Airport bond rating raised as $265 million expansion is planned
Two credit agencies have raised their bond ratings for Philadelphia International Airport just as the airport plans to issue new bonds and reissue others to pay for more international gates and other facilities.
Standard & Poors upgraded the airport to A-plus from A, and Moody's upgraded it to A2 from A3, city aviation officials said today. A third agency, Fitch Ratings, reaffirmed its A rating, the officials said.
City aviation director Charles J. Isdell said the city intends to issue $85 million in refunding bonds and about $180 million in new bonds to finance building of as many as three new international gates, a redesign of the Terminal F commuter concourse, improvements to the Terminal B-C baggage system, and other capital improvements in the terminals and on the airfield.
US Airways has been seeking additional gates in Terminal A-West so it can offer additional flights to Europe. The airport had planned to use bond revenue to build three new A-West gates and reconfigure others to accommodate more mid-sized jets, mainly Boeing 757s.
But, Isdell said, US Airways now is rethinking that plan since it announced in June that it would be buying new Airbus jets that require more tarmac space than do 757s.
Debt service on airport bonds is covered by airline landing fees, rental income and concession fees from carriers and other airport businesses. Some funds also comes from fees paid by passengers as part of their tickets. The airport is self-sustaining and doesn't use local tax revenue.
In raising credit ratings, the agencies cited the airport's lease and use agreement signed last year with airlines, which gives the city control of airport gates. The agreement replaced one in which major airlines had leases of up to 30 years on gates and other facilities.
Ed Anastasi, deputy director of aviation for finance and administration, said the higher ratings will lower the airport's costs for interest and insurance on the bonds.
Isdell said another reason the agencies raised the bond ratings was the airport has increased its cash reserves and has a strong base of originating passengers. Almost two-thirds of passengers start or end their trips here, rather than just transferring between flights, which gives the airport a stable revenue stream, he said.
Source - Philadelphia Inquirer