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Fitch: Near-Term Recovery Unlikely for U.S. Airports, Outlook Remains Negative

Dépèche transmise le 24 septembre 2009 par Business Wire

NEW YORK--(BUSINESS WIRE)--Given expectations for a continued state of weakness in the U.S. economy coupled with the ongoing capacity trimming actions by the major airlines, Fitch Ratings believes that any brisk near-term recovery for U.S. airports is unlikely. In a special airports performance report released today, Fitch maintains its negative outlook on the U.S. airports sector until the pressures across the aviation sector begin to show broad signs of stabilization. Heading into the final months of 2009, most U.S. airports will likely have experienced or will be facing consecutive annual declines in passenger traffic, a key driver affecting credit quality.

"While there is some indication that the rate of traffic loss has started to moderate, some of the ease in recent passenger traffic declines may be more reflective of the abundance of deep discounted airfare being offered by U.S. carriers," said Seth Lehman, Senior Director at Fitch. "In other words, traffic stabilization could be more of a symptom of unsustainable airfare pricing promotions. In turn, the leisure traffic component is generating demand, while in our view, the core business-based travel remains fundamentally weak and leisure demand could moderate should airfares move higher."

According to the report, the financial challenges of the domestic carriers coupled with the current economic environment has started to impact U.S. airports as seen in the growing number of rating actions taken on U.S. airport credits in recent months, which illuminates the ongoing challenges facing the sector. Since the start of 2009, there have been six rating downgrades and seven Negative Outlook revisions on U.S. airport credits. During this time, no airport was assigned either a rating upgrade or a Positive Outlook, both of which would indicate an improvement in credit quality. The recent rating actions are a sharp contrast to the credit trends in the past and there could be further actions in the near term as U.S. carriers rationalize their capacity and adjust strategy.

Fitch believes that over the next several years, airport credits will likely be driven by a combination of airline capacity rationalization, consumer spending patterns, business sentiment, and airport management in a dynamic environment. Fitch expects further differentiation in airport credit based on traffic and financial performance than seen in the earlier part of the decade. For example, Fitch sees well-positioned primary hub and international gateway airports as leading performers as a group while secondary hubs, small markets, and reliever facilities face the most pressure.

The special report 'U.S. Airports: Seeking Stability in an Uncertain Airline Market' is now available on Fitch's web site at 'www.fitchratings.com'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, '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.