Heathrow’s credit rating downgraded amid coronavirus uncertainty
Heathrow Airport’s long-term credit rating has been downgraded amid the reduced demand and ongoing uncertainty caused by the coronavirus outbreak.
Credit rating agency Standard & Poor has announced today it is lowering Heathrow’s long-term ratings on Class A and Class B debt by one notch.
Heathrow Funding Limited retains investment grade credit ratings on the debt, but Class A now stands at BBB+, while Class B debt is BBB-.
The company remains robustly positioned with £3.2bn of cash and committed facilities available to business.
Heathrow said its management team is continuing to reduce the airport’s cost base.
The decision by credit rating agency S&P is reflective of the reduced demand and availability of flights as well as the firm’s forecast of a global recession.
S&P said: “The airport sector in Europe is facing an unprecedented decline in air traffic as Europe has become the epicentre 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, said Covid-19 was having “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,” he said.
“We’ve taken steps to reduce our cost base and reorganise 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”.
Heathrow is set to provide an update on its first quarter results, which will be published on 1 May.