Upgraded from A-
COVINGTON, Ky. (June 8, 2016) — Fitch Ratings has upgraded Cincinnati/Northern Kentucky International Airport revenue bonds rating to A+ from an A-, citing “the airport’s measurably improved financial profile on a go-forward basis under its new five-year hybrid compensatory airline use agreement” as the reason for the upgrade.
Fitch also pointed out as key rating drivers, CVG’s “continued stabilization of the airport’s origin and destination (O&D) traffic profile, at nearly 85 percent of 3.2 million total enplanements; large scale cargo services from DHL also diversify CVG’s aviation activity; and very low leverage as measured by both the airport traffic base and net cash flow, coupled with reduced debt service obligations.”
In March, Moody’s Investors Service also upgraded CVG’s bond rating to A2 from A3.
“We’ve been working hard to diversify our carrier base and revenue streams, and this bond rating upgrade as well as the rating upgrade we received earlier this year from Moody’s is a reflection of that hard work,” said Candace McGraw, chief executive officer, CVG.
Since 1972, CVG had operated under a full residual airline agreement, but transitioned to a new five-year hybrid airline agreement effective January 2016. According to the report, “Fitch expects debt service coverage ratios to drastically increase to above 3x starting in 2016 under the new airline use agreement, versus 1.25x in recent years.”