Wednesday, August 20, 2008

"Toll roads have seen traffic fall as much as 16 percent."

Fitch: Negative outlook on US airports, toll roads

Aug 20, 2008

Reporting by Karen Pierog; Editing by Tom Hals
Copyright 2008

CHICAGO- Skyrocketing fuel prices and drops in U.S. airport and toll road traffic led Fitch Ratings to revise outlooks for the two sectors to negative from stable, the rating agency said Wednesday.

Fitch cited continued weakness in airline travel and toll-paying traffic volume that "are being adversely affected by more than seven months of volatile fuel prices, economic weakness and inflationary pressures."

For U.S. airports, Fitch's action followed Moody's Investors Service's revision last week of the sector's credit outlook to negative. Standard & Poor's Ratings Services said in July that airport credit quality was stable but threatened.

The number of air passengers has fallen as much as 19 percent, while jet fuel prices jumped 52 percent over 2007, Fitch said.

Major carries such as UAL Corp's (UAUA.O: Quote, Profile, Research, Stock Buzz) United Airlines, AMR Corp's (AMR.N: Quote, Profile, Research, Stock Buzz) American Airlines, Northwest Airlines Corp (NWA.N: Quote, Profile, Research, Stock Buzz) and Continental Airlines (CAL.N: Quote, Profile, Research, Stock Buzz) have announced plans to reduce domestic flights as they battle high fuel prices.

Fewer flights and passengers mean less revenue for airports in terms of landing fees, concession business and parking.

Large hubs with international traffic have fared better than other airports, according to Fitch.

Airports have options to deal with revenue pressure, the rating agency said, including deferring capital improvement plans, closing down underutilized terminal space, and raising parking fees.

Toll roads, meanwhile, have seen traffic fall as much as 16 percent, as gasoline prices have risen about 33 percent, Fitch said.

"The key to maintaining financial flexibility during the current environment is for a combination of rate increases and cost-cutting measures," Fitch said.

On a regional basis, the rating agency said the economic situation in the southeast for both airports and toll roads appears to be the most challenging.

© 2008 Thompson and

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE