PROVIDENCE – Fitch Ratings affirmed the R.I. Airport Corp.’s “BBB+” bond rating but assigned the quasi-public agency a negative outlook, the ratings firm announced Wednesday.
The ratings are on $66.6 million outstanding airport revenue bonds as of June 30, 2020, issued by the R.I. Commerce Corp.
Let’s Save Big with Rhode Island Energy Efficiency Programs
Nestled alongside the Blackstone River in Pawtucket, RI, in a historic National Heritage Corridor that…
Learn More
The negative outlook was said to reflect the uncertainty around the long-term economics for airlines serving the region due to the competition from surrounding airports, particularly during periods of traffic decline. Adding to the uncertainty was that enplanements across the entire Northeast have recovered more slowly than the national average.
Fiscal 2020 saw T.F. Green Airport’s enplanements decline by 29% over fiscal 2019 due to the coronavirus pandemic, Fitch said, adding that year-to-date 2021 enplanements through March have declined 72% over the prior period. RIAC officials have told Fitch, however, that “traffic levels have been rising over the past several months.”
Prior to the pandemic, traffic at T.F. Green had been generally improving over a number of years. After enplanement declines from 2006 through 2015, the airport saw growth from 2016 through 2018. The grounding of Boeing 737 MAX airplanes and related service cuts were said to have caused moderate declines in 2019.
Fitch said that RIAC saw operating revenue decline by 20.6% year over year in fiscal 2020, attributable to the loss of enplanements due to the pandemic, but also noted that it marked the fifth consecutive year of a decline in airline revenue for RIAC.
Offsetting the decline, Fitch said, was that RIAC was allocated a combined $30 million in federal stimulus funds for operation expenses and debt service payments, meaning that financial performance of T.F. Green remained relatively stable in fiscal 2020 despite significant disruptions.
The ratings agency said it could see RIAC return to a stable rating if RIAC sees a sustained recovery in passenger levels due to the easing of the pandemic. However, Fitch noted that enplanements at T.F. Green Airport “have been showing a limited recovery to date.”
Fitch projected that enplanements at the airport will decline to 35% of fiscal 2019 levels in fiscal 2021, and recover to fiscal 2019 levels by fiscal 2025. In a worst-case scenario, enplanements were projected to recover to 95% of fiscal 2019 numbers by fiscal 2025.
