Moody's Investors Services said it has upgraded to A3 from Baa1 the rating of the Allegheny County Airport Authority, Pa.'s airport revenue bond.
The outlook on all bonds is revised to stable from positive.
The rating upgrade to A3 from Baa1 is based on an increasingly economically varied origination and destination market, strong management that balanced the demands of protecting financial margins while attracting new air service, and the increased liquidity provided by an upfront payment from a third party operator for natural gas drilling rights.
Additionally, non-airline related revenues from royalties from natural gas on the property will be applied against the rate base to lower airline costs and will provide additional unrestricted liquidity to pursue capital projects at the airport.
The rating is still constrained by the airport's high operating costs due to stranded assets from the US Airways de-hubbing and an underfunded county-wide pension system which could place upward pressure on labor costs in future years. However, the authority is currently at peak annual debt service with annual requirements falling significantly after FY2017.
