Dallas Fort Worth International Airport is gearing up to enter the municipal bond market with a significant $750 million deal. This deal has been given a boost by a recent rating upgrade and outlook revision to positive by S&P Global Ratings. The rating has been increased to AA-minus from A-plus, highlighting the airport’s strong enplanements, history of financial resiliency, and stable debt service coverage. The positive outlook, which was already in place before the upgrade, is now stable at the higher rating. This upgrade is a direct result of DFW’s improved financial performance, which is expected to be sustained over the forecast period of 2025-2029. The airport’s ability to fund a large capital plan, based on a recently renegotiated airline use-and-lease agreement and projected financial results, has been a key factor in this rating upgrade.
Dallas Fort Worth International Airport’s capital improvement program, which includes the construction of a sixth terminal and expansions of terminals A and C, comes with a hefty price tag of $8.6 billion through fiscal 2029. Despite the high costs involved, the airport’s outstanding debt of $7.224 billion is expected to grow to $12.4 billion by fiscal 2029 with future debt issuances. The airlines’ pre-approval of $5.1 billion of the program, as part of a 10-year use agreement with DFW, indicates strong support for the airport’s growth and development plans. While there are significant pricing and execution risks associated with the program, management’s efforts to de-risk the construction program, with 64% of costs already contracted, bode well for its successful completion.
Despite facing challenges due to the COVID-19 pandemic, Dallas Fort Worth International Airport has managed to steadily recover its passenger volume. In fiscal 2023, the airport exceeded its pre-pandemic passenger numbers, reaching 79.7 million passengers compared to 73.3 million in fiscal 2019. The airport’s optimistic forecast predicts 92.7 million passengers for fiscal 2025, with growth projected to reach 107.1 million passengers by fiscal 2029. This growth trajectory is supported by the airport’s strategic position as the second-busiest U.S. airport after Hartsfield-Jackson Atlanta International Airport in terms of passenger traffic in 2023.
The upcoming bond sale by Dallas Fort Worth International Airport will involve the issuance of tax-exempt, non-alternative minimum tax joint revenue refunding and improvement bonds. The structure of the bonds will include serial and term maturities, with approximately $450 million of outstanding extendable commercial paper being refunded, along with the issuance of around $300 million of new bonds. The debt has been rated A-plus by Fitch Ratings and AA by Kroll Bond Rating Agency, with both agencies maintaining stable outlooks. The underwriting team for this deal includes Wells Fargo Securities as the senior manager, along with Siebert Williams Shank & Co as the co-senior manager. Other members of the underwriting team include JP Morgan, Academy Securities, and Truist Securities, with co-bond counsel provided by McCall, Parkhurst & Horton and West & Associates.
Overall, Dallas Fort Worth International Airport’s financial success is a result of its strategic planning, strong passenger growth, and prudent financial management. The airport’s ability to navigate challenges such as the COVID-19 pandemic and execute on its capital improvement program demonstrates its resilience and long-term vision for sustainable growth. As the airport continues to expand and enhance its facilities, it is poised for continued success in the years to come.