S&P Global Ratings revised its outlook for EasyJet’s long-term credit rating from ‘negative’ to ‘stable’ on expectations that European airline traffic was set to continue recovering over the course of 2022.
The ratings agency predicted that, assuming no escalation of Covid-19 related restrictions, then European airline traffic would recover to 50-65% of its 2019 level in 2022 and to 70-85% in 2023.
The Omicron coronavirus variant would hit passenger volumes in the first quarter of 2022, but pent-up demand was expected to support strong summer travel and short-haul leisure trips.
Thanks to its intra-European route network and exposure to leisure travel, earnings before interest, taxes, depreciation and amortisation and operating cash flow were expected to turn “clearly” positive over the fiscal year ending on 30 September 2022, S&P added.
EasyJet’s FY 2023 results meanwhile were expected to be “much improved”.
2The stable outlook reflects our view that the recovery in air traffic will continue, assuming no protracted travel restrictions beyond those currently in place, allowing easyJet to restore its credit ratios to rating commensurate levels in FY2022, and resulting in a markedly lower likelihood of a downgrade.”
As of 1600 GMT, shares of EasyJet were trading higher by 2.68% to 643.80p.
