FAA Reauthorization Expiration Should Not Negatively Impact U.S. Airport Ratings

Late last week, Congress allowed the FAA's operating authority to expire a timely continuing resolution, thus causing significant near-term uncertainties with regards to the continued funding capabilities for the FAA and infrastructure investments at U.S. airports.

Fitch says, in general, airports have solid financial underpinnings that have remained largely intact even during the recent recession. Larger airports tend to have manageable cash reserves or access into short-term borrowing markets to handle interim funding of capital costs. They also have less general reliance on federal grant sources as part of their capital funding mix.

On the other hand, smaller airports could be exposed to additional risks given the increased historical and prospective dependency on federal grants. Thus, delays in project implementation or limitations to market access could affect financial flexibility and credit stability.

Should the expiration period continue, long or short, Fitch believes airports will need to consider making adjustments to managing their capital programs. To the extent projects are underway and airports are seeking timely reimbursements through eligible AIP grants, alternate or interim funding sources may be needed.

Fitch's special report titled 'Federal Aviation Funding Grounded - Are Airports Impacted' is available on Fitch's website at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Federal Aviation Grounding May Affect U.S. Airports

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Fitch Ratings Seth Lehman, +1-212-908-0755 Senior Director Fitch Inc. One State Street Plaza NY, NY 10004 or Mike McDermott, +1-212-908-0605 Managing Director or Media Relations: Cindy Stoller, +1-212-908-0526 Email: [email protected]

Source: Fitch Ratings