Moody's Investors Service downgraded Alaska Airport System's revenue bonds to A1 from Aa3 Tuesday, citing the slowdown in global air cargo trends.

The rating affects $553.2 million of the system's revenue bonds issued for Ted Stevens Anchorage International Airport, a major air cargo hub, and the Fairbanks International Airport. Its outlook was revised to stable.

"Given the airport system's relatively high leverage, its financial strength has remained constrained by the marked reduction in air freight activity at the airport and a more robust recovery does not appear likely in the near term," analysts wrote in a report.

Moody's said the A1 rating reflects the airport system's strong market position as a major air cargo activity point, as an air transportation hub for the state, and key transportation asset for Alaska, rated at Aaa, and Anchorage, rated at Aa2.

Other credit strengths include a solid liquidity position, and limited future debt requirements for at least the next five years.

Challenges include a concentration in Alaska Airlines for passenger enplanements, above average debt level and airline cost per enplanement, and volatile enplanement levels for cargo traffic.

"The stable outlook is based on the airport system's stable enplanement levels, relatively stable operating revenues, and management's proactive steps to use financial resources to reinforce the debt service reserve fund and to manage airline costs," Moody's said.

Also on Tuesday, Moody's affirmed the Baa2 ratings on the Alaska Industrial Development and Export Authority's $59 million of revenue bonds issued to finance the consolidated rental car facility at the Anchorage airport. The outlook is stable.

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