Reno's airport authority earns an 'A' credit rating

A credit-rating agency gives the Reno/Tahoe Airport Authority high marks for its financial management, especially in a time when the airline industry is in turmoil.

As the airport authority prepares to market $29.3 million in bonds this week, Fitch Ratings gave the bonds an "A" rating with a stable outlook.

The bonds, which will be marketed by UBS Financial Services, refinance a 1999 bond issue.

"Experienced management has enabled the airport to focus on developing a strong balance sheet and solid profit margins while maintaining a low-cost structure and debt levels," wrote analysts for Fitch Ratings.

The San Francisco-based analysts noted that the airport has relatively little debt.

The maximum amount it needs to generate to cover debt payments in coming years will be $11.2 million in 2011, the analysts said.

Because there's currently excess capacity at the 23-gate airport, no capital improvements are planned that would require more debt.

At the same time, the airport is posting healthy gains in operating revenues.

In its most recent fiscal year, operating revenues increased by 5 percent to $36.4 million.

Even though operating expenses rose even more quickly by 6 percent, to $25.9 million Fitch noted that the airport's operating margin was 29 percent.

By another measurement, the cost of running the airport amounted to $3.76 per passenger abroad a plane.

That's fairly low compared with other airports, the Fitch analysts said, and it's particularly important because low-cost Southwest Airlines handles 47 percent of the Reno airport's passengers.

The biggest worry about the airport's finances, the Fitch analysts said, is the volatility of passenger traffic.

Even though the number of passengers rose by 12.4 percent in the past 23 months, the number is still down by 20 percent since 1996.

In the past decade, RenoAir reduced its flights from the Reno hub.After American Airlines purchased RenoAir, Fitch noted, it essentially shut down the Reno hub operation.

Even so, the Fitch analysts see the potential for more passenger service at the airport because the economy, in its service area is growing and becoming more diverse.

While issuing an "A" rating to the new bond issue, Fitch also upgraded its rating of approximately $49 million earlier airport bonds to "A" from "A-".