Moody’s Investors Service maintains the Baa1 rating of Pensacola Airport Enterprise’s outstanding revenue bonds with a stable outlook. Big factor: The region’s economic recovery is seen as better than national average. Cash liquidity remains a problem.
RATINGS RATIONALE
The rating is based on the airport’s financial margins, liquidity, and lack of a longer term airline agreement leaving it more vulnerable to pressures from airline consolidations. The rating also considers the strength of the airport’s O&D base, the airport’s competitive cost base, fairly significant military presence providing greater level of enplanement stability, and minimal additional leverage in the medium term.
Outlook
The stable outlook is based on expectations of growth in enplanements from estimated added service and better than national average estimates for economic recovery in the region.
What could change the rating–UP
Faster than expected enplanement recovery to previous high levels, debt service coverage that recovers and remains at the historic 2.0x times average, and an improvement in liquidity levels to more closely align with medians.
What could change the rating–DOWN
Continuous decline or maintenance of low enplanement levels that results in declines in debt service coverage, lack of signing of longer term airline agreements, and/or continued decline in or maintenance of liquidity levels below 200 days cash on hand could exert downward pressure on the rating.
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