Last updateThu, 20 Jan 2022 6am

(Moody's) European Airports: 2022 Outlook revised to positive from negative ; Passenger traffic expected around +98% higher than 2021 (32% below 2019 levels)

Moody’s is revising today to positive its 2022 outlook on European airports, expecting full-year 2022 passenger traffic at our rated European airports will be around +98% higher than 2021, translating into total passenger traffic at around 32% below 2019 levels (vs -65% in 2021).

Traffic recovery at European airports is still assumed to be gradual and uneven and will not return to 2019 levels before 2024 at the earliest. Short-haul intraregional travel in Europe will also recover faster than long-haul, because the harmonised EU digital COVID certificate will aid intra-European trips and the return of short city breaks. Nevertheless, the reopening of the transatlantic (US) market to European travellers is positive particularly for Heathrow, Amsterdam Schiphol and Gatwick .

“The outlook on European airports has been revised to positive, from negative, reflecting our expectations that passenger traffic will continue to rebound. The pace of recovery will be uneven but improved macroeconomic prospects and the wide availability of vaccines will support travel demand” says Corrado Trippa, AVP Analyst (Projects and Infrastructure Finance) at Moody’s, and the author of the report.

Passenger traffic will continue to rebound in 2022, sustained by improved economic prospects. We expect 2022 full-year passenger traffic at our rated European airports to be around 98% higher than 2021. The availability of vaccines and improved coordination between EU countries and across different regions will support travel demand.

The pace of recovery will be uneven. Airports with the highest share of domestic traffic will continue to outperform, whereas opening of long-haul markets will help boost passenger volumes. A likely easing of restrictions in other markets, particularly Asia, could also accelerate the pick up in traffic, while the degree of business travel recovery remains uncertain.

Passenger volumes will be the key driver of revenue growth as aeronautical charges remain broadly flat. A large number of operators will hold their rates steady to incentivise the return of traffic, which will also benefit commercial revenue.

Cash generation to improve, while sector liquidity remains high. Leaner cost structures, moderate capex and cessation of dividends will support cash flow generation. Because of high debt levels and uncertain deleveraging prospects, some airports will request further covenant waivers through 2022. In this context, we expect creditors support to remain strong.

What could change our outlook. We could change our outlook to stable if demand for air travel weakens so that there is limited improvement in traffic from current levels. We could change the outlook to negative if (1) there is no improvement in traffic from current levels as a consequence of new travel restrictions or slower vaccine rollout or (2) liquidity concerns arise for our rated airports.


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