The coronavirus pandemic is likely to have an unprecedented impact on global air travel, with a recovery expected only in 2022, S&P Global Ratings revealed.
"Our current base case for global air passengers in 2020 assumes a decline of 20%-30% from 2019, with full recovery achieved only in 2022-2023," Julyana Yokota, S&P Global Ratings credit analyst said.
S&P expects the coronavirus's rapid spread to over 125 countries and the severity of the lockdown measures to contain the virus, given the risk of contagion. Additionally, the agency forecasts a global recession this year against a backdrop of volatile markets and growing credit stress.
For the new coronavirus, the rating agency expects a more protracted recovery compared with the quick rebound seen after the 2003 SARS epidemic. The fall in passenger numbers could potentially average 70 percent over a three-month peak period, S&P said.
Air traffic could remain depressed over a six-month period (despite a partial recovery after a three-month peak drop), while full recovery is likely to be gradual in the 24 months following the containment of the virus.
“Also, as the world enters the post-coronavirus phase, apprehension around travel may slow down the recovery of traffic through some airports,” S&P said.
The impact on each airport’s rating will depend on several factors, such as the speed, scale, geography, duration of the crisis and measures taken by each airport to mitigate passenger declines, as well as administrate fixed costs, potential government extraordinary support, the financial flexibility of each airport prior to the virus outbreak, and their liquidity cushions.
(Writing by Gerard Aoun; editing by Seban Scaria)
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