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Correction: Fitch Rates San Antonio Airport's (Texas) 2006 GARBs 'A+'.

CHICAGO -- (This is an amended version of a press release issued Thursday, Nov. 9, 2006 and corrects information regarding the amount of outstanding issues in the second paragraph, enplanement statistics in the fourth paragraph and airport improvements in the eighth paragraph).

Fitch Ratings assigns an 'A+' rating to the City of San Antonio, Texas' $18,055,000 airport system revenue refunding bonds, series 2006, scheduled for negotiated sale on or about Nov. 14, 2006 through a syndicate led by Siebert Brandford Shank & Co., LLC. Fitch also affirms the following issues for the San Antonio International Airport (the airport):

--$167 million of outstanding parity lien general airport revenue bonds (GARBs) 'A+';

--$71.5 million of outstanding subordinate airport revenue/passenger facility charge (PFC) bonds 'A+'.

The Rating Outlook for all debt is Stable.

The 'A+' rating reflects the airport's growing regional economic base; high level of origination and destination traffic, diverse carrier mix, and modest capital program that should maintain the airport's low cost structure. Credit concerns include a significant tourism component in the local economy, which may create slightly higher volatility in enplanement levels than at similarly sized airports, and below-average, though improving, liquidity levels. The Stable Outlook is based on the recent gains in enplanement activity and the airport's moderate future borrowing plans.

San Antonio International ranked as the 52nd busiest airport in North America, based on statistics from Airports Council International -- North America, having served 3.7 million enplaned passengers for 2005. This represents a 6% increase from 2004, and follows a 7.6% gain in 2004. Through July 2006, the airport recorded an 8.8% increase in activity that was bolstered by short lived point-to-point service offered by United Express. Originating enplanements historically represent approximately 90% of total activity at the airport, indicating that passenger volume is influenced more by local and national economic trends than the scheduling decisions of any particular airline.

A diverse mix of carriers serves the airport, led by Southwest Airlines with 34.9% of enplanements in 2005, followed by American Airlines and its regional affiliates with 19.5%, Continental Airlines at 12.6% and Delta Air Lines and its regional affiliates with 11.7%.

The airport recently extended its use and lease agreement through September 2009 or the date of beneficial occupancy of the new Terminal B. The agreement sets forth a cost recovery formula for the airfield rates and charges and compensatory rate setting mechanism for terminal space that provides for the airport's consistently sound financial performance. Recent gains in enplanement activity combined with a successful overhaul of the airport's terminal concession program resulted in a 19% increase in non-airline revenues over the past two years. The increased non-airline revenue helped reduce dependence on airline rates and charges, which declined by 14% for the period due to increased rebates to the carriers, and lowered the cost per enplaned passenger (CPE) to a well below average $3.72 in 2005 from $4.31 in 2004. Furthermore, debt service coverage of outstanding GARB debt improved to 1.5 times(x) on a net basis in 2005, from 1.4x in 2004.

The airport is in the midst of a $375.5 million capital program in which it will build up to two new concourses, increasing the number of gates to 28 from 24. Other improvements include extending the elevated terminal roadway, parking expansion, and airfield and apron improvements. The airport plans to finance the program through a mix of federal and grants, PFC revenue on both a current and leveraged basis, additional GARBs, and airport funds.

The 2006 bonds are secured by a gross lien on the revenues generated by the airport system, which includes San Antonio International Airport and Stinson Municipal Airport, a general aviation facility. Proceeds will refinance a portion of the airports outstanding GARB debt.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Article Type:Correction notice
Date:Nov 10, 2006
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