Ratings Will Aid Philadelphia International Airport

Three financial ratings agencies are giving high ratings to Philadelphia International Airport bonds, an affirmation that the facility is financially stable, the airport said yesterday.

The agencies - Fitch Ratings, Moody's Investors Service and Standard & Poor's - cited as the basis for the good ratings the airport's traffic growth, the region's economic health, and the ability of airport management to respond to the threat of a US Airways liquidation, the airport said in a statement.

Fitch and Standard & Poor's gave the airport an "A" rating. The rating - the third-highest available out of 10 - indicates that the airport has a strong ability to meet debt obligations but is also subject to changing economic conditions.

Moody's gave the airport an "A3" rating, the seventh-highest out of 21.

The ratings agencies noted that Philadelphia expects passenger traffic to increase about 17 percent in the fiscal year ending June 30, on top of an 18 percent rise last year, the airport said. Traffic has been increasing since Southwest Airlines started low-fare service May 9, 2004, and US Airways and other carriers matched the prices.

The ratings come as the airport is preparing to sell $165 million in bonds, primarily to finance an expansion of the Terminal D-E complex, and to refinance $190 million in bonds issued in 1995. The new bond issue still needs City Council approval, airport spokesman Mark Pesce said.

The D-E expansion project will add three gates at the end of Terminal E, enlarge the terminals' security checkpoints, and create a retail area and food court similar to the one in the B-C concourses, airport chief of staff Jeff Shull said in an earlier interview. The work is expected to take almost three years to complete, Shull said.

Proceeds from the bond issue also will help pay for improvements to Terminals B, C and A-East and the extension of the airport's north-south runway, Standard & Poor's said a report last week.

Higher bond ratings will help the airport borrow at a lower interest rate.

The agencies' ratings were done before last week's announcement by US Airways and America West Airlines that they plan to merge. Analysts have said that cash from the merger would allow US Airways to emerge from bankruptcy, stabilizing its position as the airport's dominant carrier, with about two-thirds of the traffic.

The Standard & Poor's report said the airport's ratings included consideration of what would happen if US Airways ceased operations. The airport indicated that it could continue paying debt service on the bonds, but that its operating cost for each departing passenger could go up about 50 percent, from $8 now to $12, the report said. The operating costs are paid mostly by the airlines, based on the number of passengers boarding their flights.