On Monday, September 21, 2009, Fitch Ratings affirmed Fresno Yosemite International Airport with a ‘BBB+’ rating for approximately $60 million in outstanding City of Fresno General Airport Revenue Bonds. The firm said the ‘BBB+’ reflects FYI’s position as the principal airport serving the central San Joaquin Valley, its solid air service to major origination & destination markets and hubs in the western half of the United States, and its diversity of revenue sources that provide a degree of financial stability to help manage the airport’s cost per enplanement (CPE).

Fitch also revised its rating outlook from Stable to Negative, citing recent weakness in economic activity in the air trade service area, along with moderate downward trends in passenger traffic. Fitch said these factors could result in a higher than previously anticipated airline cost profile and weaker financial flexibility.

In response to the rating analysis offered by Fitch, Aviation Director Russell C. Widmar expressed confidence in the Airport’s current and future financial outlook. “The affirmation of FYI’s BBB+ rating is a reflection of our success in managing our business despite current economic challenges facing the air service industry and most others,” he said. “I am confident we will continue to be successful in meeting our financial objectives.”

Fitch recognizes the Airport’s efforts to reduce Airport costs despite the downturn in air traffic. Due to aggressive cost cutting practices the Airport has maintained its domestic cost per enplaned passenger to the airlines at below $6.00. This industry standard financial measure has been consistently under $6.00 for years and benchmarks very favorably with other airports of similar size. The Airport's current cost per enplaned passenger for domestic and international carriers combined is $6.88.

Although passenger air traffic around the world has declined over the last two years, Fresno Yosemite air passengers began to stabilize during the June – August 2009 period inclusive, at about 5% below last year’s level. Although too early to calculate the results, management remains confident that September will continue or perhaps improve on this recent trend. International air service continues to outperform with Mexicana Airlines generating international traffic up some 18% year over year with its daily non-stop service to Guadalajara, Mexico.

Today, Fresno Yosemite benefits from a change in its business strategy implemented five years ago. Previously, the Airport relied heavily on scheduled airlines as a major source of airport revenues. Currently, less than 24% of total airport revenues are generated from airline sources. This new business strategy has allowed the Airport to stabilize a significant portion of its total revenue package, thereby lessening its long-term dependence on airline growth as a major source of increased revenue.

Fitch predicts Fresno Yosemite could be facing costs reaching $8.00 - $9.00 per enplaned passenger by fiscal 2011. Such a jump would represent a 23% increase from the current level of $6.88 per domestic and international enplaned passenger. However, Widmar said the Airport has demonstrated an excellent record of cost reduction and has no intention of letting this measure rise to such a level.

Widmar stated there are additional avenues to reduce operating costs and the Airport will not hesitate to explore them when necessary. However difficult the Fitch outlook may portray the situation to be, Airport management believes it will prevail through these unstable economic times and will be well positioned to prosper when passenger air traffic rebounds.

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