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Fitch Affirms Greater Orlando Aviation Auth, Florida's Revs at 'AA-'; Affirms Sub Lien at 'A+'

Dépèche transmise le 15 mars 2011 par Business Wire

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed its 'AA-' rating on the outstanding $1.1 billion in senior revenue bonds, and its 'A+' rating on the authority's $6.4 million outstanding subordinate revenue bonds issued by the Greater Orlando Aviation Authority, Florida (the authority, or GOAA). The Rating Outlook on all bonds is Stable. For more information, please refer to Fitch's release on GOAA from Oct. 21 2010, available at www.fitchratings.com.

In addition, Fitch withdraws its ratings on the authority's airport facilities refunding revenue bonds, series 2010C and 2010D. The ratings are withdrawn because the bonds were never sold.

Rating Rationale:

The ratings reflect:

--The airport's high level of origination and destination (O&D) traffic, which has shown signs of steady recovery in both fiscal 2010 and the first quarter of fiscal 2011;

--A well-diversified mix of carriers including a strong presence of low-cost carriers;

--Sound financial operations with diverse sources of operating revenues and the benefit of a hybrid rate-setting airline use agreement which provides adequate coverage protection;

--A flexible capital program with modest future borrowing requirements of $93.5 million and available passenger facility charge (PFC) funds for pay-go capital projects;

--A competitive airline cost structure.

Rating risks are centered on the tourism and leisure component of the air trade service area representing a meaningful component of the overall demand for travel at the airport.

Key Rating Drivers:

The rating is based on Fitch's expectation that airport traffic operations will continue to stabilize over the next one to two years, despite the Southwest/Airtran merger, and that the authority will maintain its current strong financial and rate-setting flexibility. Fitch also expects the five-year capital plan will require only modest additional debt in the near term, and that management will continue to proactively manage its program.

Security:

The bonds are secured by a pledge of net revenues generated from the operations of the airport. The indenture defines net revenues to include all income and revenue received by the airport, less operation and maintenance expense. PFC revenues limited to a maximum of 1.25 times (x) annual debt service for PFC-eligible projects financed through airport revenue bonds are also pledged.

Credit Summary:

The airport's market base is structurally sound and expanding. While the tourism and leisure component of the Orlando area economy experienced weakness through the downturn, contributing to a 7.9% reduction in passenger traffic levels during fiscal 2009, more recent data indicates this trend is moderating. Passenger levels for fiscal 2010 finished up 2.0% above the prior year, and enplanements for the first quarter of 2011 through December 2010 are up a further 8% over the same period in 2009. This increase reflects both renewed demand for travel by passengers and new service introductions by the airlines. Results for 2010 exceed forecast levels at Fitch's last review (a 0.3% decline was expected for fiscal 2010). Prior to fiscal 2009, Orlando had been one of the strongest growth markets in the U.S. in terms of enplanements. Fitch's rating considers the tourism and discretionary nature of the air trade area that may result in periods of enplanement fluctuations. It is important to note that a steady rebound in passenger growth may necessitate construction of a second terminal facility. The authority has indicated that this investment would be warranted once annual passenger traffic reaches 50 million. Given the recent slowdown in airport operations, the future terminal project is not planned to require financing or begin construction until after the current capital planning period ends in 2016.

Improvements in passenger activity have contributed to strong financial performance. Based on unaudited financial statements, operating revenues for 2010 are up 3.9% over 2009, while unaudited operating expenses are $183 million, 5.3% lower than the previous year. Resulting debt service coverage levels for fiscal 2010 are 1.61x for senior bonds and 1.46x on total debt. These results are higher than both 2009's results and Fitch's expected coverage levels at last review. The authority continues to maintain strong flexibility with over $300 million of unrestricted fund balances, or 638 days cash on hand, and a comparatively low signatory cost per enplaned passenger (CPE) level of $4.16 in 2010, down from $4.51 in 2009 figures; Fitch had previously anticipated an increase for 2010. Both the cash reserves and the CPE levels have been well managed over the past five years and through the downturn, with the airport generating significant revenues from non-airline sources including concessions and PFCs.

In October, Fitch assigned ratings to GOAA's series 2010 C and D bonds, with proceeds meant to refund $70 million of 1999A and $11.5 million of 1999B bonds. Due to changes in market conditions, at the time of the intended sale GOAA's internal present value savings thresholds were not met; as a result the series 2010C and D bonds were never sold. The series 1999A bonds will remain outstanding, pending changes in the market which make a refunding economical. For the series 1999B bonds, GOAA is entering a long-term senior bank loan with Bank of America. The loan is governed by the same legal resolutions and covenants as the senior bonds it will replace. The loan is for $6.355 million and runs to 2028; GOAA will use unspent reserves to refund the balance of the 1999B bonds. The deal is expected to provide 4% savings to GOAA.

Additional information available at www.fitchratings.com.

Applicable criteria and Related Research:

'Rating Criteria for Infrastructure and Project Finance', 16 Aug., 2010;

'Rating Criteria for Airports', 29 Nov., 2010.

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548345

Rating Criteria for Airports

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=578745

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Business Wire

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