Moody’s Investors Service announced Wednesday that it has changed its outlook for the airport sector to stable from negative, where it had been since August 2008.

“The projected modest economic growth in the US and global economies should support enplanement and subsequent revenue increases, although the modest growth also exposes the airlines to downside risks,” said Moody’s analyst Earl Heffintrayer, the lead author of the report. “Better than expected operating results in 2011 and 2012, however, provide some cushion for minor weakening in airport enplanements, should they occur.”

The report notes that airports in Moody’s portfolio have seen some improving economic metrics over the past year, with both the median debt-to-enplaned passengers ratio and median debt service coverage continuing to head back towards levels seen before the great recession in 2008. Both those ratios remain 10%-15% below previous levels, though airports have generally maintained strong cash reserves, Moody’s said.

Though airline financial health has improved thanks to stabilizing fuel prices, most other metrics remain constrained.

But one of the biggest risks for airports remains, despite Congress’ passage of a Federal Aviation Administration funding law last year, is possible federal funding cuts.

“A negative for airport credit quality is that federal funding of airport-related activities remains uncertain,” Moody’s said. “Although the long-term FAA reauthorization bill passed in 2012 provides for stable funding levels, these levels are currently exposed to across-the-board cuts from sequestration, debt ceiling, or budget negotiations.”

The air transport sector would be among the hardest hit under the potential sequestration cuts, which are slated to take effect Friday in the absence of last-minute congressional action to avert them.

Transportation Secretary Ray LaHood told airport executives and industry groups earlier this week that the FAA is preparing to slash $600 million from its operating budget, and warned that the resulting shortages of manpower in air traffic control towers could lead to fewer flights.

“If control towers were closed, we would expect smaller airports with larger airports nearby, such as Augusta, Ga., Regional Airport or Bishop, Mich., International Airport Authority to be most affected,” Moody’s stated in its outlook.

Taking U.S. macroeconomic factors into account, the agency expects passenger enplanements, an indicator of bonding revenue, to grow around 2% in 2013, the report concluded.

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