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S&P Global Ratings expects cautious recovery for Europe’s airports


In the new edition of its Infrastructure & Energy Outlook magazine, S&P Global Ratings examines how airports and aviation have fared amid a resurgence of restrictions in Europe, and looks ahead to the future of the sector.

“The rebound in European air traffic has been delayed, and a more meaningful recovery will now have to wait until after the crucial summer season,” comments Tania Tsoneva, lead analyst for EMEA Infrastructure and Rachel Gerrish, sector lead, EMEA Airlines at S&P.

“Although Europe is ramping up vaccination roll-outs, a meaningful rebound in air travel across the continent this summer remains uncertain.

“Even assuming most of the population is immunised by the end of the third quarter, we expect air traffic in Europe will be only 30%-50% of the 2019 levels this year versus our November 2020 forecast of a 40%-60% shortfall.

“In the UK, the gradual unwinding of mobility restrictions could come in the form of a traffic light system, with a list of ‘green’ countries considered safe. As such, passenger numbers could recover quickly as tourists visit green countries.

“But if this does not happen, air traffic levels could be even worse this year. Our ratings on European airports remain, on average, one notch lower than before the pandemic.

“European governments have been cautious about reopening cross-border travel, even in the UK where 60% of the population has been vaccinated, owing to the risk of exposure to new variants of the coronavirus.

“An exception to this could be UK-US traffic, which could potentially reopen by June or July.”

New to this edition of S&P Global Ratings’ new Infrastructure and Energy Outlook, the section on ‘Sector Updates’ takes a global, sector-by-sector look at key developments from Q1 2021, as well as what we can expect to see in the coming months.

Highlights include:

• Infrastructure as an asset class has demonstrated a high degree of resilience throughout the COVID-19 pandemic, however regional and sectoral recovery prospects vary significantly.

• Although air travel should pick up quickly in the US and China, since 75%-80% of traffic is domestic, there is significant uncertainty in Europe given a high share of air traffic is on international routes.

• Indeed, S&P’s revised forecasts that European air passenger traffic in 2021 will recover to only 30%-50% of 2019 levels, lead it to expect many European airports to post weaker ratios in 2021.

• The proposed $2.3 trillion American Jobs Plan is set to lift US infrastructure, since roughly half is earmarked for the sector.

• In Latin America, Brazil is launching an infrastructure concession auction for airports, ports, and roads to attract private-sector investment.

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