The ongoing coronavirus pandemic forced people around the world to stay home. The current situation has had an extremely harmful effect on global air travel. Moreover, analysts see no prospects for improvement in the near future. Experts are confident that airline companies will have to face a drop in profits and a subsequent decline in ratings.
The international rating agency Fitch Ratings downgraded the Long-Term Issuer Default Rating (IDR) for the largest airline group Ryanair Holdings Plc. to BBB from BBB+. The outlook for the company turned out to be rather negative. The experts also affirmed the Short-Term IDR at F2.
The downgrade also affected Wizz Air Holdings Plc. Fitch analysts lowered the Long-Term IDR for the air carrier to BBB- from BBB. The outlook for the company remained negative as well. Besides, Fitch affirmed the Short-Term IDR for Wizz Air at F3.
The downbeat projection for both companies stemmed from growing uncertainty about air travel and a low probability of demand recovery.
Fitch notes that the downgrade for airlines reflects updated local macroeconomic data and global aviation industry expectations. The ratings illustrate the airlines' seriously weakened business and financial profiles, experts emphasize.
According to Fitch Ratings, the key scenario for the global economy in 2020 implies a deep recession. As it escalates, air-travel demand is likely to drop sharply. The agency expects the revenue of Ryanair and Wizz Air to recover not earlier than in fiscal year 2023.
