Fitch Ratings warns about risks of a no deal Brexit for UK and EU airlines and airports

22 October, 2020

Fitch Ratings stated (22-Oct-2020) European airlines and airports "could come under further pressure" if the UK and EU fail to reach an agreement on aviation connectivity for the post Brexit period. Fitch Ratings believes UK airports and airlines with high exposure to travel to and from the UK would be hit the most, while the impact on EU airport and EU-based airlines would be lower. Fitch still expects the parties to make basic arrangements to maintain connectivity, followed by a comprehensive long-term agreement, as its base case. However, failure to reach a new agreement or implement contingency measures may result in grounding of UK-EU flights and exacerbate troubles in the air transportation and infrastructure sectors.

  • Airline impact: Airlines with high exposure to or from the UK, such as British Airways and easyJet, are at higher risk from uncertainties over connectivity arrangements. EU-based carriers, especially LCCs whose operations are largely reliant on intra-European traffic, would also be affected, albeit to a lesser extent. LCCs serving traditionally popular routes, such as between the UK and Spain, Italy, Germany or Ireland, would be most affected;
  • Airport impact: UK airports' revenues could temporarily come under further pressure in the event of air traffic coming to a standstill, especially if such a scenario were to last into the summer of 2021. EU airports should fare better due to their lower reliance on UK-EU traffic. However, London is among the top 10 destinations for the majority of Fitch-rated European airports. Access to adequate liquidity would be key to withstanding short term operational disruption for airports. Some have started preparing for potential disruption. [more - original PR]