Traffic at the airport carrying the code FAT has thinned, leading Fitch Ratings Monday to move its outlook on Fresno airport revenue bonds from stable to negative. The BBB-plus rating on about $60 million of outstanding bonds was affirmed.
“The negative outlook reflects growing concerns that recent weakness in economic activity in the air trade service area coupled with developing, although not severe, downward trends in passenger traffic may result in a higher than previously anticipated airline cost profile and weaker financial flexibility,” according to a Fitch news release.
The bonds are secured by a pledge of net revenues from the Fresno Yosemite International Airport, with eligible portions of the outstanding debt receiving additional support by revenue from passenger facility charges and customer facility charges.
“The downturn in enplanements is now weakening PFC, CFC, and other non-airline revenues to levels below the 2007 financial plan at the same time the debt service associated with the series 2007 bonds comes on line,” Fitch said. “As revenues are pressured and financial flexibility narrows, availability to provide subsidies narrow and create upward pressure on the cost per-enplanement and downward pressure on debt service coverage ratios.”
Airport management has been proactive in responding, according to Fitch, which noted that the airport’s credit profile is also boosted by modest capital needs going forward.
“The affirmation of [the airport’s] BBB-plus rating is a reflection of our success in managing our business despite current economic challenges facing the air service industry and most others,” aviation director Russell Widmar said in a statement. “I am confident we will continue to be successful in meeting our financial objectives.”
