Moody’s Investors Service, one of the major international bond rating agencies, cheered last week’s decision by an easy majority of Kansas City voters to approve a $1 billion single terminal at Kansas City International Airport.
Moody’s, which evaluates the creditworthiness of governments and corporations the same way firms such as Experian give consumers credit scores based on their financial condition and history, described the Nov. 7 outcome at the polls as a good thing for Kansas City. More than 75 percent of Kansas City voters gave their approval for a new terminal to replace KCI’s current three-terminal layout.
“The vote is credit positive for the airport because the new terminal would meet the needs of airlines that serve the airport, which have indicated a willingness to provide full recovery of capital costs,” Moody’s said in a research note issued on Monday. “A new terminal also eliminated capital expenditures on existing terminals that don’t meet airline needs.”
Moody’s did not give Kansas City or the Kansas City Aviation Department a new credit score or outlook. Kansas City’s credit rating is “Aa2 negative” and the Aviation Department is “A1 stable,” both investment-grade scores in Moody’s rating scale.
“Kansas City Aviation Department is pleased with the credit positive approach and believe it is a direct result of a terrific three year relationship with the airlines that serve KCI,” said Aviation Director Pat Klein in an email to The Star.
Moody’s said that while the new airports will increase the airlines’ costs to do business at KCI, the new terminal would improve the facilities that the airlines use.
“Without the new terminal, the airport would be forced to invest in shorter-term capital projects that do not address operational needs as airlines move toward using larger planes,” the Moody’s research note said.
Southwest Airlines, the dominant airline flying in and out of KCI, also lauded the voters’ decision last week.
“Many people have worked extremely hard over the last several years to understand the issues, concerns, options and opportunities,” Southwest spokesman Dan Landson said in an email. “These teams have put together a plan that addresses those needs for decades to come.”
Moody’s said the new terminal would increase the airport’s leverage to $195 per passenger, compared to $29 at the current terminal in 2016.
“We consider leverage around $200 moderate for airports with new facilities,” Moody’s said.