Fitch Ratings has elevated the rating of the Tucson Airport Authority’s approximate $8.8M senior lien airport revenue bonds to A+ from A and affirmed the $63M subordinate lien airport revenue bonds at A, according to a report issued March 8. The rating outlook on all liens of debt is stable.
Fitch says the upgrade reflects the authority’s low percentage of senior debt relative to overall capital structure, superior net revenue debt service coverage complemented by strong liquidity and short maturity life, with the outstanding senior lien bonds set to mature in the authority’s next fiscal year. Other key ratings drivers including Tucson International (TUS) strong military, government and manufacturing presences and a well-diversified commercial carrier mix.
The airport “benefits from a balanced airline market share of legacy and low-cost carriers serving short- to medium-haul flights. The airport’s two dominant airlines, Southwest Airlines and American, have retained stable market share … and have a long history of serving the airport. Recently the airport gained incremental service from American with daily service to LAX [Los Angeles International Airport], and Southwest commenced a new daily flight to BWI [Baltimore-Washington International Thurgood Marshall Airport] in February 2012.” the report states. Fitch also noted that TIA’s residual airline use and lease agreement allows TAA solid rate-making flexibility and the ability to maintain a stable cost per enplanement, produce consistently strong debt service coverage levels and fund capital expenditures with surplus cash flows.
