Outlook 2006 Analysts See Airports as Steady Bets, Despite Airline Woes.

Bonds issued by the nation's airports will continue to be stable investments, although the financially troubled airline industry will remain a credit concern, rating analysts said in recent interviews.

In 2005 airports issued about $11 billion in debt, including general airport revenue bonds and special facility revenue bonds, according to Thomson Financial. Special facility revenue bonds are typically used to finance a gates, terminals and similar infrastructure and are often paid off by the airline that uses the facility.

The total figure was up significantly from the $7 billion airports issued in 2004 and just above the $10.3 billion they issued in 2003.

"Largely the credit issues remain the same; what changes is the backdrop of the industry, which impacts how airports operate, what kind of environment they are operating in," said Standard & Poor's analyst Kurt Forsgren.

"In the last several years, [airports] have been operating in an environment where there has been a recovery in traffic [since the Sept. 11, 2001, terrorist attacks], and really an evolution in who the airlines are in terms of their market share," he said. "The growth of low-cost carriers and the erosion of market share of the [major] carriers ... has resulted in three of the five largest airlines currently in bankruptcy."

United Airlines filed for bankruptcy in 2002 and Delta Airlines and Northwest Airlines filed in September.

Airports depend on the charges and fees they charge airlines to cover the debt service on their bonds and operations of their airport.

"A median of about 37% of operating …