KBRA Affirms A+ Rating/Stable Outlook for Memphis-Shelby County Airport Authority Airport Revenue Bonds

7 Mar 2024 | New York

KBRA affirms the long-term rating of A+ with a Stable Outlook for the Memphis-Shelby County Airport Authority (MEM) Airport Revenue Bonds.

The rating was affirmed because of the following key credit considerations:

Credit Positives

Enplaned passenger activity has demonstrated favorable recovery since the Delta de-hubbing (2013). MEM has fully transitioned to an O&D airport, with enplanements solidly growing the past three years, up 9.6% YoY in FY23, exceeding the pre-COVID pandemic level.
Operating revenues are supported by substantial cargo activities. MEM is the busiest air cargo airport in North America given its critical position in the FedEx network and it is the site of the shipper’s corporate world headquarters.
Capital needs through FY28 are manageable given terminal and airfield capacity, external funding sources, and limited new debt requirements.

Credit Challenges

Socioeconomic indices are relatively low, which may adversely affect discretionary air travel during economic downturns.
Gradually growing air carrier service, although the number of markets served remains somewhat limited.
Debt and debt per enplanement metrics are high but improving.

For Upgrade

Strong enplanement growth, accompanied by material service additions to new markets.

For Downgrade

Changes in FedEx business plan that substantially reduces cargo activity at MEM.
While not expected, a secular declining trend in enplaned passenger activity.

To access rating and relevant documents, click here.