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Pittsburgh International Airport

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Allegheny County Airport Authority’s Bond Rating Reaffirmed at A-; Fitch Says Long-Term Financial Outlook Stable

The Allegheny County Airport Authority’s bond rating has been affirmed by Fitch Ratings of New York for the third year at A-, showing a long-term stable financial outlook and improved traffic performance at Pittsburgh International Airport.

The rating affirmation reflects stabilized traffic performance from an origin and destination (O&D) facility, favorable carrier diversity, stable cost per enplanement levels, low leverage and stable coverage metrics. Traffic at Pittsburgh International increased by 1.3 percent for the first five months of 2015, following a 1.3 percent rise in 2014. The cost per enplaned passenger (CPE) has decreased nine percent since 2013.

Fitch said it expects slight enplanement growth going forward fuelled by continued economic developments and stability of the Pittsburgh region.

“We are pleased to see that for the third straight year, the agencies have affirmed our rating demonstrating confidence in the Authority’s finances and operation,” said CEO Christina Cassotis. “This news is evidence of our dedication to maintaining stable costs and staying the course of financial responsibility despite challenges in the industry.”

Fitch noted that recent operational results and air service development indicate a more stabilized enplanement base, as well as additional seat capacity being added by carriers. In 2015, the airport has added five new carriers, 20 additional flights and 16 new airport destinations.

Cassotis said that upcoming airport capital needs are manageable, but will be clearer with an FAA-mandated master plan update in 2016. Debt service expenses are anticipated to decline sharply in 2018 which, with rapid debt amortization, could bolster the financial profile of the airport going forward. However, the 23-year-old terminal is in the process of being renovated, and most future capital projects will focus on repair and rehabilitation. An updated master plan will identify those projects.

Fitch also noted that while not certain as a stable revenue stream, future gas drilling royalties could enhance the airport’s financial position. The Authority expects to receive monthly royalty payments beginning in the first quarter of 2016 when natural gas is expected to begin flowing from drilling operations.

“The Authority remains steadfast in its goal to ensure the long-term success of Pittsburgh International and Allegheny County airports, and the greater Pittsburgh region which they both serve, through controlling costs and forming beneficial partnerships,” Cassotis said.