Fitch Affirms Manchester NH Airport at 'BBB+'; Outlook Negative; Withdraws Ratings

NEW YORK--()--Fitch Ratings has affirmed Manchester, New Hampshire's $167 million airport revenue bonds at 'BBB+' with a Negative Outlook and has withdrawn the ratings.

The affirmation takes into account Manchester's weakening asset profile as seen by its declining traffic performance and rising airline costs while maintaining a sizable debt burden. As a secondary airport serving the Boston region, it has experienced a nearly 50% overall loss in passenger traffic since the peak period in 2005 and a 6.8% traffic loss in Fiscal 2014, which follows a similar loss in the prior fiscal year. Airline costs are elevated for its market niche at $8.98 per enplanement in Fiscal 2013 and may face further increases in light of already high debt related costs. Even through this period of operating weakness, the airport has maintained adequate debt service coverage levels at about 1.3x (with treating applied passenger facility receipts for debt service as revenues) as and has sound liquidity.

Fitch has withdrawn the ratings as Manchester has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the rating. Fitch reserves the right in its sole discretion to withdraw or maintain any rating at any time for any reason it deems sufficient.

On April 4, 2013, Fitch Ratings downgraded the airport's rating to 'BBB+'; Negative Outlook from 'A-'; Negative Outlook, which reflected the airport's increased risk profile caused by steady declines in passenger traffic due to competition from Boston Logan International Airport (Logan). In Fitch's view, the airport's high debt burden assumed from prior capital programs coupled with elevated carrier concentration (nearly 60% market share from Southwest) as well as a revenue profile that relies heavily on traffic supported sources such as parking receipts and passenger facility charges, are inconsistent with the 'A' category. The Outlook remained negative and reflected concerns that Manchester is exposed to further traffic reductions in conjunction with expanding service levels from carriers at Logan. Should passenger traffic at Manchester further contract, airport operating revenues may be pressured and could result in weaker financial margins as well as a less competitive cost profile.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance' ( July 11, 2012)

--'Rating Criteria for Airports' (Dec. 13, 2013).

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for Airports

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=725296

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=892954

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Contacts

Fitch Ratings
Primary Analyst
Emma Chapman
Associate Director
+1-312-368-2063
Fitch Ratings, Inc.
70 W. Madison St.
Chicago IL 60602
or
Secondary Analyst
Raymond Wu
Associate Director
+212-908-0845
or
Committee Chairperson
Seth Lehman
Senior Director
+1-212-908-0755
or
Media Relations
Elizabeth Fogerty, New York, +1 212-908 0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Emma Chapman
Associate Director
+1-312-368-2063
Fitch Ratings, Inc.
70 W. Madison St.
Chicago IL 60602
or
Secondary Analyst
Raymond Wu
Associate Director
+212-908-0845
or
Committee Chairperson
Seth Lehman
Senior Director
+1-212-908-0755
or
Media Relations
Elizabeth Fogerty, New York, +1 212-908 0526
elizabeth.fogerty@fitchratings.com