Press Release|Public Finance

KBRA Revises Outlook to Positive for WCAA (Detroit Metropolitan) – Airport Revenue Bonds; Assigns AA- Rating to Series 2023A-E Bonds; Affirms Rating for Outstanding Bonds

12 Sep 2023   |   New York


KBRA revises the Outlook to Positive, from Stable, for the Wayne County Aiport Authority (Detroit Metropolitan Wayne County Airport) Airport Revenue Bonds. KBRA simultaneously assigns a long-term rating of AA- to the Authority's: Airport Revenue Bonds Series 2023A (Non-AMT); Airport Revenue Bonds Series 2023B (AMT); Airport Revenue Refunding Bonds Series 2023C (Non-AMT); Airport Revenue Refunding Bonds Series 2023D (AMT); and, Airport Revenue Refunding Bonds Series 2023E (AMT). Lastly, KBRA affirms the long-term rating of AA- for the Authority's outstanding Airport Revenue Bonds.

The Positive Outlook reflects the Authority's successful management of the steady recovery in passenger traffic after significant declines realized at the height of the COVID-19 pandemic. Such recovery has included incremental service additions from Delta Air Lines (“Delta”), and foreign flag carriers reflecting the strength, resilience and diversity of the air trade area. Positive rating action may be warranted should the enplanement recovery continuing against a backdrop of low airline costs, modest capital needs, and Delta’s long-term commitment to maintaining a sizable hub at Detroit Metropolitan Wayne County Airport.

Key Credit Considerations

The rating actions reflect of the following key credit considerations:

Credit Positives

  • Market position as primary commercial airport for the broad and diverse Detroit CSA (the 14th most populous metropolitan area in the U.S.) supports significant O&D activity that forms the basis for hubbing.
  • Delta’s continuing commitment to the Airport and its strategic value as a core, mid-continent hub, and gateway for international service.
  • Low airline costs and limited future capital needs.

Credit Challenges

  • Passenger enplanement activity has recovered substantially from early pandemic lows but trails the recovery of the U.S. air market due to reliance on international traffic which has been slower to recover as well as pilot and staffing shortages at regional airlines which have weighed on connecting activity.
  • Enplanement dependency on Delta, coupled with a fairly high concentration of connecting traffic.

Rating Sensitivities

For Upgrade

  • Continuing recovery in enplanement activity accompanied by a backdrop of continuing modest capital needs, low airline costs, and continuing commitment from Delta.

For Downgrade

  • While not expected, a significant and sustained reduction in Delta service.
  • Material increase in leverage without a commensurate rise in resources available for repayment.

To access rating and relevant documents, click here.


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