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Fitch Affirms Lima Airport Partners S.R.L Sr. Notes at 'BBB'; Outlook Stable

Dépèche transmise le 1 février 2012 par Business Wire

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the 'BBB' rating on Lima Airport Partners S.R.L.'s USD164 million senior notes due in 2022. The Rating Outlook is Stable.

KEY RATING DRIVERS

SIGNIFICANT GEOGRAPHIC FUNDAMENTALS: Lima Airport Partners (LAP) serves one of the largest metropolitan areas in Latin America with a robust enplanement base. Located in the northern region of the South American cone, LAP principally acts as origin and destination (O&D) airport and offers a convenient platform for connecting flights across the continent with limited competition.

STRONG HISTORY OF TRAFFIC VOLUMES: A balanced mix of business and leisure travel underpins the stability of passenger traffic. Numerous air carriers consider LAP as a tactical HUB in an attempt to increase load factors. A combination of a stronger domestic air traffic demand and the accumulation of over 90% of total international traffic to Peru further sustain firm traffic volumes.

MODERN FACILITIES MANAGED BY EXPERIENCED OPERATOR: Recent investments to renovate the airport's facilities allow LAP to schedule a larger number of flights and to increase cost savings from operations and maintenance. Successful commercial operations and adequate facilities maintenance reflect the global expertise of the reputable operator.

CONSIDERABLE CARRIER CONCENTRATION: Higher frequencies from limited number of airlines continue to take place, increasing the exposure to counterparty risk. A single airline constitutes over half of the domestic traffic at LAP, and two carriers alone capture nearly one third of the international demand. Counterparty risk is partially mitigated by the leading airlines' global scope, continued growth and regional diversification.

MODERATE LEVEL OF LEVERAGE: Revenue generation is adequate for the level of debt. Revenues are projected to continue surpassing projections going forward, providing LAP with greater financial flexibility. Strong margins positions LAP in a more favorable situation to overcome external adverse events.

WHAT COULD TRIGGER A RATING ACTION

--Material increase in Net Debt to EBITDA may reduce financial flexibility;

--Revenue contraction from a severe and sustained reduction in passenger traffic;

--Significantly lower operating margins resulting from higher operating and/or major maintenance expenses.

SECURITY

The notes are secured by all revenues collected in connection with the services and facilities furnished by LAP, all assets including all the issuer's rights under the Concession Agreement pursuant to the Trust Agreement.

CREDIT UPDATE

The airport continues to benefit from its location and infrastructure facilities resulting in higher domestic, international, and cargo levels. Stability on passenger traffic is underpinned by an adequate mix of leisure and business travelers.

In 2011, international traffic grew by 14% and generated nearly 75% of the total aeronautical revenues. Concurrently, domestic traffic grew 15% in the same year, marking for the first time nearly 51% of the total traffic volume and highlighting greater consumer demand towards air transport over other modes. In the aggregate, total passengers transported at LAP increased 15% over 2010.

Fraport's global expertise continues to maintain the airport in optimal conditions, allowing for more efficient services and keeping operating expenses relatively stable. Operating expenses (opex) increased by 19% in 2011, preserving an adequate balance with the airport's overall performance.

Total revenues' five-year compounded annual growth rate (CAGR) reached 14% in 2011. Meanwhile, total passengers' CAGR was 12% for the same period. Consistent with previous years, this level of growth in both revenues and traffic has surpassed initial projections. Fitch expects a continuation of growth in revenues and traffic going forward, albeit at a slower pace.

International traffic was primarily driven by South America, volume which accounted by 45%. U.S. international traffic participation represented 21% followed by Spain, Panama and Mexico with 9%, 5% and 4% respectively. Fitch believes regional market participation is adequately diversified.

Apart from passenger traffic, other favorable revenue stream is Cargo. Cargo activities at the airport increased by 5.5% over the previous year, transporting nearly 300 thousand tons. Cargo movements at JCIA represented approximately 96% of the country's total cargo in 2011. Roughly, 12% of cargo is domestic and 88% international.

Tariffs remained constant and include the revised x-factor established by: Organismo Supervisor de la Inversion en Infraestructura de Transporte de Uso Publico (OSITRAN) in 2009. Fitch expects the new x-factor, for the 2014-2018 period to be publicly announced in 2013.

Additional leverage is projected to be issued to fund the capital expenditures (capex) program which includes the construction of a second runway. As of today, the airport's surrounding areas is under an expropriation process performed by the Peruvian Government, and expected to finalize by February 2013. As established by the Concession Agreement, LAP will have five years to complete the construction of the assigned works, after 100 percent of the expropriation land is received. Fitch understands that the expropriation process is on schedule and, therefore, additional leverage is considered in the agency's projections and analysis.

The affirmation of the 'BBB' rating is supported by the combination of a low net debt to EBITDA ratio, currently at 2.8 times (x), and strong debt service coverage ratio projections. In line with LAP's revenue profile, and according to projections, additional leverage would be expected to result in a net debt to EBITDA ratio peaking near 4.5x by 2017 to maintain adequate financial flexibility.

The JCIA Concession was granted by the Ministry of Transportation, Communications, Housing and Construction (MTC) of the Peruvian Government which expires in 2031, nine years after the maturity of the rated notes, and with an automatic right of renewal for additional 10 years.

The fixed-rate notes were issued by LAP under a 15-year tenure, with expected maturity in 2022, and secured by revenues collected on Lima Airport pursuant to the concession.

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 & Project Finance' (Aug. 16, 2011);

--'Rating Criteria for Airports' (Nov. 18, 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

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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