DALLAS — Fitch Ratings has lowered the outlook on Colorado Springs Airport debt from stable to negative while affirming its A-minus rating.
“The negative outlook reflects elevated concerns that the cumulative decline in airport passenger traffic that has now extended for three consecutive years will place building pressure on total operating revenues, debt coverage levels, and airline costs,” said the report released Monday.
Standard & Poor’s in March affirmed its A-minus rating and stable outlook. Moody’s Investors Service affirmed its A3 and stable outlook in May 2010.
Fitch cited declines in enplanements of 3.4% in 2008, 6.9% in 2009 and 6.1% in 2010. Officials predict the airport will experience minimal growth in boardings in the near term, with long-term growth at about 2% per year.
The airport at Colorado Springs, about 70 miles south of Denver on Interstate 25, competes with Denver International Airport, 70 miles to the north, one of the nation’s busiest hubs. The two facilities especially compete for the affluent market in Denver’s southern suburbs.
For several years after DIA opened in 1995, Colorado Springs could offer lower fares on some flights, particularly with the upstart carrier Western Pacific, which was based there. That airline is defunct, and DIA can offer two discount carriers, Frontier and Southwest Airlines. The so-called “Southwest effect” has lowered airfares in Denver since the Dallas-based carrier began operating there, and the airline is now DIA’s second largest carrier in terms of enplanements.
Unlike DIA, however, Colorado Springs carries a fairly small debt load of $46 million in revenue bonds. The airport most recently issued bonds in 2007 and 2002 and has no more on the horizon. It defeased the last $1.7 million of Series 1992 debt in 2009. Nonetheless, the city’s coverage on airport debt is expected to fall to a 1.44 ratio this year, according to Fitch. That is below historic coverage levels of 1.62 times or better between 2000 and 2009, analysts said.
The airport completed a renovation of its terminal in 2005 and capital expenditures in the future are expected to go toward airfield improvements.
The airport is expected to benefit from a business park planned to cover over 1,000 acres. Two anchor tenants, Northrop-Grumman and Aerospace Corp. have signed long-term leases and have constructed multi-building office campuses.
Serving nearly one million people in El Paso County, Colorado Springs Airport provides a key service for tourism, the Fort Carson Army Post, the Air Force Academy, and a business community that includes a number of major nonprofits.