articles Ratings /ratings/en/research/articles/220124-a-volatile-recovery-ahead-for-european-airports-12204883 content esgSubNav
In This List

A Volatile Recovery Ahead For European Airports


Instant Insights: Key Takeaways From Our Research


Highlights From Our 2024 European Real Estate Conference


Credit FAQ: How Will Nan Fung Navigate Hong Kong's Property Downturn?


Your Three Minutes In Digital Assets: How Restaking Could Create An 'Internet Bond' Market

A Volatile Recovery Ahead For European Airports

As highlighted by the impact of the omicron variant, the path to recovery for European airports is proving to be volatile. We expect this to continue, given the possibility of other dangerous variants evolving without accompanying adequate vaccines. Last year, we noticed 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 crossborder 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.

S&P Global Ratings believes the recovery in passenger numbers at our European airports will depend on the extent of travel restrictions related to new COVID-19 variants. We believe this will depend on the ability of vaccines to mitigate and keep up with new COVID-19 strains. Moreover, the uncertainty of stricter border entry or vaccination requirements themselves will continue to weigh on consumers' willingness to travel. Therefore, we have lowered our assumptions for the recovery in passenger numbers at airports over the next few years, with an expectation of full recovery not before 2025.

For European airports we rate, we expect air passenger traffic numbers will be 45%-65% of 2019 levels for 2022, rising to 70%-85% in 2023, lower than our earlier estimates published in the fourth-quarter of 2021 (see "COVID-19 And Inflation Are Clouding European Airlines' Recovery Path," published on Nov. 11, 2021). The wide range reflects our expectation of different recovery paths, depending on the airport's traffic mix. Competitive domestic airports and those with high short-haul traffic should fall closer to the upper end of the range. Those that depend more on long-haul and business traffic are likely to fall at the lower end of the range.

Table 1

European Rated Airports: S&P Global Ratings’ Passenger Number Estimates, As A Share Of 2019 Levels
(%) Current estimates versus 2019 actual
2021F 20-35
2022F 45-65
2023F 70-85
2024F 80-95
Note: We forecast revenue for our rated airports based more on our expectations of the absolute number of passengers, while our analysis for airlines is based more on revenue per kilometer. The 2021 ranges indicate our expectations for different recovery speeds for each airport based on each one’s characteristics. The ranges do not indicate an average expectation for passenger numbers in Europe. F-forecast. Source: S&P Global Ratings.

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

The recent rapid spread of the omicron variant highlights the inherent uncertainties of the pandemic as well as the importance and benefits of vaccines. While the risk of new, more severe variants displacing omicron and evading existing immunity cannot be ruled out, our current base case assumes that existing vaccines can continue to provide significant protection against severe illness. Furthermore, many governments, businesses, and households around the world are tailoring policies to limit the adverse economic impact of recurring COVID-19 waves. Consequently, we do not expect a repeat of the sharp global economic contraction of second-quarter 2020. Meanwhile, we continue to assess how well each issuer adapts to new waves in its geography or industry.

Domestic and short-haul leisure traffic to lead the airport passenger recovery in 2022

European airports generally have greater volumes of cross-border travel than those with large domestic markets such as the U.S. (where we assume air traffic volumes will approach 90% of pre-pandemic levels in 2022). Also, the increased use of digital technologies and particularly online meetings could reduce demand for business travel. Therefore, we believe airports with higher proportions of domestic and short-haul leisure traffic will perform better. That said, with the opening of U.S. borders at the end of last year, we expect some pent-up demand to lift trans-Atlantic volumes in 2022, supporting those airports that rely more on longer-haul routes (see "Updated U.S. Transportation Infrastructure Activity Estimates Show Air Travel Normalizing By 2023 And A Stymied Transit Recovery," published on Jan. 12, 2022.

Traffic for Norwegian airport group Avinor, for example, is recovering more robustly than peers, given a relatively high proportion of domestic and short-haul traffic that accounts for close to 60% of total passenger numbers. For Avinor, traffic in 2021 reached about 41% of 2019 levels, with domestic traffic surpassing 55% of 2019 levels and more than 80% in the last quarter of 2021. In comparison, those airports with a high exposure to cross-border traffic and a limited domestic market, such as Heathrow and DAA PLC, were hit harder by the longer-than-expected restrictions on international flights in 2021. For these airports, traffic volumes reached less than 25% of 2019 traffic levels in 2021.

