Fitch Ratings has upgraded the $412 million in outstanding senior airport revenue bonds issued on behalf of Tampa International Airport (the airport) by the Hillsborough County Aviation Authority (the authority) to 'AA-' from 'A+'. Fitch has also upgraded the $316 million in outstanding airport subordinated revenue refunding bonds to 'A+' from 'A'. The Rating Outlook for all bonds is revised to Stable from Positive. The upgrade reflects the continued improvement of financial metrics as the airport progresses with its capital improvement program, with strong enplanement performance supporting a favorable financial profile. Furthermore, future master plan elements have been modified to reflect more modest future borrowing, furthering Fitch's expectation that coverage and leverage metrics will remain steady to improving in the future. The ratings reflect the airport's strong origin and destination (O&D) position in the Tampa and Central Florida market, providing stability through the recent downturn. The airport benefits from stable overall coverage in the 1.7x range and a reasonable cost per enplanement (CPE) in the $5 range, which are expected to continue going forward. While a sizable capital program is underway with some additional borrowing expected, leverage is expected to remain at moderate levels consistent with the proposed rating. The airport compares favorably with other Florida airport peers, including Greater Orlando Aviation Authority (rated 'AA-'/'A+', Outlook Stable) and Broward County Fort Lauderdale (rated 'A'/ Outlook Positive). KEY RATING DRIVERS Revenue Risk Volume: Stronger Large Traffic Base with Some Volatility: The airport's sizable O&D market, comprising 88% of 9.3 million enplanements in 2015, is underpinned by a strong local traffic base. Enplanements recovered relatively slowly in the first few years post economic downturn; however, the rate of traffic recovery has accelerated in recent years with fiscal 2015 enplanement increases of 6.8% and 2016 year-to-date of 3.6% demonstrating continued, robust growth. While the airport faces limited competition from nearby Florida airports, the vigorous recovery of its service area as well as the airport's carrier diversity offset this concern. Revenue Risk Price: Stronger (from Midrange) Cost Recovery Key to Borrowing: The airport's current use and lease agreement with airlines extends to 2020, and covers roughly one third of airport operating costs. Still, the revenue generation from non-airline receipts and PFCs provide a strong overall cash flow generation versus total airport operating and debt costs. PFCs provide support for the subordinate lien debt service, while senior lien debt service is covered through airport revenues. Sizable non-airline revenues help maintain a low airline CPE for a large-hub airport in the $5 range, even as the CIP progresses. The airport benefits from extraordinary coverage protection, allowing it to levy additional charges to airlines in the event that net revenues are insufficient to meet debt service covenants while also providing for a revenue sharing mechanism based on surplus net revenue generation. Infrastructure and Renewal: Midrange Capital Plan Partially Debt Funded: With the deferral of the north terminal development project, the airport's Master Plan CIP consists of a three phase plan to reduce traffic congestion, prepare the existing terminal for future growth, and to expand the main terminal. Phase 1 is underway and fully funded at $953 million, will 71% of funding coming from GARB, PFC, and CFC debt already issued in 2015. The remaining funding is expected to come from state and federal grants (21%) as well as authority funds and paygo CFCs. Phase 2 and 3 of the Master Plan are dependent upon the authority meeting certain international operations triggers, not likely within the next five years. Management indicates the Master Plan is currently under review with scope and cost of Phases 2 and 3 expected to be reduced from earlier estimates of up to $1.6 billion. Debt Structure: Stronger (Senior); Midrange (Sub) Conservative Debt Structure: Nearly all of the airport's debt is issued in fixed rate mode. Currently, 39% of outstanding GARB debt is on the subordinate lien. Debt amortization is favorable with declining annual debt service payments expected over the next five to ten years. Structural features and covenants are standard for a strong airport credit, including cash funded debt service reserves. Robust Finances: The airport's 2015 net debt-to-cash flow available for debt service (CFADS) of 4.7x is comparatively low, and liquidity levels have improved to over $130 million, representing over 400 days cash on hand. Leverage is expected remain in the 3.5x - 4.5x range due to borrowing associated with the CIP. The airport's debt service coverage ratio (DSCR) has risen to above pre-recession levels at 1.89x/1.73x for senior/all-in coverage in fiscal 2015, and averages improve to 1.89x/1.78x range (senior/all-in) in Fitch's conservative rating case. For HCAA, maintaining high DSCRs is key to retaining the ability to cash fund large portions of its ongoing capital programs. Peers: The airport's peers include other Florida airports with similar market characteristics, such as Greater Orlando Aviation Authority (rated 'AA-'/'A+', Outlook Stable) and Broward County Fort Lauderdale (rated 'A'/Positive Outlook), with GOAA's rating reflecting a strong liquidity position and moderate leverage that may rise with its CIP.