BRADENTON, Fla. - Standard & Poor's upgraded Lee County, Fla.'s airport revenue bonds to A from A-minus based on continuing improvement in passenger enplanements, strong liquidity and debt service coverage.
The upgrade affects $307 million of general airport revenue bonds that were issued for Southwest Florida International Airport, S&P said Oct. 1. The outlook is stable.
Another $10 million of passenger facility charge bonds are outstanding in a direct loan from Bank of America NA. The Lee County Port Authority governs the airport, whose code is RSW.
S&P said the A rating reflects the airport's "very strong liquidity position" with approximately $116 million in unrestricted cash and investments as of fiscal 2013, which translates into more than 600 days' cash on hand.
In addition to no additional debt plans, RSW also has "excellent airline diversity" that limits exposure to service level changes from any one carrier, with the top three carriers constituting 50% of fiscal 2013 enplanements, according to analyst Adam Torres.
"We believe a moderately high debt burden of $81 per enplanement constitutes a credit weakness," Torres said.
In the last five fiscal years, debt service coverage has ranged from 1.24 times to 1.39 times with the highest coverage occurring in 2011 and 2013. Airport officials estimate debt service coverage was 1.32 times as of June.
Enplanements increased by 3.7% to 3.8 million in fiscal 2013, following a decline in the prior two years. In fiscal 2014, the airport expects about 3.94 million enplanements, which would be the highest since 2007.
"We consider the airport's capital improvement program to be manageable, because it includes no additional GARB debt," said Torres. The 2015-2019 plan totals $146 million, which officials expect to fund from federal and state grants, passenger facility charges, and other revenues.
The only expansion projects are preconstruction work for a parallel runway, and design and construction of an air traffic control tower, for a total cost of about $63 million.
The top three airlines in fiscal 2013 - Delta Air Lines Inc., AirTran Airways, and JetBlue - accounted for 50% of enplanements. The full merger of Southwest Airlines and AirTran would give them the single largest market share at 27%.
RSW has limited competition with the nearest major regional facilities 123 miles north in Tampa and 132 miles east in Fort Lauderdale.
In August, Fitch Ratings cited improving traffic levels when revising its outlook to stable from negative while affirming it's A rating on RSW's bonds.
