In a report released today, S&P Global Ratings said that U.S. airport infrastructure is showing its age, with shortcomings being painfully obvious as passenger levels push well past design capacity. On top of the relatively minor impact associated with the grounding of the Boeing 737 MAX aircraft (this accounted for less than 5% of daily flights), a tight labor market is adding to the airlines' operational challenges and contributing to staffing shortfalls at the Federal Aviation Administration and Transportation Security Administration.

In response to rising air travel demand fueled by financially healthy airlines and a growing economy, airport operators have responded with ambitious, multi-year capital programs, overwhelmingly financing them with debt. In the report released today, entitled, "When The Cycle Turns: U.S. Airport Balance Sheets--And Exposures--Increase With Traffic," S&P Global Ratings has found that the sector has shown credit stability overall, and has even improved in the past few years.
However, as the country enters--some might say endures--a renaissance in airport construction, key questions lie ahead. How will airport operators handle the growing leverage? How will airport credit quality weather the next downturn? How does airline industry weakness translate to the airport sector, and are past economic cycles and shocks a good measure of what can go wrong? "Overall, we believe that those airports that can successfully prepare for and navigate the next downturn when it arrives will be more likely to preserve their creditworthiness," said S&P Global Ratings credit analyst Kurt Forsgren in the report.