S&P revises outlook on Dallas Fort Worth Airport’s A-plus rating to positive

S&P Global Ratings signaled Dallas Fort Worth International Airport could be upgraded in the future as it revised the outlook on the airport’s A-plus rating to positive from stable ahead of about $1.2 billion in bond issuance planned for this summer. 

The rating agency said the airport, which it upgraded a notch from A last year, has a one-in-three chance of achieving a higher rating during the two-year outlook period.

“The positive outlook and A-plus rating is based on the continued recovery in traffic levels, a return to business-as-usual rate-setting, and historical financial performance levels further supported by a new 10-year agreement with airlines, principally American Airlines Inc. that contributes to our improving view of the financial risk profile,” S&P said in a report last week.

It added an upgrade could occur “if DFW’s financial metrics trend favorably, including debt-to-net revenues supported by the new use-and-lease agreement as the airport finances its large capital plan.”

While Kroll Bond Rating Agency already has DFW at AA with a stable outlook, the airport’s other ratings remain in the single-A category with Fitch Ratings at A-plus and Moody’s Investors Service at A1, also with stable outlooks.

Chris Poinsatte, the airport’s chief financial officer, said DFW and other single-A-rated, large hub airports have been pushing to be in the AA-category.

“Our main argument is the essentiality of the industry, both airlines and airports, and we believe that was demonstrated by the federal government providing relief to the industry during COVID,” he said Wednesday.

As for DFW, the airport recovered rapidly from the pandemic and its airline use and lease agreement that takes effect Oct. 1 includes $4.9 billion in capital spending on top of $1.8 billion in previously approved projects, as well as airlines’ preapproval for inflation adjustments, Poinsatte added.

DFW was the world’s second busiest airport in 2022 behind Hartsfield-Jackson Atlanta International Airport. Passenger volume between January and April was up 15.3% at nearly 24.3 million. 

Poinsatte said the airport has $215 million taxable refunding of 2021 subordinate lien joint revenue bonds pricing through Loop Capital Markets July 18 and 19. A $550 million bond refunding and $200 million new money issue through Piper Sandler and an approximately $255 million bond refunding through Cabrera Capital Markets are planned for mid-August.

DFW, which has a $9.2 billion capital improvement program, will continue to use its $600 million commercial paper program through the summer of 2024 and expects its next big new money issue to price in the fall of 2024, according to Poinsatte.