"D.C. Airports Authority Planning $300 Million Issue"

Thursday, August 7, 2003

D.C. Airports Authority Planning $300 Million Issue
Bond Buyer - The American Banker


WASHINGTON, The Metropolitan Washington Airports Authority plans to issue
$300 million in refunding and revenue bonds this fall, with $238 million
going to refinance existing debt and $62 million to fund capital
improvements and related costs at Washington Dulles International Airport,
an MWAA official said yesterday.

The authority, which also operates Ronald Reagan Washington National
Airport, intends to issue the bonds through negotiation in three series on
Oct. 1, according to Lynn Hampton, MWAA's chief financial officer.

The Series A issue, totaling $185 million, which will be tax exempt but
subject to the alternative minimum tax, includes $123 million to refund
Series B bond anticipation commercial paper notes. The issue will also
provide $62 million in new-money bonds, including $44 million to fund
construction at Dulles and $22 million for capitalized interest for ongoing
projects.

Dulles is currently undergoing a six-year, $2.6 billion renovation that
includes the construction of an underground shuttle train from the main
terminal to the gates and a fourth runway.

Series B, totaling $64 million that will be tax-exempt and not be subject to
the AMT, will refund the authority's Series 1993A bonds. However, MWAA may
decide not to issue the Series B bonds if interest rates continue to rise.

The Series B issue "is real interest-rate sensitive," Hampton said in an
interview yesterday. "That one we might not do if interest rates keep going
up in the next month."

The third issue, Series C, will consist of $51 million in taxable bonds, of
which $12 million will be new-money and the rest will refund the authority's
Series 1993B taxable bonds.

The debt issues have not yet been scrutinized by analysts, but MWAA plans to
meet with the major credit rating agencies in the next couple of weeks,
Hampton said.

Standard & Poor's currently rates the authority A plus with a stable
outlook. Moody's Investors Service has a Aa3 rating on MWAA with a negative
outlook, and Fitch Ratings rates the authority AA-minus with a stable
outlook.

In a brief interview yesterday, Fitch analyst Daniel Champeau characterized
MWAA as a "strong airport credit" with a "proactive and experienced"
management team.

However, the analyst said he will be watching for any credit issue that
comes up at Dulles stemming from financially embattled United Airlines,
which carries 37.8% of the passengers using the airport. United filed for
bankruptcy in December.

Last week United released a statement that said it was "committed to keeping
Washington Dulles as one of our hub airports."

The statement followed a decision by Atlantic Coast Airlines -- which
carries 17% of the Dulles passengers, second behind United -- that it will
sever its ties with United. Atlantic Coast, which intends to become an
independent low-fare airline, operated United's United Express connection
service.

Delta Airlines has the third-largest share of passengers at Dulles with 6%,
followed by American Airlines with 5.5% and Jet Blue Airlines with 3.9%.

At Reagan National, the airline with the largest share of passengers is US
Airways, with 26.5%. US Airways emerged from bankruptcy in March and has not
scaled back service at Reagan National.

Delta has the second-largest number of the Reagan National's passengers with
14.3%, followed by American Airlines with 14%, Northwest Airlines with 8.5%,
and United with 5.8%.


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