ALLEGHENY COUNTY AIRPORT AUTHORITY CREDIT RATING IS AFFIRMED FY STANDARD & POOR’S AND FITCH RATINGS
- S&P keeps positive outlook for future upgrade
PITTSBURGH, PA (August 10, 2011) – The Allegheny County Airport Authority recently received rating reports from Fitch Ratings and Standard & Poor’s, both agencies awarding outstanding bonds with a BBB+ rating. The bonds financed terminal and other improvements at the Pittsburgh International Airport, and are secured by the net revenues generated from the operations of the airport.
Both Fitch and Standard & Poor’s affirmed the Authority’s existing ratings and Standard & Poor’s kept the Authority's rating outlook on positive which means that with continued positive performance, the Airport Authority could achieve a rating upgrade in the future.
“I think is a very successful result based upon the recent events where the Allegheny County Airport Authority has implemented significant cost containment measures despite rising fuel costs and an economic downturn. The ratings agencies recognized that Pittsburgh has been successful in converting from a hub to a market where most begin and end their trips here,” said Glenn R. Mahone, Chairman, Allegheny County Airport Authority.
Fitch Ratings affirms Allegheny County Airport Authority's outstanding $400.8 million Airport Revenue and Refunding Bonds at 'BBB+'. The Outlook is Stable.
Factors influencing this rating include: PIT’s origination and destination (O&D) passenger base has stabilized and is experiencing enplanement growth over the last 15 months (enplanements increased by 2.0% in 2010 and 5.9% for year to May 2011). Enplanement growth has signaled stability after a decade of continuous enplanement decline.
--Increasing passenger share for low cost airlines accounts for approximately one-third of enplanements making the airport price-competitive relative to neighboring airports, namely Cleveland Hopkins, approximately 117 miles away. Carrier service has also remained stable.
--The Authority has moderate debt burden. Debt burden is expected to ease in the upcoming years given the rapid amortization through 2020.
--The Airport Authority has been successful at diversifying revenue sources including contribution from state gaming revenues, customer facility charges (CFC) and a portion of passenger facilities charge (PFC) revenues which go towards reducing direct airline costs, resulting in a stable cost per enplaned passenger.
--The Airport Authority’s agreement with signatory airlines is a fully-residual use and lease agreement that provides adequate financial flexibility. For more information, visit: http://www.businesswire.com/news/home/20110729006211/en/Fitch-Affirms-Allegheny-County-Airport-Auth-Airport.
Standard & Poor's:
Standard & Poor's Ratings Services affirmed its 'BBB+' long-term rating and underlying rating (SPUR) on Allegheny County Airport Authority's bonds outstanding, issued for Pittsburgh International Airport. The outlook is positive.
The positive outlook is based on Standard & Poor’s view of the airport's limited additional debt needs and declining debt burden.
The outlook also reflects the airport's overall financial situation as stable, despite historic service reductions. Southwest Airlines’ and AirTran Airways’ expansions at the airport have enhanced origin and destination (O&D) passenger levels. Scheduled airline traffic for 2010 totaled approximately 4.1 million enplanements (a 2% increase over 2009), of which low-cost carriers -- Southwest, AirTran Airways, Frontier, and JetBlue -- served approximately 33%, and US Airways and its regional affiliates 26%.
The rating reflects:
• Limited additional debt needs as the authority's $254 million 2011-2018 capital improvement program (CIP) is modest.
• Generally sound O&D traffic trends due to a decline in airfares from the airport as a result of low cost airlines’ expansion of low-fare service, stimulating local demand;
• The airport's strong O&D nature, with 93% of total enplanements from its local service area in 2010.
The positive outlook reflects the authority's limited additional debt needs and front-loaded debt service schedule. The outlook also reflects that O&D passenger levels at the airport will continue to improve, providing steady financial performance. For more information: visit http://www.standardandpoors.com/home/en/us .