Los Angeles is a Jobs Over-Achiever and Minneapolis MAC Airport Preview

Categories: Commentary, Uncategorized |

September 8, 2014

This week we update an analysis of job growth by county and preview Minneapolis-St. Paul International airport deal with a focus on the economic strength of the O&D market.

Los Angeles County Job Growth is Strongest Contributor to US

S&P lifted its outlook to positive for the City of Los Angeles last week.  One of the factors cited was the city’s improved unemployment rate.  This news leads us to revisit an employment analysis we did several months ago, which examined job growth in individual counties and examined their contribution to the growth rate nationally.

The chart below plots each county’s fraction of the US population v. the county’s contribution to the nation’s overall job growth. This comparison allows us to identify overachievers and underachievers on the job front.

12-Month Employment Change in the 50 Largest US Counties

(July 2013 to July 2014)


Source:  DIVER Analytics, DIVER Data Solutions, BLS

The gray line represents a “neutral” contribution — a county’s contribution to US job growth equal to its share of the US population.  Counties above the line are “overachievers” (contributing proportionately more to the nation’s job growth) and those below the line are underachievers.

Los Angeles County continues to be an overachiever.  LA County represents 3% of US population and accounts for 7% of US job growth over the last year.  Harris, TX; Cook, IL; and Maricopa, AZ are other overachievers.  Cook’s strong showing is especially notable.  Cook’s employment performance had been lagging relative to the nation.

Moving from county data to city data, we see that, in addition to the city of Los Angeles, other cities in the area also have improving jobs markets.

Los Angeles Area Cities Unemployment change

(2013 to 2014)

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Source:  DIVER Data Solutions, US Census Bureau, BLS

Min Mac Airport has Strong O&D market, but De-hubbing Risk

Minneapolis-St. Paul International Airport  (MSP) is coming to market this week with $274mm Subordinate Bonds.  MSP is a large, hub airport (46% O&D).  MSP’s primary carrier is Delta (75% enplanements).  Delta’s presence at MSP derives from its merger with Northwest Airlines in 2008.

Minnesota DIVER Geo Scores by County

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Source:  DIVER Analytics, Map Module, DIVER Data Solutions

The economy of Minnesota and the counties in MSP’s O&D market have been strong.   The average Geo score for the counties in MSP’s service area is 7.9.

Minneapolis-St. Paul International Airport

Service Area DIVER Geo Scores

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Source:  DIVER Analytics, Data Access Module, DIVER Data Solutions

As with many US airports, MSP’s passenger enplanements dropped dramatically beginning in 2006.  Enplaned passenger growth has been positive for the last few years.  Because of this growth and more conservative (realistic) assumptions, Jacobs Consultancy’s 2010 enplanement forecast is the first in many years that has a chance of being on target.

Minneapolis-St. Paul International Airport

 Total Passenger Enplanements

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(Actual and Forecast)

Source:  MSP. DIVER Data Solutions

The most significant risk to MSP’s future enplanements is Delta’s continuation of its hub at MSP.  In order to ease approval of its merger with Northwest, Delta made certain commitments (Hubbing Covenant) to maintain service levels at MSP.  The Hubbing Covenant is part of Delta’s Lease Agreement, which expires 2020.

In a somewhat unusual arrangement, two of Delta’s US hubs are in the upper Midwest:  MSP and Detroit Metropolitan Wayne County Airport (DTW).  Delta’s network strategy is to route passengers going east (US East Coast and Europe) through MSP and passengers going west (US West Coast and Asia) through DTW.  Delta’s recent efforts to bulk up its Asia presence in Seattle are more likely to impact DTW than MSP.  Possible knock-on impacts to MSP should be monitored.

MSP’s current Cost per Enplaned Passenger is a very reasonable $6.74.

Fun Map of the Week

We have always felt strongly that combining good data with sophisticated mapping technology can create powerful visual stories that enhance analysis.

To mark the start of the NFL regular season, Facebook recently compiled data regarding fan loyalty to NFL teams and mapped the data by county.

We acknowledge that the connection to muni credit is tenuous, but take comfort that the prevalence of stadium financings in the muni market allows us to claim some relevance for this map.

NFL Fan Loyalty by County

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Source:  io9.com, Facebook

This week, Gregg and LK, our Director of Finance, will be in NYC at the AGC Partners’ Conference on Tuesday. A few other members of the Lumesis team will be in NYC that day as well.


Have a great week,

Mike Craft
Managing Director, Credit, Lumesis, Inc.


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