St. Louis Lambert International Airport received a one-notch upgrade from Fitch Ratings as the city inches toward
Fitch raised the rating on the $180 million of outstanding airport revenue bonds it rates to A from A-minus Tuesday. The airport has another $382 million of debt not rated by Fitch. Fitch revised its outlook to stable from positive at the new rating.
“The upgrade reflects St. Louis Lambert's demonstrated trend of rising traffic levels and sustained robust financial metrics evidenced by stable coverage ratios, declining leverage and moderating airline costs,” Fitch wrote. “Further, STL's moderate capital program should support a continuation of healthy metrics with leverage expected to steadily decline through the forecast period to below 3 times by fiscal 2024 under Fitch's rating case.”
St. Louis Lambert faces limited competition from other airports and modes of transportation and has moderate carrier concentration as Southwest Airlines represents 59% of total passenger levels in fiscal 2018. The airport served 7.9 million passengers in fiscal 2019.
The airport capital plan for 2019-2023 totals $249 million and calls for $83 million in borrowing. The cost per passenger fell to $8.87 in fiscal 2018 from $11.13 in 2017.
The city has been exploring privatizing the airport and issued a request for qualifications from interested private parties last week. Supporters of a possible lease deal say it would both fund airport improvements and free up some funds for city capital spending which is currently prohibited under federal rules for a publicly operated airport that benefits from federal aviation grants.
If the city decides to proceed, it could take a year to finalize a bidding process, secure approval from city bodies, federal authorities, and the airline for a closing about a year out.
Critics, including city Comptroller Darlene Green, say the airport’s improving financial position mean it can finance improvements on its own and they argue that a lease would be too beneficial to private parties.
The city first applied to participate in what’s now called the Airport Investment Partnership Program in 2017. The Federal Aviation Administration launched the program to permit privatization of facilities built with public funds.
Ahead of a refunding earlier this year, S&P Global Ratings raised the airport's rating to A from A-minus and assigned a stable outlook while Moody’s Investors Service affirmed its A2 rating and stable outlook. Moody’s upgraded the airport’s general credit last year.
