Fitch Ratings revised the outlook on the Greater Orlando Aviation Authority, Florida, to positive from stable.
Fitch also affirmed the AA-minus rating on the GOAA’s $1.8 billion of outstanding senior lien airport facilities revenue bonds and the A-plus rating on $867 million of subordinate lien airport facilities revenue bonds.
The GOAA is an agency of the city of Orlando and operates the Orlando International Airport (MCO).
“The positive outlook reflects the airport’s ongoing positive trends in passenger traffic and financial performance, with traffic well above pre-pandemic levels and in excess of Fitch’s prior base case expectations,” Fitch said.
“Forward-looking leverage remains strongly positioned for the AA rating category for both liens including anticipated capital-related debt borrowings through 2026; however, the authority has a history of capital plan scope increases to accommodate the above-average volume growth in the Orlando market,” according to Fitch.
“Further clarity on future borrowing needs within the next one-to-two years leading to stabilized leverage below 7x could lead to an upgrade,” Fitch said. “A successor rate agreement with potentially more favorable cost recovery terms may also support positive rating migration.”
Fitch said its ratings reflect the airport’s leading origination and destination market position and diverse carrier mix.
“GOAA benefits from a rate-by-resolution airline agreement, which provides competitive airline costs and strong cost recovery supplemented by passenger facility charges (PFCs) and robust non-airline revenue streams,” Fitch said.
Last year, S&P Global Ratings raised its long-term rating and underlying rating on the GOAA’s senior-lien airport facilities revenue bonds to AA-minus from A-plus and raised its rating on the authority’s subordinate-lien debt to A-plus from A and assigned a stable outlook.
S&P said its upgrade reflected MCO’s “demonstrated financial resilience and rate-setting flexibility during a period of materially depressed activity levels, along with MCO’s strong passenger recovery trends exceeding our expectations and S&P Global Ratings’ updated activity recovery estimates.
“We believe the traffic levels are sustainable and support an improved market position assessment and very strong enterprise risk profile,” S&P credit analyst Joe Pezzimenti said at the time.
In January, Kroll Bond Rating Agency affirmed its long-term rating of AA on GOAA’s airport facilities revenue bonds. Moody’s Investors Service assigns an Aa3 rating with stable outlook to GOAA’s senior revenue bonds and an A1 rating to the subordinate bonds with a stable outlook.
Florida’s airports have been one of the many bright spots in its economy
In March, Fitch Ratings upgraded the rating on Miami-Dade County, Florida’s $4.9 billion of outstanding aviation revenue and revenue refunding bonds issued on behalf of the Miami-Dade County Aviation Department to A-plus from A and assigned a stable outlook.
Last year, KBRA upgraded the long-term rating on the aviation revenue bonds to AA-minus from A-plus and assigned a stable outlook while Moody’s raised MIA’s bonds to A1 from A2.
Earlier this month, S&P weighed in on the airports sector as a whole.
“Our sector view for airports remains stable,” S&P said in a Nov. 7 report. “We expect revenue growth will be balanced against increased financing costs and large step-ups in operations and maintenance expenses as well as renewed capital spending to modernize and expand capacity.”
However, S&P said that while its economic outlook no longer includes a recession, a projected shallower and more protracted slowdown could translate into softening U.S. domestic airline travel.
“Year-to-date, 20 airports across all hub sizes have issued a total of $10.7 billion of debt with an average principal amount of $544 million,” S&P said.