Moody’s Investors Service Improves Burlington International Airport Outlook to Positive

Affirms Airport’s “Baa3” credit rating, cites improved liquidity and debt service coverage ratios, newly signed Airline Agreement

Burlington, VT – On Friday, March 17, Moody’s Investors Service revised the Burlington International Airport outlook to positive and affirmed the Airport’s Baa3 credit rating (please see the complete ratings table below). In its Credit Report, Moody’s stated that “The positive outlook reflects ongoing improvement in the airport’s liquidity and debt service coverage ratios (DSCRs), in addition to a strengthened cost recovery framework following the recent adoption of a five-year residual airline agreement.”


“Of the many financial challenges the City faced when we hit bottom five years ago, turning around the Burlington International Airport was one of the toughest. We were faced with a changing industry, the ongoing impacts of a deep recession, a loss of Canadian travelers, and the aftermath of major financial mistakes made in the late 2000s,” said Mayor Miro Weinberger. “The Moody’s outlook upgrade is more evidence that the Airport has emerged from this dark storm stronger and more resilient than ever. I am very proud of the Airport management team and CAO’s Office, which have led this important progress for this key regional institution.”


“The positive outlook revision reflects the continued and sustained efforts to build financial stability, manage costs, complete signed five year agreements with both the airlines and car rental companies, build cash reserves, and achieve the Debt Coverage Score of 1.5x year after year,” said Gene Richards, Burlington International Airport Director of Aviation. “The credit for this significant accomplishment goes to the Burlington team, Rich Goodwin, Bob Rustin and Mayor Miro Weinberger.”


This year’s Moody’s Credit Report noted that the Airport achieved its strongest financial position of the last five years in Fiscal Year 2016, ending with 230 days’ cash on hand (up from the low of one day’s cash on hand in Fiscal Year 2010) and 1.59x DSCR, the ratio of net revenues available (which is operating net revenues less operating expenses) to pay for debt principal and interest.  Moody’s added that it expected the new Airline Agreement, which the Airport recently entered with all of its long-term carriers, would support improvement of financial metrics from these levels and mitigate risks related to the airport’s enplanements.


The new Agreement—the first in 20 years—is crucial to the financial and passenger stability of the Airport’s future, resolving a challenge noted by the Airport’s Rating Update by Moody’s Investor Service in December 2015: “An uncertainty provided by a month-to-month airline agreement.” The Agreement allows the Airport to approach larger reserves and positive debt coverage ratios for future improved credit ratings, as recommended by the Airport’s Rating Update by Moody’s Investor Service in December 2015, which indicated that a debt coverage ratio of 1.5x could make the rating go up; strengthens the Airport’s financial stability by partnering closely with airlines to ensure that any unexpected budget changes are covered in partnership with the airlines; focuses on the methodology for determining terminal rental rates and landing fees; and outlines the responsibilities and space needed by airlines.


Moody’s also cited the recent 12-year tax settlement with the City of South Burlington as a positive note to stabilize a significant expenditure.


Future actions that could lead to another rating upgrade:


  • Sustained enplanement growth
  • Net revenue DSCRs above 1.5x times on a sustained basis
  • Incremental improvement in liquidity on a path to 300 days cash on hand

Moody’s Investors Service Improves Burlington International Airport Outlook to Positive

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