NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the rating of Maryland Transportation Authority's (MDTA) approximately $184.6 million passenger facility charge (PFC) revenue bonds at 'A' and approximately $182 million parking revenue bonds at 'A-'. The Rating Outlook on all bonds is Stable.
KEY RATING DRIVERS
Stable But Concentrated Enplanement Base: Baltimore Washington International Thurgood Marshall Airport's (BWI Marshall) enplanement base has demonstrated a relatively strong resilience to the recent economic downturn. The large presence of low-cost carrier service as well as the overall economic strength of the Baltimore-Washington D.C. service area has anchored the traffic base. Concentration risk associated with Southwest (Southwest; Issuer Default Rating 'BBB' with a Stable Outlook by Fitch) service exists, and comprises 72% of total enplanements, but is mitigated to some degree by mostly origination and destination (O&D) base at 73% of total enplanements.
Narrow Revenue Streams on Both Liens: The airport's narrow parking revenue stream is somewhat offset by the airport's moderate flexibility to increase rates, as the last increase was in December 2009. In the case of the PFC revenue bonds, the narrow revenue stream and the limited flexibility provided by the PFC receipts represent the primary risk related to these bonds. PFC collections have been applied to more than 90% of passengers historically.
Manageable Capital Need with Future PFC Borrowing Expected: The airport's capital program, through fiscal 2019 (ended June 30), includes a concourse D/E connector project which is expected to be largely funded with a parity PFC bond issuance as well as PFC pay-go monies. No additional debt expected for the parking lien as facilities are adequate.
Moderate Levels of Financial Leverage and Coverage: Net debt/cash flows available for debt service (CFADS) is estimated at a moderate 2.81x for the parking bonds and 3.48x for the PFC bonds. The airport has historically maintained ample coverage on both liens, with at least 2.37x coverage on the parking revenue bonds and at least 2.93x on the PFC revenue bonds over the last five years (through fiscal 2013).
--Additional leverage on either credit that would result in deterioration of debt coverage ratios to levels inconsistent with the current ratings. In particular, PFC debt service coverage below 2x and leverage in the 6x-7x range would likely result in rating pressure;
--Increased competition in rate setting with offsite parking lots would reduce the airport's parking volume and stress the rating.
The PFC revenue bonds are secured solely by a first lien on the $4.50 charge assessed on all eligible enplaning passengers at the airport. The parking revenue bonds are secured by all revenues from all airport parking facilities payable to the Maryland Aviation Administration (MAA) by the parking concessionaire.
BWI Marshall's enplanements grew at a compounded annual growth rate (CAGR) of 1.2% between fiscal 2008 and 2013 reaching 11.3 million. Enplanements were essentially flat declining at only 0.4% in fiscal 2013 over the previous year.
The airport's CPE, based on unaudited year-end results, is estimated at approximately $9.50 in fiscal 2013, below both Dulles and Reagan. The airport's favorable cost structure helps to offset concern regarding the presence of several competing airports in the service area.
The airport has 24,700 parking spaces. The parking rate structure introduced in December 2009 has yielded strong cash flow from parking operations, with debt service coverage of 3.53x in fiscal 2013, an increase from 2.82x coverage in fiscal 2012. The contract with the parking concessionaire, Maryland Parking Limited Partnership (MPLP), was executed in January 2011 and expires in December 2014. Occupancy levels average approximately 50%. The five operators of the off-airport parking lots have lower parking rates and occupancy rates.
As the airport currently levies the PFC at the maximum $4.50 rate, total revenues generated from the charge are dependent on the level of passenger traffic at the airport. PFC collections for fiscal 2013 totaled approximately $48.5 million, an increase of 4.0% from fiscal 2012, and provided 2.93x coverage. Under stressed 10% reduction enplanement scenario, the minimum coverage is estimated to drop to a lower 2.5x over the medium term.
The airport's fiscal 2014-2019 capital improvement program (CIP) totals $655.2 million. The largest project is a concourse D/E connector with an estimated cost of $125 million that will be funded through mix of PFC bonding and PFC pay-go monies.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--Rating Criteria for Infrastructure and Project Finance (July 12, 2012);
--Rating Criteria for Airports (Nov. 27, 2012).
Applicable Criteria and Related Research:
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for Airports