY22 FY23 Target

Aviation Revenue Maritime RevenueCommercial RE Revenue Federal Coronavirus ReliefWorkforce Reduction Debt Restructuring

$0

$70M

$150M

$230M

$400M

Future Actions & Federal Stimulus

$170 M

$14061%

$90 39%

Likely

Expected

83* All figures are approximate

Legend:


2021 Revenue Refunding Bond Issuance(Anna Tenaglia)


Liquidity Strategy UpdateBoard Vote to Approve $300 Million of RefundingBonds to execute a Debt Restructuring and Produce

Budget Relief

85


1. Refinance 2010 Bonds ($79 M) and 2012 Bonds ($151.4 M)

• Potential for $26.4 M of Net Present Value savings and $19 M of budget relief over next two years

2. Refinance Bonds maturing in 2021 ($31.9 M) and 2022 ($36.2 M)

• Taxable bond sale

• New debt schedule will be shaped to provide budget relief

• Approximately $30‐40 million in annual savings expected for budget relief

• Airline rates will benefit from reduced interest expense and a Terminal E amortization reserve is being explored to smooth terminal rates

86

Liquidity Strategy – Refinance approximately $300M of debt to produce budget relief

Bonds to be issued in February:


*Preliminary, subject to change

87

Massport’s debt service profile including refinancing

Outstanding Massport Debt Service after Series 2021 Refunding Bonds

‐

20

40

60

80

100

120

140

160

180

200

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048

2049

2050

2051

$Millions

Restructuring of 2021/2022 Maturities

Advance Refunding of 2012

Current Refunding of 2010

Existing DS

Prior Debt Service

Debt Service


• Notice of Bond Sale posted: January 7

• Three rating agency presentations: January 13‐15

• Board vote to Sell Bonds: January 21o Bond Resolutiono Adopt PFM recommendation

• Price Bonds: Week of February 1

• Close on Bonds: Week of February 15

88

Next steps

(1) Minority owned firm

• Team o Senior Manager: Bank of America (BofA Merrill Lynch)o Co‐Managers: Ramirez & Co.(1) and Jefferies LLC


Parcel H Developer Designation(Andrew Hargens and Tiffany Brown‐Grier)

89


90

Parcel H Site Location & Context


Parcel H Selection Criteria and Objectives

• Diversity, Equity and Inclusion

o Advance and evolve the “Massport Model”

o Integrate minority‐ and women‐owned businesses and individuals into all aspects of the project

• Financial Proposal

o Maximize the value of the site and provide the highest economic returns to Massport

o Provide substantial upfront payment, with balanced long‐term rent

• Design and Public Realm

o Demonstrate design excellence and site‐specific contribution to the public realm, with particular emphasis on MBTA Silver Line facilities

• Ability to Execute

o Demonstrate commitment and capacity to execute

91


• RFP Teaser Issued: February 2019• RFP Issued: June 2019• Building Partnerships Diversity event: October 2019• 7 Proposals received: November 2019

Barnat Development Drew/Longfellow Fallon Company Greystar

• Developer interviews (all 7 teams): February 2020• Short‐list by Selection Panel (3 teams): February 2020

COVID‐19 PAUSE• Follow‐up written questions/responses: July 2020• Second interviews (3 teams): September 2020• Best and Final Offers received and evaluated (3 teams): Nov / Dec 2020

92

Process Overview: RFP Outreach, Issuance, and Responses

Lincoln Property Company Skanska / Capri Trinity Financial


Fallon Company Lincoln Property Company Skanska / Capri

• Strong diversity, equity and inclusion plan components

• Competitive financial proposals in response to BAFO requests

• Interesting design elements that incorporate MBTA station

• Experienced development teams capable of executing a large‐scale project

93

All three finalists submitted compelling proposals


1. Most comprehensive DE&I plan including a detailed retail equity investment approach and the creation of a Life Science & Technology Career Training Center on the Option Parcel

2. Significantly larger upfront payment compared to other finalists

3. Most compelling design and public realm plan, featuring integration of new MBTA Silver Line station into the project’s multi‐level public spaces and uses

4. Commitment to build on spec; institutional equity partner identified

94

Lincoln Properties stands out across all selection criteria

View south on Congress Street to main MBTA station entrance View of project and Life Science Career Center looking west


