Airport Affirmed, Revised

Bucking a nationwide trend of decline for most airports, the rating outlook for Atlanta Hartsfield-Jackson International Airport last week was revised to stable from negative when its credit ratings were affirmed.

Fitch Ratings revised the airport’s outlook to stable while affirming its A-plus rating on $1.5 billion of senior-lien airport general revenue bonds and the A rating on $610 million of passenger facility charge and subordinate-lien general revenue bonds, also known as hybrid bonds.

The outlook revision reflects the airport’s continued strong operational and financial profile, according to a report by Fitch analyst Seth Lehman. It noted that debt service coverage on the senior GARBs was 1.98 times while coverage on the hybrid bonds solely from PFCs was 3.5 times.

“Despite the ongoing challenges in the aviation industry, the airport’s traffic has largely held up well relative to other large hub airports due to continued strong [origination and destination] demand and building international service,” Lehman said. “Enplanements increased by 4.6% in fiscal 2008 and have since come down modestly by 2% to 3% through the first 10 months of the current year.”

An important credit consideration is Delta Airlines’ commitment to the Atlanta market, Lehman added.

Over the course of the past two years, Delta has emerged from bankruptcy and has since merged with Northwest Airlines. Fitch said the combination of both carriers is not believed to have had an adverse impact on Hartsfield-Jackson’s traffic and operations.

Fitch’s said its ratings on the debt reflect the airport’s consistent status as the world’s busiest with more than 45 million enplanements in fiscal 2008, the economic strength of the Atlanta metropolitan area, a steady history of relatively low airline costs, and “a very healthy financial position in terms of coverage levels and liquidity,” Lehman said.

Credit risks center on the concentration risk relating to the airport’s reliance on Delta for 72% of total enplanements, the airport’s high proportion of connecting passengers, and the potential for additional borrowing to complete a new international terminal with an estimated cost of $1.2 billion.

An airport official said this week that debt for new capital and for refunding variable-rate obligations most likely would be sold later this year. The exact amounts have not been determined.

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Transportation industry
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