Volatile recovery ahead for European airports, says S&P

European air traffic will only reach 45%-65% of 2019 levels in 2022, according to latest estimates published by S&P Global Ratings.

In a new report, the ratings agency assesses the volatile recovery prospects facing European airports following the outbreak of the omicron variant in December.

S&P expects air traffic numbers for rated European airports to reach 45%-65% of 2019 levels in 2022 and 70%-85% in 2023, with a full recovery unlikely until 2025. This indicates a weaker recovery than the ratings agency’s last published estimates in Q4 2021.

These wide ranges reflect airports’ differing characteristics – those more dependent on international and business travellers will be more heavily affected than airports reliant on domestic and short-haul leisure traffic.

Uncertainty surrounding the COVID-19 pandemic continues to affect the recovery of European airports. Consumers’ willingness to travel will depend on the extent of travel and border restrictions related to new variants, and the ability of vaccines to mitigate new strains.

Last year, S&P observed the start of a promising turnaround in passenger traffic at European airports. This was supported by the introduction of an EU digital COVID-19 pass easing cross-border eurozone travel in the summer; loosening U.K. travel restrictions; and the opening of U.S. borders in November.

However, following the outbreak of omicron in December, many European countries reimposed travel restrictions over the holiday period, weighing on the recovery for the region’s airports.

Most of S&P’s ratings on European airports carry negative outlooks, reflecting limited financial headroom for their current ratings amid the uncertainty about recovery prospects in general. However, the ratings agency believes each airport’s path to recovery will vary, depending on each one’s specific business and financial characteristics and regulatory circumstances.

As airports take on additional debt to shore up liquidity, a recovery in credit metrics to pre-pandemic levels will now likely require more than just a full recovery in passenger traffic.