James M. Cox Dayton International Airport, OH, Outlook Revised To Stable From Negative On Stabilizing Enplanement

SAN FRANCISCO (S&P Global Ratings) May 8, 2019--S&P Global Ratings revised its outlook to stable from negative and affirmed its 'BBB+' rating on James M. Cox Dayton International Airport (DAY), Ohio's bonds outstanding.
"The outlook revision reflects our view that DAY's enplanement levels are stabilizing after year-over-year declines since 2013," said S&P Global Ratings credit analyst Kevin Archer. In addition, we expect the airport to maintain debt service coverage (DSC; S&P Global Ratings-calculated) at levels we would consider at least adequate.
The rating reflects the application of our "U.S. And Canadian Not-For-Profit Transportation Infrastructure Enterprises" criteria, published March 12, 2018. The rating further reflects our opinion of the airport's adequate enterprise risk profile and strong financial risk profile. The enterprise risk profile assessment reflects DAY's vulnerable market position as a small-hub airport (at about 899,000 enplaned passengers), with declining enplanement trends due to competition from the larger nearby medium hub airports, such as John Glenn Columbus International Airport and Cincinnati/Northern Kentucky International Airport, which each serve about 3.7 million enplaned passengers. The financial risk profile reflects DSC metrics that we expect to remain within a range we consider adequate, and a very strong debt and liabilities capacity given the lack of additional debt plans.
We consider DAY's overall market position vulnerable. The airport faces significant competition from nearby CMH and CVG which are roughly 55 and 70 miles away, respectively. CMH and CVG offer more service, and serves a more diverse base compared with DAY, and has historically enplaned more passengers. We believe the market share dominance of these two nearby airports constrains DAY's enplanement levels. Total enplanements declined to 899,000 in fiscal 2018 from 951,000 in fiscal 2017 following Southwest Airlines Co.'s decision to cease operations at the airport entirely in mid-2017. Absent additional major service level changes, we expect that enplanements could stabilize near the 2018 levels given the airport's strong origin and destination nature.
The stable outlook reflects our expectation that enplanements will be maintained near current levels, with some modest fluctuations, and that DAY's very strong debt capacity and adequate DSC (S&P Global Ratings-calculated) will not diminish.
Although unlikely, we could raise the rating during the two-year outlook period if enplanements show sustained stability or DSC improves to a level we consider strong and sustainable.
We could lower the rating during the outlook period if the airport's DSC or debt capacity were to fall below current levels.
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