95

Summary of Lincoln Project Design and Program

• Best‐in‐class life science facility

• 60% Lab / 40% Office use mix

• 730,000 SF total development

• Integrated Silver Line MBTA station with interior and exterior access

• 15,000 SF career training center on Option Parcel atop I‐90 tunnel (included in the project budget)

• More than 120K SF dedicated to public realm (MBTA station, pavilion, upper concourse, retail)

• Commitment to LEED Platinum sustainable design

View Northeast from D Street Bridge and OMNI Hotel

View East on Congress Street


96

Lincoln Team / Diversity, Equity and InclusionInnovative proposal to connect people to life science jobs will evolve the “Massport Model”

Developer Team• Lincoln Property Company• Phoenix Property Company• Boston Innovation Land (MBE) • Boston Collaborative Advisors(WBE)

Design• Arrowstreet / Moody Nolan (MBE) /

Studio Enée (WBE) JV

Construction• Suffolk Construction / General Air (MBE) JV• Elaine Construction (WBE)

Property Management / Operations• Lincoln / UHM Properties (MBE) JV

Diversity Consultant• Juan Sanchez (MBE)

Lincoln Team DEI Plan Highlights

• A majority of the development team leadership is made up of minority and female members

• Boston Real Estate Inclusion Fund (BREIF), managed by Basis Investment Group, will raise diverse project equity and offer retail equity investment

• A Life Science & Technology Career Training Center will create a bridge to jobs in the life science industry, particularly serving populations that have been under‐represented in this sector

• General contractor JV plus Elaine Construction handling interior fit out

• Design team includes more than 40% M/WBE firms

• Unique opportunity for UHM Properties in life science building management


• The Life Science & Technology Career Training Center on the Option Parcel will create a career information and training bridge to jobs in the life science industry, particularly serving populations that have been under‐represented in this sector

• Programs will target opportunities in the emerging South Boston life science cluster• Partners will include several well‐established programs:

o Apprenti: Technology trainingo Just‐A‐Start: IT and Biomedical trainingo Jewish Vocational Services: Adult education and workforce developmento MassBioEd: Life science industry career and education path building

97

Expanding Opportunities in the Life Science IndustryLife Science & Technology Career Training Center

• Lincoln is committed to build and operate for 8 years

• The Center will be connected to life science incubator space


98

Ground RentHighly‐competitive and diverse rent proposal

• Comparable PV to others, but substantially larger upfront payment

• Mix of base rent and high percentage rent provides greatest potential to participate in long‐term project up‐side in South Boston’s emerging life science industry cluster

• Excellent land value

• Rent and other supporting financial assumptions are conservative

Finance Plan • Total project budget: $590M

• Funding sourceso $47M – Developer equity (8% of project cost)o $189M – Secured institutional equity (32% of project cost)o $354M – Debt financing lender TBD (60% of project cost)

Lincoln Property CompanyFinancial Proposal and Capital Stack


99

• New MBTA Silver Line Stationo A majority of station covered and/or enclosed within buildingo Indoor vertical access to second level public concourse with access to inbound

and outbound Silver Line platformso Station integrated with retail, career center, incubation space, bike facilities

• Life Science & Technology Career Training Center on the Option Parcel

• Congress Street Frontage and Public Stairo Ample street level public plaza at entrance to MBTA stationo Active retail along Congress Street frontageo Grand public stair offers visibility and access on Congress Street

Design and ProgramConnectivity to public transit drives integrated site‐wide public realm plan

• Completes “East of D Street” sub‐district with mix of destinations and amenities


100

• Development Teamo Commitment to build on‐speco Proven ability to complete projects under challenging conditionso Strong local project management teamo Majority lab use responds to market and diversifies Massport portfolioo Self‐funding pre‐development costs, all funding in placeo Institutional equity partner secured

• Noteworthy Local Projectso Parcel K (Ora Seaport, Hyatt Place) ‐ 2020 completiono Closed on $60M construction loan for 300 Third Waltham lab project ‐ 2020o Northeastern University (Grandmarc Center) ‐ 2014o Two Financial Center ‐ 2009

Lincoln Property CompanyAbility to Execute


Documents

Massachusetts Port Authority Board Meeting