NEW DELHI: A sharp fall in passenger traffic across airports since late March and no signs of major improvement in coming days is likely to result in moderation of private airport operator’s credit profile and liquidity position, credit rating agency ICRA noted.
Passenger traffic is estimated to decline by 45-50 per cent in FY21. The agency said that given likelihood of weak traffic for a prolonged period and resultant operations conducted at sub-optimal capacities and at the same time necessity to invest in infrastructure to ensure passenger safety and meet preventive requirements against the pandemic, the airports’ profitability and cashflows are likely to remain under pressure in the near term. This risk is further exacerbated in case of the privatised airports, as most of them are in the midst of undertaking sizeable debt funded capex to expand capacities.
Anupama Arora, sector head & vice-president, corporate ratings, ICRA, says “Thus far, the underlying business position of the privatised airports has been supported by their strategic importance and sizeable share in the country’s total air traffic; and adequate liquidity profile for most, with sizeable fund availability. However, a prolonged impact of the pandemic on the operations of these airports, in the absence of any meaningful support from key stakeholders, is likely to result in moderation of their credit profile and liquidity position.”
The report comes at a time when the government is actively looking to privitise more and more airports.
So far, a total of six airports has been privatised and Adani Enterprises had emerged as the winning bidder for all of these airports. The aviation minister had last month said bidding for the second batch of six airports to be privatised is on the anvil.
Experts feel that the second round of bidding may find fewer takers at much lower values as it might take upto 3-4 years for passenger traffic to reach the pre-covid level.ICRA expects the traffic recovery in a meaningful manner will be only towards FY22 and that FY219 passenger traffic levels are likely to be surpassed only by FY23.
