City of Burlington, Vermont

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Fitch Upgrades Burlington International Airport Credit Rating to “BBB”

On the Heels of Upgrade from Moody’s in May 2018, this Upgrade Demonstrates the Continued Strength of Airport’s New Airline Agreement, Managed Capital Program, and Stabilizing Debt Service

 

FOR IMMEDIATE RELEASE

September 25, 2018

Contact: Gene Richards, Director of Aviation

                (802) 343-9909

 

                Olivia LaVecchia, Mayor’s Office

                (802) 734-0617

 

Burlington, VT – Mayor Miro Weinberger and Aviation Director Gene Richards today announced that Fitch Ratings has upgraded Burlington International Airport’s credit rating to “BBB” from “BBB-,” and revised the Airport’s credit outlook from positive to stable.

 

This upgrade is particularly significant. For the past six years, the Airport’s credit rating has been “BBB-,” which is the lowest a bond can be rated to be considered investment grade. With this ratings upgrade, the Airport is crossing an important threshold into greater financial health. (Please see the complete Airport ratings table below).

 

In its credit report, released on Wednesday, September 19, Fitch stated that “the upgrade reflects the Airport’s improved fiscal profile demonstrated in recent years.” The report particularly highlights the new Airline Agreement, which began in Fiscal Year 2017 and will extend for five years, noting that it “provides strong cost recovery mechanisms.” The report also cites the Airport’s strengthening liquidity position, stabilizing debt coverage, and conservative debt structure, and draws attention to the fact that the Airport’s four-year capital improvement plan does not call for issuing additional debt.

 

With this upgrade, the Airport is continuing a trajectory of recent success. In May 2018, Moody’s Investors Service upgraded the Airport’s credit rating to “Baa2,” the Airport’s highest rating since prior to its financial troubles in 2010.

 

“This upgrade is yet another indication that the Airport is having a great 2018,” said Mayor Miro Weinberger. “In addition to this continuation of years of financial improvements, I’m encouraged to see that enplanements are now starting to rise as well. I congratulate the Airport staff on this achievement and their hard work on this issue.”

 

“The extraordinary team effort to accomplish unprecedented financial and infrastructure improvements has been reflected in the upgrade ratings by both Moody’s Investors Service and Fitch Ratings,” said Gene Richards, Burlington International Airport’s Director of Aviation. “With the guidance of the City of Burlington, I am extremely satisfied with the progress that the Airport has made and I am pleased to see this well-deserved upgrade. Our financial discipline has directly led to the improvements in the Airport’s financial profile. These are great times for BTV Airport and our traveling public with more flying options and seats available than in past years. The credit for this significant accomplishment goes to the entire Burlington International Airport team, as well as the City of Burlington team of Rich Goodwin, Beth Anderson, and Mayor Miro Weinberger.”

 

The Airport has seen numerous positive trends in recent months, including:

  • Enplanements up 4.3 percent in FY 2018;
  • Growth in total operating revenues of 2.4 percent in 2017, and growth in preliminary operating revenues of 5.8 percent in 2018;
  • Strongest financial position in last five years, ending FY 2017 with 276 days’ cash on hand as calculated by Moody’s, and 186 days’ cash on hand as calculated by Fitch, which excludes customer facility charge revenue.

The Fitch report focuses on the new Airline Agreement, which is intended to maintain a debt-service coverage ratio (DSCR) of 1.5x into the future, with excess net revenues shared among air carriers. This arrangement, along with a well-received four-year capital improvement plan and a conservative debt structure, provide the basis for Fitch’s upgrade. The full report is attached.

 

The Fitch report also highlights the Airport’s proactive work to remain strong. “The Airport has recently also undertaken various steps to increase demand,” the report notes, “including offering new service incentives and launching aggressive marketing campaigns for new domestic routes for two years of operation.”

 

Fitch Ratings table:

 

Fitch's BTV Ratings History

Date

Action

Rating

Action

Outlook

9/19/2018

Upgrade

BBB

Revised

Stable

8/18/2017

Affirmed

BBB-

Revised

Positive

7/29/2016

Affirmed

BBB-

Affirmed

Stable

7/22/2015

Affirmed

BBB-

Affirmed

Stable

11/13/2014

Affirmed

BBB-

Affirmed

Stable

5/30/2014

Affirmed

BBB-

Revised

Stable

11/15/2012

Downgraded

BBB-

Affirmed

Negative

3/23/2012

Affirmed

BBB

Affirmed

Negative

3/23/2011

Downgraded

BBB

Revised

Negative

1/12/2009

Affirmed

BBB+

Affirmed

Stable

11/1/2005

Affirmed

BBB+

Affirmed

Stable

 

Please see the Fitch Rating Report for additional information.

 

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Press Release Date: 
09/25/2018
City Department: 
Mayor's Office