Fitch Ratings affirms the Metropolitan Washington Airports Authority's (the authority) approximately $5 billion outstanding revenue bonds at 'AA'. The rating affirmation is being done in connection with the substitution of the irrevocable, direct-pay letter of credit (LOC) provided by Regions Bank (currently rated 'A-/F1') supporting the bonds with a LOC provided by Wachovia Bank, National Association, (currently rated 'AA-/F1+') securing the bonds. The authority's bonds are secured by a pledge of authority net revenues. Authority net revenues include revenues generated at both Washington Dulles International Airport (Dulles) and Reagan National Airport (National), plus transfers, if any, from the general purpose fund to the revenue fund, following payment of operations and maintenance (O&M) expenses. The Rating Outlook is Stable.
The 'AA' rating reflects the authority's well-established role as an international gateway airport, strengthened by the continued international service additions at Dulles, the sustained strong and stable financial operations of the airports, the strong and growing air trade area, and the demonstrated ability of management to guide a complex capital program. Offsetting the moderate airline concentration risk is the strong origination and destination (O&D) profile of traffic at both Dulles (62%) and National (81%), and favorable demographic trends within the affluent service area. The rating also reflects the authority's competitive position and complementary service offerings of both Dulles and National and conservative forecasting practices that demonstrate sound coverage of debt service through the capital program. Primary credit concerns include the moderate single-carrier concentration risk at each of the authority airports, the higher cost profile to support the capital construction program (CCP), and the resultant rising costs passed onto the airlines, and risk posed by a debt portfolio with approximately 19.8% variable-rate debt.
For the first sixth months of fiscal 2009 financial results show continued positive trends despite enplanement stagnation, with operating revenues 2.4% higher than same time frame in 2008 and year-to-date operating expenses below budget. However, under review of various stress scenarios that incorporate substantial enplanement declines in the near term and a protracted recovery period, debt service remains above 1.35 times (x). However, projected CPEs are materially higher than currently anticipated, potentially making the airports' cost structure uncompetitive and inconsistent with the current rating level. Through April 2009, enplanements are down system-wide 5.2% when compared with the prior year but Fitch expects new or expanded service to assist in minimizing enplanement declines through the remainder of the calendar year.
For more information on the authority please see Fitch's press release 'Fitch Rates Metro Washington Airport Auth's Series 2009 D-1 & D-2 Bonds 'AA'; Outlook Stable' dated June 2nd, 2009 and available on the Fitch Ratings 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.
Contacts:
Fitch Ratings, New York
Vanessa E. Roy, 212-908-0508
Mike
McDermott, 212-908-0605
or
Media Relations:
Cindy
Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com