Dallas-Fort Worth airport raising millions to build American Airlines a bigger hub
American Airlines flight attendant Stewart walks down from the rear exit of an American Airlines Boeing 737 at DFW International Airport in Dallas, Texas. Darrel Byers / Reuters
Dallas-Fort Worth is already busy, now its leaders are using the soon-to-be merger of American Airlines and US Airways to turn the hub into an even bigger power player. Should Atlanta and Chicago be worried?
Dallas-Fort Worth International Airport is selling $366.5 million of debt this week as its primary carrier, American Airlines, prepares to merge with US Airways Group Inc. to create the world’s largest airline.
The offering of bonds with maturities from 2026 through 2050 would help pay for capital projects such as the $2.05 billion initiative to overhaul four terminals, according to deal documents. After the sale, the airport, the world’s eighth- largest by passengers, would have $5.69 billion in debt outstanding, the documents said.
Michael Phemister, DFW’s vice president of treasury management, said he expects the issue to be well-received.
“The interest rates are actually better than a month ago and supply appears to be down,” he said in an e-mail.
Standard & Poor’s ranks the deal A+, its fifth-highest rating, saying the airport has a “solid business position.” In March, Moody’s Investors Service cut the airport’s rating one step to A2, sixth-highest, saying the facility will have the highest debt outstanding among its U.S. peers this year.
A DFW airport bond maturing in 2033 traded May 9 at an average yield of 3.7 percent, 1.12 percentage points above benchmark munis of similar maturity, compared with a yield of 3.89 percent when sold last month.
American Airlines’ parent company, Fort Worth-based AMR Corp., said in February that it plans to exit bankruptcy by merging with Tempe, Arizona-based US Airways.
Airport bonds have earned about 2 percent this year, beating a return of about 1 percent for top-rated debt, according to Bank of America Merrill Lynch indexes.
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