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Moody's Negative on Milwaukee County's Mitchell Airport

Moody’s Investors Service has revised its outlook on Milwaukee County’s general airport revenue bonds to negative from stable due to recent declines in passenger levels as airlines revamp service at General Mitchell International Airport.

At the same time, the agency affirmed the airport’s A1 rating on approximately $200 million of outstanding GARBs.

The airport has seen significant enplanement declines over the last year that are expected to continue in 2013 as Frontier Airlines pulls down its hub. Southwest Airlines’ expansion has helped offset some of the impact of Frontier’s loss. 

“The outlook change also reflects the uncertainty around Southwest/AirTran’s final presence at the airport as it continues to reconfigure its routes nationally, especially noting their large presence at nearby Chicago airports,” analysts said.

The airport has a relatively stable medium sized origination and destination market with some competition from the airports in Chicago to the south and average debt service coverage. Analysts noted that recent enplanement volatility is likely to settle at a level experienced in the mid to late part of the 2000’s.

The airport this month raised its passenger facility charge to $4.50 from $3.00 to provide additional funds for future capital improvements. The airport had a cost per enplanement level of $5.43 last year but that is expected to rise to $8.14 this year.

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