"Fitch Rates Columbus Regional Airport Auth, Ohio's $32.6MM Rev Bonds 'A'"

Wednesday, September 17, 2003

Fitch Rates Columbus Regional Airport Auth, Ohio's $32.6MM Rev Bonds 'A'


NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns an 'A' rating, with a
Stable Rating Outlook, to the Columbus Regional Airport Authority (formerly
Columbus Municipal Airport Authority), Ohio's (the authority) $32,600,000
Airport Refunding Revenue Bonds scheduled for negotiated sale during the
week of September 29th through a syndicate led by Morgan Stanley. The bonds
are secured by the net revenues derived from the operation of Port Columbus
International Airport (PCIA or the airport) and Bolton Field. Proceeds will
refinance the authority's outstanding 1994 revenue bonds. Fitch also affirms
its 'A' rating for the authority's $88.6 million of outstanding revenue
bonds. 

The 'A' rating reflects the authority's consistently strong financial
performance that is supported by the airport's broad market area which
generates significant origination and destination (O&D) traffic, diverse
carrier mix, modest debt levels, and competitive cost structure. Credit
concerns center on America West Airline's (America West) recent decision to
reduce its service at PCIA and the financial difficulties of the domestic
airline industry in general. The Rating Outlook for the authority is Stable,
based on the quick actions of other carriers at PCIA to institute new
service in response to America West's realignment, the continued growth of
the local market, and management's proactive initiatives to maintain the
authority's balanced financial operations.

Established by the city of Columbus in 1991 to operate the city's two
airports, the authority changed its name in January 2003 to the Columbus
Regional Airport Authority to reflect the integration of the former
Rickenbacker Port Authority, owner and operator of Rickenbacker
International Airport (Rickenbacker), into its operations. PCIA serves as
the primary commercial airport for the Columbus area, while Rickenbacker
largely functions as an all-cargo facility and Bolton Field handles general
aviation. The authority continues to operate Rickenbacker as a separate
financial entity, thus revenues derived from its operations are not pledged
to the bonds. 

PCIA ranked as the nation's 46th busiest airport in calendar 2002, serving
3.4 million enplaned passengers. This represents a 3.6% average annual
increase in passenger volume since 1992, a period that includes a 3.7%
annual decline in 2001 due to the national economic recession and the
aftermath of the events of September 11, 2001. 

Since establishing a mini-hub at the airport in 1992, America West has
historically accounted for the largest amount of passengers at PCIA, peaking
at 21% of enplanements in 2002. However, in March 2003 America West
announced it would reduce service at PCIA to four daily flights from 49 over
a three month period ending in July 2003. Other carriers quickly responded
to America West's retrenchment by adding a total of 22 daily departures. As
a result, the net impact of America West's actions on the airport equaled a
9% reduction in capacity and a 15% reduction in daily flights. Delta
recorded the largest market share in July 2003 at 22%, followed by Southwest
at 16% and American at 15%. 

The authority's hybrid use and lease agreement establishes a framework for
consistently sound financial operations. However, reflecting the downturn in
passenger volume, the airport's net revenues available for debt service
declined in fiscal 2002, with the coverage ratio equaling 1.56 times (x)
compared to 2.22x in fiscal 2001. The airport's cost per enplaned passenger
remained low at $5.19 for fiscal 2002. 

In response to America West's retrenchment, management imposed a 5%
reduction in the current operating budget and deferred $13 million in
capital expenditures. As a result, Fitch expects the authority to maintain
its sound financial position and anticipates slight improvement in the debt
service coverage ratio.

The authority's five year capital program totals $268.4 million and includes
airfield, terminal, and road improvements among all three airports. The
authority plans to finance the program through a mix of federal grants ($87
million), passenger facility charge receipts ($47.2 million), current
resources ($59.7 million) and external financing ($65 million). 

The airport serves as the primary commercial airport for the Columbus
metropolitan statistical area (MSA). The region's 2001 population of 1.6
million represents a 1.2% average annual growth rate since 1990. The broad
economic base, which features a blend of service, government, and
manufacturing, expanded at a 5.8% average annual rate since 1990, compared
to the national average of 5.5%, in terms of total personal income.


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