Correction: Fitch Rates City of St. Louis, MO $104.5MM Airport Revs 'A-', Neg Outlook.

Business Editors

CHICAGO--(BUSINESS WIRE)--Jan. 28, 2003:

(In a press release issued earlier, the sale date for the bonds was incorrect, the date should read Feb. 10, 2003. The amended release follows.)

Fitch Ratings-Chicago-January 28, 2003: Fitch Ratings assigns an 'A-' rating to the City of St. Louis, Missouri's $104,500,000 airport revenue refunding bonds, series 2003, scheduled for negotiated sale during the week of Feb. 10, 2003 through a syndicate led by AG Edwards and Sons, Inc. The issue consists of $76,920,000 series 2003A bonds, proceeds of which will refinance the city's outstanding Letter of Intent Double Barrel Revenue Bonds, series 2000; and $29,505,000 taxable series 2003B bonds, proceeds of which will refinance the city's outstanding taxable airport revenue bonds, series 1993A. Fitch also affirms the 'A-' rating on the city's approximately $922,000,000 of outstanding airport revenue bonds. The Rating Outlook for St. Louis' airport bonds remains Negative.

The 'A-' rating reflects Lambert-St. Louis International Airport's (Lambert or the airport) central location in the national hub and spoke aviation system, its competitive cost structure and control over gate assignments, its diversified regional economic base, management's proactive response to the financial impact of the airline industry's downturn, and a conservative financial forecast that indicates satisfactory debt service coverage levels as the airport completes its capital program. Credit concerns center on the dominant position of American Airlines (American, Senior unsecured debt rated 'CCC+', outlook negative, by Fitch Ratings), which utilizes Lambert to compliment its larger hubs at Dallas-Fort Worth International and Chicago-O'Hare International airports and served 76.7% of total enplanements at the airport in 2001. With American accounting for over 90% of transfer traffic passing through the airport, which represents an above average 52% of total enplanements, Lambert is vulnerable to schedule changes or route rationalization decisions made by the airline that could impact the airport's traffic levels and financial operations.

Fitch maintains a Negative Rating Outlook for the airport's debt due to the continuing financial distress encountered by the domestic airline industry. While American's recent statements of assurance to the airport, as well as its financial participation in approximately $15 million of terminal improvements, provide comfort regarding the airline's long-term commitment to Lambert, Fitch will continue to monitor industry developments and assesses the potential impact on American's operations at the airport.

The only commercial airport serving the St. Louis metropolitan area, Lambert ranked as the nation's 18th busiest airport in calendar 2001, serving 13.4 million passengers, down from 15.3 million in 2000. Enplanements increased 4.8% annually between 1992 and 2000 as the former TWA steadily built up its hubbing operation and Southwest Airlines entered the St. Louis market. The decline in enplanements during 2001 reflects the uncertainty accompanying TWA's bankruptcy and subsequent purchase by American, the reduction in business related travel due to the onset of a national economic recession, and the events of Sept. 11, 2001. Through November 2002, enplanements at Lambert were down 5.2% from the same period in 2001, compared to a national decline of 5.9%, reflecting the continued depression in business air travel and American's across-the-board service reductions in response to the slackened demand.

Airport management adjusted to the decline in air traffic during fiscal 2001 and 2002 by reducing costs passed to the airlines through the deferral of some capital items, the institution of a hiring freeze, and the elimination of all non-essential purchases. As a result of these actions and the strength of the airport's hybrid use and lease agreement, Lambert sustained its consistently sound financial operations by posting net revenues of $81.1 million in during fiscal 2002, up from $64.7 million in 2001, providing 1.30 times (x) coverage of annual debt service requirements.

The airport's consultant conservatively projects enplanements to increase 2.1% annually from 2003 through 2012. Based on these estimates, air traffic at Lambert will not return to 2000 levels until 2012 when the airport attains 15.1 million enplanements. Based on this forecast, airport net revenues provide 1.33x coverage in 2003, rising to 1.77x in 2005, before declining to 1.36x in 2009 due to increased debt service costs associated with the scheduled opening of the airport's third parallel runway during the first quarter of 2006. The costs of the runway passed along to the airlines result in the airport's cost per enplaned passenger (CPE) rising to a moderate $8.00 in 2008 from $4.94 in fiscal 2002. However, this is below the airport's December 2002 forecast of a $8.21 CPE in 2008, as this refunding will allow the city to allocate previously reserved federal grant monies to the capital program.