It’s a curious case; though the Burlington, Vt. airport serves a prosperous city and picturesque tourist destination, it’s one of the few passenger airports to which Moody’s Investors Service has given a speculative grade rating.

Out of the 92 airports that Moody’s rates, it has awarded junk ratings to only two: Burlington and one of the bond liens of Susquehanna Area Regional Airport Authority in Pennsylvania, which operates Harrisburg International Airport.

In November Moody’s affirmed its Ba1 rating with a negative outlook on the airport’s revenue bonds.

As of July 1 the airport expects to have $40.6 million in debt outstanding.

The airport does not draw money from the city government. However, Moody’s took into account its negative outlook on the city in giving the airport a negative outlook.

Moody’s associate analyst Esra Akyol pointed to three primary challenges in explaining the rating.

The airport had debt service coverage below its rate covenant of 1.25 in fiscal 2009 and 2010, Akyol wrote. This evidenced volatile financial performance, she wrote.

It had less than 20 days of cash on hand in fiscal 2011. This is low liquidity compared to Moody’s airport sector median.

Finally, passenger enplanements declined from fiscal 2010 to fiscal 2012 and continued to go down in fiscal 2013.

For strengths, Akyol noted the large education and health care sectors in Burlington. She also pointed to the airport having a diversity of revenues, including significant parking and concession revenues.

Also, she acknowledged that the airport has a diverse carrier mix.

“The fundamental strength of the Burlington economy is incorporated in the rating, coupled with the lack of direct competition that is likely supportive of future increased rates and charges at the airport,” Akyol wrote.

Gene Richards, the airport’s director of aviation, saw things differently.

The airport is about to complete its third consecutive year of meeting its debt service coverage ratio goal of 1.40, he said. During the same period the airport has increased its reserves and reduced reliance on short-term debt.

The airport has improved its amenities, Richards said. It has negotiated new concession contracts that include minimum annual guarantees. The airport has added full time marketing staff to attract new airlines and service, including new Delta daily nonstop service to Atlanta launching Friday that will add about 40,000 seats during the first year of operation, Richards said.

Per passenger spending seems to be increasing, Richards said.

As for the decline in enplanements, “Burlington International Airport is facing the same issues that all small airports around the country are facing, which is a decline in air service as both low cost and mainline carriers consolidate operations at larger airports and downsize equipment,” Richards said.

Burlington has had smaller declines in enplanements from its peak year as compared to competing airports in Albany, N.Y. and Manchester, N.H. While Burlington has seen a 17.8% decline since 2003, Albany has seen a 20.2% decline since 2004 and Manchester has fallen 43.3% since 2005, Richards said.

“We expect enplanements to remain steady or slowly increase,” Richards said.

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