Fitch Affs Pittsburgh Airport Rev Bnds `A-'; Rtg Watch Neg

Business Wire, Oct 16, 2001

Business Editors

NEW YORK--(BUSINESS WIRE)--Oct. 16, 2001

Fitch affirms its `A-' rating for approximately $711,000,000 Allegheny County Airport Authority, PA (Pittsburgh International Airport or PIT) outstanding general airport revenue bonds.

Fitch places the rating on Rating Watch Negative reflecting increased risk associated with US Airways and the overall decrease in passenger traffic under the current economic environment. In the short-term, a greater degree of uncertainty regarding the potential bankruptcy for certain carriers exists, including US Airways. Pittsburgh is US Airways' headquarters and principal hub airport.

US Airways, under the current economic and post-September 11 environment, has announced a 23% reduction in operations, laid off 11,000 employees, and is scheduled to cease operations of its Metrojet service, effective December 2001. On September 22, US Airways received a $160,000,000 cash installment of the expected $360,000,000 from the Air Transportation Safety and System Stabilization Act. The balance of $170,000,000 is expected prior to the end of October 2001. US Airways' mainline service accounts for 75% of passengers and its regional carriers account for an additional 12% of passengers of PIT's roughly 9.8 million passengers. Based on US Airways' hubbing operations, PIT has 40% O&D traffic. Prior to September, PIT had 610 daily departures, which have decreased to approximately 585, though more service reductions may occur. Somewhat mitigating these risks is $57 million in unrestricted cash, $121 million in bond reserves, and PIT's residual airline use and lease agreement, which has an airline revenue sharing component. Annual debt service costs are about $61 million. Management has frozen new hiring, discretionary spending and deferred all capital projects that are not completely funded by AIP grants or PFC revenues. After September 11, PIT management readjusted revenue estimations and estimated $30.4 million annual revenue for concessions instead of the $34.6 million budgeted. Current rates and charges went into effect on Jan. 1 2001, and based on these, PIT shared $6 million with its airlines after FY2000, and after June 30, PIT shared $3 million with its airlines. Management has forecasted a worst-case scenario of US Airways ceasing operations under bankruptcy, under which PIT costs per enplaned passenger (CPE) would rise from $5.33 to roughly $10.00. PIT began collecting PFC revenue on October 1, 2001. Fitch will continue to closely monitor enplanement levels and financial position of PIT.