CHICAGO -- Cleveland Hopkins International Airport's $60 million of ongoing terminal and parking projects are on time and on budget, airport officials told the City Council in a progress report Nov. 18.
The airport has a five-year capital improvement program that is estimated at $158 million and being funded through grants, existing bond proceeds, or private investment.
Fitch Ratings recently revised the airport's BBB-plus rating for $724 million of rated debt to stable from negative in recognition of its solid rebound in passenger levels. About four million passengers flow through the airport annually.
Passenger numbers grew at an average monthly year-over-year rate of 15% between May and September and are on track to finish 2015 with positive growth in the 5% range, Fitch said. That growth followed 16 months of declines due to United Airlines' sharp reduction in flight operations starting in mid-2014.
"The entry of low-cost carriers backfilling routes and higher parking revenues from non-connecting passengers have helped maintain stable operating revenues," Fitch said. "Furthermore, negotiations continue on an extension of the residual use and lease agreement that expires at year end."
The rating reflects a midsize airport market with uneven traffic performance, high average airline costs, and leverage offset by modest capital requirements, sound liquidity and stable coverage metrics. The recent shift to a regional origination/destination airport has been supported by the entrance of low-cost carriers which has helped diversify the carrier options as the airport has shifted from 68% of its traffic using United in 2013 to only 31% today.
Fitch downgraded the airport in 2014 after United made the announcement it was dropping its Cleveland hub. The airport's rated bonds are secured by a first lien on the net revenues of the city of Cleveland's airport system.
