Cincinnati/Northern Kentucky International Airport: Fitch raises bond rating to A-

HEBRON, Ky. - Fitch Ratings has upgraded Cincinnati/Northern Kentucky International Airport's rating on outstanding revenue bonds to A- and says its outlook for the airport remains stable even as Delta Air Lines reduces its flights.

Fitch noted that the airport is at risk for declining traffic due to the downsizing of the Delta hub.

"Delta still accounted for 78.3 percent of CVG's 2012 traffic, meaning the airport remains exposed to carrier concentration. Airport management projects enplanements to decrease in 2013 by another 7.2 percent due to an additional 23.5 percent cut to Delta's connecting services," said the report.

Airport officials said the reductions are based on cuts already announced by Delta, as opposed to new cuts planned. Delta recently said it had no plans for service reductions at CVG.

In raising the airport's rating from BBB+, Fitch cited CVG's "solid financial metrics," including:

➢ Lower fixed costs going forward, with a 75 percent reduction in annual debt service requirements beginning in 2014;
➢  Management of the Capital Improvement Plan with no need for new borrowings in the foreseeable future;
➢  The ability to maintain competitive cost-per-enplanement levels;
➢ "Robust fund balances available on the balance sheet."

Fitch also pointed out as positives:

➢ The continuing expansion of DHL's cargo hub;
➢ CVG's steady origin and destination traffic base of more than 2.1 million passengers;
➢ CVG's updated and modern infrastructure with "ample capacity for expansion;"
➢ The arrival of low-cost carrier Frontier Airlines.

Airport CEO Candace McGraw  said rapidly increasing cargo traffic, improving concession, parking and car rental revenue, and the addition of Frontier Airlines helped improve its financial profile.

"The airport has a solid track record of financial responsibility, a low, flexible debt structure and an aggressive strategy for income diversification," McGraw said. "We're extremely glad others have taken notice of our success."

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