Heathrow Airport remains financially stable despite the devastating fiscal impact of the Covid-19 pandemic, says rating agency.
Credit rating agency Standard & Poor’s has announced that it is lowering the long-term ratings on Class A and Class B debt issued by Heathrow Funding Limited, with both retaining negative outlooks due to the ongoing uncertainty surrounding the spread of COVID-19.
Despite the move, Heathrow retains investment grade credit ratings on its Class A and Class B debt which now stand at BBB+ and BBB- respectively.
Heathrow’s financial position remains robust with £3.2bn of cash and committed facilities available to the business, while management continues ongoing work to reduce the airport’s cost base. The decision reflects the agency’s updated view on airports and forecast for a global recession that will result in a slower recovery in passenger traffic. The decision does not take into consideration other potential remedies.
The agency notes “the airport sector in Europe is facing an unprecedented decline in air traffic as Europe has become the epicenter of the COVID-19 pandemic and the governments have introduced travel restrictions and quarantine orders. In addition, S&P Global Ratings now expects a eurozone and global recession in 2020, which will likely slow the recovery in passenger traffic.”
Heathrow Chief Financial Officer Javier Echave says, “The spread of COVID-19 is having a tragic human cost and significant effects across the global aviation industry. Prudent management and investment in the airport over the past decade puts Heathrow in a strong financial position.
“We’ve taken steps to reduce our cost base and reorganize our operation which will help us keep Britain’s hub airport operating and protect vital supply lines throughout this crisis. We will continue working to restore our strong rating as soon as possible.”