Dépêches

Fitch Rates Dallas-Fort Worth (TX) Airport Rev Rfdg Bonds 'A+'; Outlook Negative

Dépèche transmise le 26 janvier 2012 par Business Wire

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A+' rating to Dallas-Fort Worth International Airport, Texas' (DFW) approximately $487 million joint revenue refunding bonds, series 2012B (Non-AMT) with an expected final maturity of Nov. 1, 2035. In addition, Fitch assigns an 'A+' rating to DFW's planned $1 million parity, private-placement - joint revenue improvement bonds, series 2012A with a final maturity on Nov. 1, 2014.

Fitch also affirms $3.94 billion in outstanding joint revenue improvement bonds issued by the cities of Dallas and Fort Worth, Texas for DFW at 'A+'.

The Rating Outlook for all bonds is Negative.

KEY RATING DRIVERS

DEMONSTRATED TRAFFIC BASE: The airport is located in a strong primary market area that generates sufficient demand for air service.

FAVORABLE POSITION AND PASSENGER PROFILE: DFW's favorable central geographic location provides for a well-balanced traffic profile for both domestic and international passengers.

FIXED-RATE, LOW COST STRUCTURE: The historically sound financial profile is demonstrated by DFW's competitive cost structure and conservative fixed-rate debt structure.

CARRIER CONCENTRATION: DFW relies on its dominant carrier, Fort Worth-based American Airlines (American; Fitch Issuer Default Rating 'D'), with approximately 85% market share and a high proportion of connecting traffic.

HIGH LEVERAGE: Debt per enplanement is expected to approach $200 in fiscal 2015 or in excess of $450 per origination and destination enplanements when all of the debt to finance the $1.9 billion (inflated dollars) Terminal Renewal and Improvement Program (TRIP) has been issued.

LOWER NATURAL GAS REVENUES: While not pledged to bondholders, natural gas revenues were expected to provide the airport with a source of internal liquidity and reduce future borrowing needs, but due to lower production estimates and prices, the revenue projections have been reduced.

WHAT COULD TRIGGER A RATING ACTION

CHANGES IN AMERICAN'S SERVICE OPERATIONS: American and its principal operating subsidiaries filed for Chapter 11 bankruptcy on Nov. 29, 2011 which may lead to a number of operational changes at DFW.

REVENUE GROWTH NEEDED: The airport's $2.1 billion capital program has been agreed to by the signatory airlines. Should non-airline revenues remain flat after the terminal improvements are completed and the additional borrowing has occurred, DFW's finances could be negatively pressured.

POSSIBLE COMPETITION: Beginning in October 2014, Wright Amendment restrictions related to domestic air service to or from nearby Love Field airport will be removed and any airline will be allowed to operate non-stop service from Love Field to all U.S. destinations. Fitch will closely monitor the effects, if any, on air traffic at DFW.

SECURITY

The bonds are secured by an irrevocable first lien on gross revenues generated by the operation of DFW, as well as passenger facility charge (PFC) revenues to the extent they are specifically pledged to an individual series of bonds. Proceeds of the series 2012B bonds will be used to refund portions of the airport's outstanding series 2000A, 2001A, 2002B, 2002C, 2003A and 2004B bonds for interest rate savings. In addition, the maturity of the bonds will not be extended.

CREDIT UPDATE

On Dec. 2, 2011, Fitch revised the Rating Outlook to Negative from Stable reflecting the potential for elevated risks and uncertain outcomes associated with the bankruptcy of DFW's principal carriers, American Airlines and American Eagle. American and its regional affiliate, American Eagle, collectively accounted for approximately 85% of DFW's 28 million total enplanements in fiscal 2011 (ended Sept. 30). Transfer traffic also represents a relatively high 57% of the airport's total traffic, the majority of which is generated by American.

DFW currently serves an important role in the national aviation system and has a favorable geographic location to support its standing as a Midwestern transportation hub and its use and lease agreement has a 10-year term, expiring Sept. 30, 2020. As part of the agreement, the airlines serving DFW have approved the $2.1 billion capital program. As a result, gate use will be preferential, and if American's passenger traffic declines 10% from fiscal 2010 levels by the time design is complete for Terminals B and C, the projects may be deferred. The airport's debt per enplanement is expected to approach $200 by fiscal 2015 when all of the debt to finance the terminal renewal and improvement program has been issued.

As is common in the early stages of the bankruptcy process, American is expected to operate much of its pre-bankruptcy schedule and fulfill obligations of its use and lease agreements at the various airports where it operates, though there may be some small amounts of pre-petition rents owed. As bankruptcy courts generally allow an airline to continue making payments to the airports it serves, Fitch expects airports will continue to receive payments from American on a timely basis for the near term.

For more information, please see the Fitch press release, 'Fitch Rates Dallas-Fort Worth (TX) Airport Rev Refunding 'A+'; Outlook Stable' dated June 16, 2011 available on 'www.fitchratings.com'.

For additional information on AMR Corp's voluntary filing, please see the Fitch press release 'AMR Restructuring to Boost Industry Revenue Fundamentals,' dated Nov. 29, 2011 also available on 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance' (Aug. 16, 2011);

--'Rating Criteria for Airports' (Nov. 28, 2011).

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648832

Rating Criteria for Airports

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656970

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