CHICAGO - Moody's Investors Service revised its outlook on the Kansas City, Missouri airport to positive citing recent revenue and traffic growth.
The rating agency June 20 affirmed the airport's A2 senior and A3 subordinate ratings. The action impacts $230 million of outstanding revenue backed debt from issues in 2005 and 2013 for Kansas City International Airport.
"The positive outlook reflects the expectation that revenue and traffic growth that was seen in fiscal year 2015 will continue, which will increase financial profile commensurate with a higher rating category," Moody's wrote. "The outlook also considers the expectation that additional clarity on the debt needs, construction risk, and cost recovery of the future capital program will be gained within the outlook period."
The rating reflects the airport's dominant market position with minimal competition and a relatively low cost per passenger level which makes it attractive to low-cost carriers. The rating also factors in continued demand for air service as traffic levels weathered a decrease in operations by Frontier Airlines and have shown signs of strong growth trends.
The airport wants to expand non-airline revenue, but the rating considers that financial flexibility is constrained with very low levels of concession revenues. "This could increase the reliance on airlines for future increases in annual debt service after two years of artificially low levels," Moody's said.
The rating also incorporates the potential for the large-scale airport redevelopment plan, but that course is uncertain given the need to have any plan approved by the voters of Kansas City. An advisory group has recommended that the airport build a new state-of-the-art central terminal.
The airport could win an upgrade if positive growth trends continue leading to improved financial margins. The rating agency is also looking for more clarity on how the airport would finance the proposed terminal expansion plan.
The enterprise system is operated by Kansas City and oversees Kansas City International Airport and Charles B. Wheeler Downtown Airport.