Airport Drops to Stable

Standard & Poor’s on Monday revised its outlook to stable from positive on bonds issued by Broward County on behalf of Fort Lauderdale-Hollywood International Airport. The outlook revision was due to recent declines in enplanements and affects $856 million of debt, said a report by analyst Laura Macdonald.Standard & Poor’s affirmed its A-plus rating on the county’s airport system revenue bonds and its A rating on the county’s passenger facility charge/airport system revenue convertible-lien bonds. The ratings are based on the airport’s low cost structure, diversified carrier mix and revenue base, and strong service area economics, offset by weak cash-flow debt-service coverage, Macdonald said.Offsetting factors include the potential for higher capital needs if strong traffic growth continues, which could place pressure on the airport’s low cost structure. The current proposed capital improvement program for fiscal 2008-2012 totals $1.4 billion. The major project in the CIP is the extension of the south runway, for which the airport has allocated $678 million over the next five years. Funding for the CIP is expected to come primarily from future debt issuances totaling $788 million with remaining funds to come from the airport, PFC revenues, and grants.“We expect that management will prudently manage its capital improvement plan while maintaining a low cost structure,” Macdonald said. “Upward rating potential is constrained by the airport’s weak cash flow debt service coverage, which at the same time helps keep the cost structure low.”