Additionally, Fitch has affirmed the 'A-' rating on the WCAA's approximately
The Rating Outlook for both lien ratings is Stable.
The 'A-' rating reflects DTW's central geographic location and essentiality to Delta's system as seen in their fully residual long-term use and lease agreement through 2032. The authority's ability to increase non-airline revenues and control operating expense growth while enplanements have remained relatively stagnant in recent years has helped maintain a stable financial position using internal liquidity despite thin underlying financial performance.
KEY RATING DRIVERS
Revenue - Volume: Midrange
Strong Cost Recovery Structure: Airline use and lease agreements are 100% residual with long-term expiration in 2032 and with multiple airlines beyond the dominant carrier, Delta. CPE was
Revenue - Price: Stronger
Modest Capital Needs: Having recently completed a multi-billion capital program the airport's investment plans are primarily focused on airfield work. The capital program will be funded from a combination of proceeds from previous issuance, grants, and new money borrowing.
Infrastructure & Renewal Risk: Midrange
Variable Rate Debt Exposure: Compared to other airports of its size DTW has a relatively high debt burden with approximately
Debt Structure: Midrange
Moderate Leverage and Liquidity: WCAA's financial performance has been stable in recent years despite the step-down decline in traffic during the recession, as it has been able to pass along costs to carriers through residual agreements. Financial leverage of 8.31x net debt/cash flow available for debt service (CFADS) is comparable to peers while having sufficient balance sheet liquidity of 260 days cash on hand. FY 2013 debt service coverage ratio (DSCR) as calculated by Fitch is 1.14x on the senior lien and 1.05x on the junior lien without the benefit of the sizeable revenue fund balance.
Negative - Exposed Economic Area: The deteriorating condition of
Negative - Hub Loss: A material reduction in, or elimination of, connecting traffic will cause CPE to rise and operating margins to weaken.
The senior debt has a first lien pledge on net airport revenue while the junior debt has a second lien pledge of net airport revenues.
Enplanements have been broadly flat since FY 2009, having grown at a compound annual growth rate (CAGR) of 0.2% since. Traffic declined 0.6% in FY 2013, but through the first 8 months of FY 2014 it has rebounded up 1.7%.
DSCR, as defined in WCAA's debt ordinance, has remained robust in recent years, around 1.60x for the senior lien and around 1.50x for the junior lien. These have been supported by the relatively stable traffic performance, and improved non-airline revenue performance, which grew 1.6% in FY 2013, increasing revenue per enplanement to
Fitch calculates DSCR excluding the impact of revenue fund balances from the ratio, and these have remained stable at historical levels between 1.10-1.15x for the senior lien and around 1.05x for the junior lien - while these may appear tight, they are backed up by the fully residual AULs to 2032 with numerous airlines including not only Delta but also United/Continental,
The airport's FY 2014-19 capital improvement program is moderate at
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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