Press Release|Public Finance
KBRA Affirms 'A' Rating with Stable Outlook for Chicago Midway Airport Senior Lien GARBs
6 Mar 2025 | New York
KBRA affirms the long-term rating of A with a Stable Outlook, on the City of Chicago, IL Chicago Midway International Airport Senior Lien Airport Revenue Bonds.
Key Credit Considerations
The rating action reflects the following key credit considerations:
Credit Positives
- Strong, diverse, expansive air trade area supports O&D activity.
- Ranks as the third busiest airport in its dominant carrier’s (Southwest) route system as measured by enplanements and scheduled seat capacity.
- Residual agreements obligate airlines, mainly Southwest, to absorb necessary rate and rental charge increases.
Credit Challenges
- High level of carrier concentration, as Southwest accounts for nearly 90% of enplaned passenger activity.
- Narrow debt service coverage, reflecting an adequate, although strengthened, rate covenant and residual airport use agreement.
- Non-airline revenue performance ranks among the lowest of U.S. commercial airports.
Rating Sensitivities
For Upgrade
- Diversification of the carrier mix with concurrent enplanement growth.
- Successful transformation of terminal concessions, resulting in enhanced non-airline revenue support.
For Downgrade
- Significant reduction in Southwest Airlines operations at Midway.
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