Chart 1


The trajectory back to pre-pandemic financial performance could require more than just a recovery in traffic levels

Looking forward, we'll be taking a close look at each airport's financial flexibility and government or regulatory support. Many European airports experienced increased cash burn in the early stage of the pandemic, despite government support, cancellation of dividends, deferral in capital spending, and cost reduction programs. This prompted airports to take on additional debt to shore up liquidity. To offset the implications of additional indebtedness, we expect that a recovery in credit metrics to pre-pandemic levels will therefore likely require more than just a full recovery in passenger traffic. This is reflected in the downgrades of European airport ratings by one or two notches over the past two years.

Regulations and tariff resets remain key watch points for many of our rated European airports

Most of our European airports expect tariff increases to support their credit metrics, such as Heathrow and Schiphol. Several regulatory decisions are due for European airports throughout 2022, and regulators will have a hard job reconciling the requests from the airports to increase tariffs with the slow and uncertain recovery in traffic as well as affordability concerns for consumers. In addition, those airports expecting higher tariffs to compensate for hefty capital spending, lower passenger traffic, or both, could see pushback from airlines that have also suffered financially throughout the pandemic. Airports that already have relatively higher tariffs could experience greater difficulty in realizing sharp increases. We believe there is uncertainty about the size and timing of tariff approvals from regulators. We view a likely outcome could entail regulators avoiding sharp tariff increases, through the phasing of tariffs to coincide with a stronger operational environment. However, this could mean that airports may not benefit from cash flow when they need it most.

The ability of European airports to sustain cost control and sync capital spending with recovery will also influence the rebound in credit strength

We expect airports with lower leverage and higher spending flexibility will be better able to mitigate traffic recovery delays and regulatory uncertainty, supporting a more sustained rebound in credit metrics. In the face of the pandemic, most airports have been able to scale back capital spending, particularly for expansion, to preserve cash flow, given the lower traffic levels and uncertainty about when normal traffic levels will return.

Those airports that find it difficult to avoid capital investments, to ensure compliance with safety regulations or even sustainability spending as they strive for net-zero emissions, for example, will likely see more pressure on their credit profiles because debt is likely to increase. The ability of airports to maintain the cost efficiency measures implemented during the pandemic, even as the recovery starts to accelerate, will equally be important for their profitability and cash flow resilience.

Table 2

Long-Term Ratings And Outlooks On European Airports
Entity Country Rating on Feb. 1, 2020 Rating on Jan. 24, 2022 Notches downgrade during COVID-19 Notches of lower SACP during COVID-19

Flughafen Zurich AG

Switzerland AA-/Stable A+/Negative 1 1

NATS (En Route) PLC

U.K. A+/Negative A+/Negative 0 1

Aeroports de Paris

France A+/Stable A/Negative 1 2

Royal Schiphol Group N.V.

Netherlands A+/Stable/A-1 A/Negative/A-1 1 2

Schiphol Nederland B.V.

Netherlands A+/Stable/A-1 A/Negative/A-1 1 2

Avinor AS

Norway AA-/Stable/A-1+ A/Negative/A-1 2 2


Ireland A/Stable/A-1 A-/Negative/A-2 1 1

Heathrow Funding Ltd. Class A

U.K. A-/Negative BBB+/Negative 1 1

Heathrow Funding Ltd. Class B

U.K. BBB/Negative BBB-/Negative 1 1

Gatwick Funding Ltd.

U.K. BBB+/Negative BBB/Negative 1 1

Aeroporti di Roma SpA

Italy BB+/Watch Neg/B BBB-/Positive/A-3 0 2
Source: S&P Global Ratings.


Related Research

This report does not constitute a rating action.

Primary Credit Analysts:Annabelle C Teo, Milan + 39-2-7211-1216;
Gonzalo Cantabrana Fernandez, Madrid + 34 91 389 6955;
Secondary Contact:Pablo F Lutereau, Madrid + 34 (914) 233204;
Secondary Credit Analysts:Stefania Belisario, Madrid +34 91 423 3193;
Juliana C Gallo, London + 44 20 7176 3612;

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at


Create a free account to unlock the article.

Gain access to exclusive research, events and more.

Already have an account?    Sign in