Fitch Rates $207MM Dallas-Ft Worth, TX Airport Rev Bonds 'A+'; Stable Outlook.

CHICAGO -- Fitch assigns an 'A+' rating, with a Stable Rating Outlook, to the cities of Dallas and Fort Worth, Texas' $207,000,000 Dallas-Fort Worth International Airport (DFW, or the airport) joint revenue improvement bonds, series 2004B, scheduled for negotiated sale on or about July 15, 2004, through a syndicate led by Ramirez & Co., Inc. The bonds are payable from the gross revenues derived from the operations of the airport and pledged passenger facility charge receipts. Proceeds will finance various capital projects at the airport, including the completion of a new international terminal and an interterminal transit system. Fitch also affirms its 'A+' rating on the airport's $3.6 billion in outstanding debt.

The 'A+' rating reflects DFW's strong management team, highly efficient operating layout, strong demand for air service from the local market, and competitive cost structure. Credit concerns include rising costs associated with the airport's sizable capital program, market concentration represented by American Airlines (American), and the financial condition of the domestic airline industry, in particular American Airlines, Inc.(American; senior unsecured debt rated 'CCC+' by Fitch) and Delta Air Lines (Delta; senior unsecured debt rated 'CCC+' by Fitch). The Stable Rating Outlook reflects the increase in passenger activity related to American's decision to shift a portion of its connecting activity from St. Louis to DFW, the importance of the airport in the operations of American, and the airline's improved financial performance after a successful cost-reduction campaign during 2003.

DFW ranks as the nation's fourth busiest airport, serving 26.2 million enplaned passengers for the fiscal year ended Sept. 30, 2003. A total of 26 passenger carriers serve the airport, led by American and its affiliates, which enplaned 70% of the airport's passengers. Delta and its affiliates operate a smaller connecting operation at DFW and accounted for 19% of total enplanements in 2003. Overall, connecting passengers represented 61% of total enplanements at the airport in fiscal 2003. The level of market concentration and connecting traffic leave the airport vulnerable to the scheduling decisions of the leading carriers. However, this is somewhat offset by the central role the airport plays in American's route system, the presence of the airline's headquarters in Fort Worth, and the large local market which sustains demand for air service. The airport operates under a residual use and lease agreement with the airlines, which provides the basis for the airport's sound financial operations. However, reflecting the residual nature of the operating agreement, debt service coverage equals the rate covenant of 1.25 times (x) annually. The airport's cost per enplaned passenger equaled a very competitive $3.35 in fiscal 2003.

The airport is in the midst of a $2.7 billion capital program that includes the construction of a new international terminal, a new interterminal automated transit system, and other airfield and roadway improvements. As a result of the borrowing and operating costs associated with these new facilities, the airport's consultant projects that DFW's cost per enplaned passenger will rise to $8.30 in fiscal 2009, a level that remains competitive with its peers. This cost forecast is based on the consultant's projection that enplanements will increase at a 3.5% average annual rate through 2009.

DFW serves the 12-county Dallas-Fort Worth metropolitan area. The region's 2001 population of 5.4 million represents a 2.6% average annual growth rate since 1990. American leads the list of large metropolitan employers, with 26,700 employees, followed by Lockheed Martin Aeronautics Co. at 15,500, and SBC Communications at 14,093. Unemployment in the metropolitan area equaled 5.8% as of April 2004, slightly above the state and national rates of 5.8% and 5.4%, respectively. Per capita income in the region equaled 109% of the national average as of 2001.