Tucson, Ariz. (March 9, 2012)- In a report issued March 8, 2012, Fitch Ratings elevated the rating of Tucson Airport Authority's (TAA's) approximately $8.8 million senior lien airport revenue bonds to "A+" from "A" and affirmed the $63 million subordinate lien airport revenue bonds at "A." The rating outlook on all liens of debt is stable.
According to Fitch, the upgrade reflects TAA's very low percentage of senior debt relative to overall capital structure, superior net revenue debt service coverage complemented by strong liquidity and short maturity life, with the outstanding senior lien bonds set to mature in TAA's next fiscal year.
Other key ratings drivers include Tucson International Airport's (TIA's) strong military, government and manufacturing presences and a well-diversified commercial carrier mix.
"[TIA] benefits from a balanced airline market share of legacy and low-cost carriers serving short- to medium-haul flights. The airport's two dominant airlines, Southwest Airlines and American, have retained stable market share ... and have a long history of serving the airport. Recently the airport gained incremental service from American with daily service to LAX [Los Angeles International Airport], and Southwest commenced a new daily flight to BWI [Baltimore-Washington International Thurgood Marshall Airport] in February 2012." the report states.
Fitch also noted that TIA's residual airline use and lease agreement allows TAA solid rate-making flexibility and the ability to maintain a stable cost per enplanement, produce consistently strong debt service coverage levels and fund capital expenditures with surplus cash flows.