Fitch has downgraded British Airways’ debt rating to ‘BB’ from ‘BBB-‘. The long-term outlook is negative. Iberia is saved.
This downgrade in the debt rating of British Airways (BA), according to sources from the credit rating agency, is “a reflection of our updated macroeconomic and global aviation industry expectations, which weaken BA’s business and financial profile across the rating horizon.”
With a deep global recession in 2020, according to the forecast of Fitch, which affects air travel demand far beyond current restrictions related to the coronavirus pandemic, the agency estimates that BA will not regain capacity from the end of 2019 until 2023.
“This will leave BA’s profit margins too weak to withstand the previous rating level,” they point out from the agency.
Ficht maintains that the coronavirus will harm airlines beyond 2021. He expects restrictions on flights, especially international ones, to remain well beyond the second half of 2020.
This, along with economic weakness, will affect air travel throughout 2021.
With this downgrade in BA’s credit rating, Fitch joins the decisions taken a few days ago by Moody’s first and S&P after reviewing down the debt of IAG and other European airlines, as a result of the strong impact of the coronavirus in this sector.