"Moody's Reports: Credit Outlook For Us Airports Now Stable"

Thursday, September 23, 2004        
 
Moody's Reports: Credit Outlook For Us Airports Now Stable
DOW JONES NEWS


New York, -- Moody's Investors Service has revised its credit outlook on the
US airport sector to stable following a three-year period of negative and
uncertain outlooks, according to a newly released special report from the
rating agency. As Moody's anticipated, 2004 is proving to be the year in
which both the legacy airlines and low-cost carriers (LCC) have grown
capacity at double-digit rates.

"Combined with low fares, the growth in capacity has resulted in very strong
passenger growth and this in turn has bolstered revenue generation at
airports and bond security," said Moody's analyst Kevin Carney, who authored
the report.

Moody's cautioned that that the airline industry continues to struggle with
unanticipated higher costs for fuel while operating in an anemic passenger
revenue environment. Yet, as the airline industry continues to struggle, the
airport sector has undergone tremendous changes over the last three years
and has performed remarkably well. Airport credit has stabilized based on
increased diversity of revenues, management's control over operating and
capital budgets, and the strength of the underlying origin and destination
(O&D) service area economies.

"Air transportation remains an essential service in our economy and in
general, we believe that because of their near-monopoly status in most
markets, airports are able to withstand periods of significant industry
turmoil," said Mr. Carney.

Moody's has ratings on 157 debt issues at 116 U.S. airports or airport
systems. Of these, 124 are public or underlying ratings and 33 are rated
Aaa, based on the financial claims paying ability of the insurance company
insuring the debt. The median rating for US airport issues has improved to
A2 from A3, since the beginning of 2004. Moody's ratings range from a high
of Aa2 to a low of Caa1. The only two below-investment grade ratings are
assigned to project financings that do not benefit from the broad and
diverse pledge of general airport revenues.

Moody's said that a number of factors have led to the strong rebound in
passenger traffic this year, including lower air fares as a result of the
growth of LCCs, increases in airline seat capacity by both the legacy
carriers and the LCCs, and the overall improving national economy. Moody's
expects this improvement in passengers will continue to positively impact
airport credit over the near term.

In Moody's opinion, airport credit fundamentals remain sound following the
industry turmoil of the last few years. Long term debt and operating
expenses per enplaned passenger have increased yet airports were able to
increase operating revenues. In addition, the increase in operating revenues
does not appear to be borne by the airlines since the median airline
payments as a percent of operating revenues have increased approximately 2%.
Furthermore, although debt service coverage has dropped slightly, the median
is still above 1.60 times.

"In our opinion, as passenger traffic continues to recover and grow, the
financial margins will continue to improve," said Mr. Carney.


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