The rating reflects the strong demand for air travel in an expanding market, the strategic location of
KEY RATING DRIVERS
SIZABLE TRAFFIC BASE SUBJECT TO CONCENTRATION AND CONNECTING EXPOSURES: DFW is located in a strong primary market area that generates strong demand for air service. DFW has a base of 30.1 million total enplanements, of which 12.8 million are categorized as origination/destination. Further, DFW's favorable central geographic location provides for a well-balanced traffic profile for both domestic and international passengers. The bankruptcy of DFW's leading carrier, American Airlines (85% of enplanements) and American's merger with
STRONG RATE-SETTING MECHANISM: The current airline use agreement (which runs through 2020) allows for timely recovery of costs within all airline cost centers. The agreement also provides for adequate cash flow generation to meet all funding requirements under the bond documents as well as funding for renewal and replacement. Airline costs are currently low for a large-hub airport at
LARGE-SCALE CAPITAL PROGRAM WITH RELIANCE ON ADDITIONAL BORROWINGS: Much of the
FIXED-RATE, LOW-COST CAPITAL STRUCTURE: All of DFW's debt is issued in fixed-rate mode with generally conservative debt amortization. Aggregate general airport debt is projected to peak at
STABLE BUT MORE LEVERED FINANCIAL POSITION: Debt service coverage and liquidity metrics have been sound. In fiscal 2013 (ended
Negative: Enplanement Declines: Losses in total enplanements that signify a change in American's total support at DFW (15%-25% reduction from current levels).
Negative: Lack of Adequate Revenue Growth: Flat or declining airline and non-airline revenue for multiple years.
Negative: Leverage: Borrowing Beyond the Current Plan: Significant additional borrowing beyond the airport's current plan.
Positive: Unlikely given the growing debt burden to support the capital program.
The bonds are secured by an irrevocable first lien on gross revenues generated by the operations of DFW, as well as PFC revenues to the extent they are specifically pledged to an individual series of bonds.
Net proceeds of the series 2014E bonds will be used to refund maturities of the series 2004B and 2007 bonds for debt service savings. Additionally, a portion of the proceeds of approximately
Fitch views DFW as an airport with an important role in the national aviation system and a favorable geographic location to support its standing as a Midwestern transportation hub. Fiscal 2013 operating data indicated positive trends in enplanements (30.1 million), up 3.3 % over the prior year, with growth in both domestic and international passengers. Connecting passengers remain the dominant component of traffic, representing 58% of total passengers. For the first six months of fiscal 2014, the airport is realizing additional traffic growth of about 2.1%, primarily supported by domestic operations with American Airlines. Improvement in traffic is having a positive impact on year-to-date non-airline operating revenues, up 10.7% for the first six months of fiscal 2014.
American Airlines, including American Eagle and its recently merged
The elimination of flight restrictions at nearby city of
Financial performance under the current airline agreement is healthy evidenced by stable debt service coverage levels and strong reserve balances. The ongoing capital programs, including the
The multi-year TRIP plan calls for an estimated
Debt service coverage levels are expected to remain stable near 1.5x (including the use of rollover coverage funds) over the five-year forecast period. In Fitch's view, the overall financial flexibility including the airline cost and debt service coverage stability will depend on both maintenance of current traffic performance as well as steady and timely growth in airline and non-airline revenues. In particular, revenue growth in terminal concessions and commercial development activities will be instrumental to preserving the airport's financial profile. Fitch recognizes that the TRIP enhancements have the potential to increase concession revenue from new and reconfigured concession spaces, increase parking revenue from expanded and improved parking garages, and reduce operating expense through energy and maintenance cost savings.
Additional information is available at 'www.fitchratings.com'.
--'Rating Criteria for Infrastructure and Project Finance' (
--'Rating Criteria for Airports' (
Rating Criteria for Airports
Rating Criteria for Infrastructure and Project Finance
Source: Fitch Ratings
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