The Rating Outlook is Stable.
The downgrade reflects
The Stable Outlook reflects Fitch's expectation that the airport should approach a sustainable base level of traffic once adjustments following the expiration of the Wright Amendment have materialized, and should be able to maintain stable financial margins thereafter.
KEY RATING DRIVERS
Low Historical Cost Profile: The airport's cost per enplaned passenger (CPE) remained moderate relative to peer airports at
Manageable Near-Term Infrastructure Needs: The airport's five-year capital improvement plan (CIP), estimated at
Conservative Debt Structure: All of the airport's debt is fixed-rate with a declining amortization profile. Maximum annual debt service (MADS) of
Low Leverage and Adequate Liquidity: The airport has a very low debt load with debt/O&D enplanements of
--While some traffic losses may continue in the near term, future material erosion in airline operations or further contraction of traffic volume in excess of 10% would likely signal additional credit weakness;
--An inability to support margins from operating revenues, should expenses rise, that impact the DSCR to a level more comparable to lower-rated airport credits; or
--Heightened revenue volatility or declining trends in non-core airport operations, such as the industrial park segment.
The bonds are supported solely by the net revenues of the airport, after the payment of operating and maintenance expenses.
Enplanements declined 5.5% from the prior year to 1.4 million, representing a 19% loss from peak levels in FY2007. Additionally, traffic has continued to decline 5.2% over the first seven months of FY2014. The airport relies heavily on non-airline, fee-dependent revenue sources while its volume is sensitive to national economic cyclicality, employment at nearby
The current airline use and lease agreement, commencing
Operating revenues have grown at a 0.8% five-year compounded annual growth rate (CAGR), while operating costs have decreased at a CAGR of -0.6% over the same period. Based on FY2013 results, operating revenues increased 0.7% from the prior year to
Fitch's Rating Case, which contemplates further revenue and enplanement declines, indicates that net revenue produced from future cost containment and/or higher CPE levels may be required to maintain the DSCR at expected levels. An estimated 30% of combined annual debt service costs and operating expenses are passed through to the airlines through 2016; thus, cost control is critical to continued financial flexibility.
Additional information is available at 'www.fitchratings.com'.
--'Rating Criteria for Infrastructure and Project Finance' (
--'Rating Criteria for Airports' (
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for Airports
Source: Fitch Ratings
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