Brisbane Airport Corp. Pty Ltd.

The stable outlook reflects our expectations that BAC will continue to cautiously manage its capex and capital structure, amid a slowing operating environment, in a manner that is consistent with the current rating. We also believe that BAC's resilient traffic profile should cushion any prolonged weakening in traffic and provide sufficient time to adjust capital spending patterns, if required. We expect BAC to operate with a ratio of funds from operations (FFO) to debt of 9.5%-10% assuming modest traffic growth. Under a sustained slowdown, we expect BAC to operate above 9% with some flexibility exercised on capex or dividends. We would consider lowering the rating on BAC if FFO to debt were to drop to below 9% on a sustained

...Brisbane Airport to maintain strong market position as gateway to Queensland. Currently we see no threat to Brisbane Airport Corp. Pty Ltd.'s (BAC) long-term position as Queensland's primary airport. While we anticipate Gold Coast and Sunshine Coast airports will compete with BAC in the low-cost carrier segment, these airports are constrained in that they can only take narrow-bodied aircraft. BAC can handle wide-body aircraft. BAC is also protected to a certain extent from a downturn in passenger numbers as it benefits from being the airport in Queensland that carriers generally fall back on when rationalizing capacity from regional airports, such as Cairns International Airport. Passenger growth expected to moderate in the next couple of years before settling to long-term trend of 2%-2.5%.We anticipate domestic growth to stagnate over the next 12-18 months due to weakening domestic economic conditions deterring travelers, similar to other Australian airports. We expect international passenger...

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