Moody’s downgrades Airport bonds

Moody’s Investors Service has downgraded the rating of Pensacola Airport Enterprise’s outstanding revenue bonds from A3 to Baa1. The downgrade is based on the airport’s narrower financial margins, decreased liquidity and lack of a longer term airline agreement, which leaves it more vulnerable to pressures from airline consolidations.

Per their analysis:

* Presence of Pensacola Naval Air Station provides some stability to service area
* Cost per enplanement, a key metric for residual airports, remained competitive in FY2011 at $6.47
* Minimal additional borrowing plans in medium term

* Liquidity levels have deteriorated further and remain low compared to peer airports and Moody’s U.S. airport median
* Month-to-month airline agreements, with somewhat limited airline diversification (five airlines account for 95% of total enplanements) amid an airline industry consolidation environment
* The airport’s leverage position is well-above average, although minimal future borrowing is expected

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