C8 The BulleTin • Sunday, June 13, 2021
Airport
Solve these puzzles on C4
Continued from C1
Reumann said he was plan-
ning to make a trip to Bor-
deaux in August but canceled
his plans due to the uncer-
tainty of travel. France may be
opening up, he said, but that
doesn’t mean life is back to
normal. He worries that the
on-again, off-again lockdowns
could cause business closures
during his trip. That morning
coffee and croissant at the cor-
ner bakery in Bordeaux might
not happen if all the bakeries
in town are closed, he said.
“So we will reschedule that
for next year.”
One advantage of foreign
travel, said Reumann, is that
flights are still mostly empty.
That could mean more com-
fortable travel compared to
crowded domestic flights.
“But if you go over, you may
have to quarantine and have
proof of tests and vaccinations,
and a lot of people don’t want
to deal with that,” he said.
Those who do start their
air journey from Redmond
will encounter some improve-
ments at the airport. A 500-
spot parking lot costing $3.5
million was recently com-
pleted. The third TSA line was
also installed to speed up pas-
senger lines through security
checkpoints.
The 45,000-square-foot
operations building was con-
structed at a cost of $14 mil-
lion; it houses heavy equip-
ment like snowplows and
snowbrooms (trucks that
“sweep” the runway). While
snow and ice removal takes
up a lot of time in winter, the
summers are spent doing
pavement maintenance and
painting.
Valentine
Continued from C1
The first is the dividend
yield — the amount of div-
idends you get per dollar of
stock price invested. Histori-
cally the average yield in the
U.S. has been about 4.5%. To-
day, dividend yields in the U.S.
are closer to 1.2%. Yikes.
The second component
that’s contributed to the 10%
historical return is inflation.
In the long run, it’s come in
at about 3% annually. For the
past few decades, inflation has
been below that, but there are
indications that it is picking
up pace right now and how
much (or how little) inflation
the next decade reveals will
have a big impact on stock re-
turns.
The third component
to stock returns is the real
growth of earnings. Over the
long haul, that rate has been
about 1.5%. Companies have
grown profits by that rate, net
of inflation. How well compa-
nies do going forward is im-
possible to guess. Optimists
will peg that growth number
north of 1.5% due to advance-
ments in productivity on the
back of extraordinary benefits
of technology. That’s plausible.
Finally, about 1% of the 10%
annual average stock return
owes itself to the increase in
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Dean Guernsey/The Bulletin
Travelers line up at the Alaska Airlines ticket counter in the Redmond Municipal Airport on Tuesday.
“It never slows down for us;
there is always something de-
pending on the season,” said
Mike Wilcox, operations su-
pervisor at the facility.
Bass also upgraded the air-
port’s HVAC system. It now
includes a new UV lighting
that purifies the air flowing
through the vents.
All up, the airport spent $25
million on upgrades during the
pandemic.
Funds to pay for the up-
grades came with consider-
able help from federal assis-
tance packages, including the
CARES Act. The airport re-
ceived $12 million in funding
and is expecting to receive an-
other $6 million, said Bass.
There were some hiccups,
though. Construction of a $10
million “quick turnaround”
car rental facility was put on
hold during the pandemic.
That could get going again in
the summer of 2022, said Bass.
The facility will include car
washing, detailing and a fuel-
ling depot.
As Redmond Airport moves
past the pandemic, it will be
building on what had been
unprecedented growth. The
airport is now the 115th larg-
est commercial airport in the
country.
Passenger numbers dou-
bled over the five years be-
fore the pandemic hit, from
500,000 each year to one
million. That volume puts
Redmond in the “small hub”
category designated by the
Federal Aviation Administra-
tion. It previously was labeled
a “primary non-hub.” Other
“small hub” airports include
Palm Springs, California, Eu-
gene and Spokane, Washing-
ton.
More passengers mean more
destinations. The newest non-
the valuation of the market
— the aforementioned P/E.
Given how high valuations
are already, it’s hard to see the
multiple continue to expand.
Looking forward in the U.S.,
your estimate for stock returns
then is sum of your estimates
of the four components.
If we think dividend yields
aren’t going to change much
(1.2%) and we assume higher,
but normal, inflation (3%) and
we add that to solid earnings
growth (2%) and no change
in valuation, that assumes the
go-forward return in the U.S.
is about 6% per year.
So what’s the takeaway?
To eke out results above that
6% will require the broad-
est opportunity set possible.
Thus, we have to look over-
seas. However, this does not
mean abandoning invest-
ments domestically.
In our view, the decade
ahead should be decent for
most markets, and the U.S.
market will likely continue to
be a leader. Diversifying glob-
ally will be the added key to
extracting the best the markets
have to offer investors.
stop daily flights will be to San
Jose, California, starting in
September on Alaska Airlines.
San Jose is Redmond’s 12th
destination.
September will also see the
return of nonstop flights to Las
Vegas on Allegiant Airlines.
Chicago, a seasonal flight with
United, is expected to return in
the summer of 2022.
Bass said he is also working
with American Airlines to start
a new nonstop flight to Dallas,
expected in the spring of 2022.
After Dallas, Bass said Minne-
apolis could be the next non-
stop destination.
The East Coast and Hawaii
could also be future destina-
tions, but Redmond would first
need to extend its runway, said
Bass.
“It’s on our plan for the next
10 years,” he said.
e
Reporter: 541-617-7818,
mkohn@bendbulletin.com
e
William Valentine, CFA, is the co-chief
Investment Officer of ASI Wealth
Management of Bend. He and his
wife, Jessica, have lived in Bend since
2000, where they raised their four
sons.
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