AENA S.M.E., S.A.
Fitch Ratings has affirmed
RATING RATIONALE
The Negative Outlook reflects the limited visibility of Aena's traffic profile and recovery and operating environment for 2021 and beyond. Fitch assumes the 2020 traffic shock to be progressively recovered by 2025 but if the severity and duration of the pandemic are longer than expected, we will revise the rating case accordingly.
The 'A' rating reflects Aena's large diversified network of airports, with more than 90% origin & destination (O&D) traffic and low concentration of airlines. Pricing is under a regulatory asset-based (RAB), dual till regime. Debt is largely amortising and we expect leverage to reduce gradually to within our rating sensitivity by 2023 as traffic recovers.
Aena's liquidity position is comfortable throughout 2021 and it has some financial flexibility to help offset the expected short-term revenue shortfall.
Visibility of the medium-term evolution of the company's capital structure is also limited following government approval for more M&A activity. However, under Fitch's Rating Case (FRC), Aena will have leverage headroom from 2023 when traffic recovers, with net leverage remaining below 4.0x.
KEY RATING DRIVERS
Volume Risk - Midrange: Large, Diversified Airports Network
The coronavirus pandemic has led to an unprecedented impact on travellers' mobility with a 72% contraction of passenger numbers in 2020. Under the FRC, we assume traffic will remain be around -59% in 2021 and -25% in 2022 versus the 2019 base line, before gradually recovering by 2025.
Aena is the largest airport operator in the world by number of passengers. The peak-to-trough decline was 11% during the financial crisis. It is predominantly an O&D network, with more than 90% of O&D passengers largely leisure and with a higher weight of international traffic in a normal year.
The network includes two hub airports,
Price Risk - Midrange: RAB, Dual Till Regime
The regulatory framework has moved to a dual till system based on Aena's RAB. In
Aena has already submitted its proposal for the next regulatory period 2022-2026 to the Directorate General for
Aena has considerable experience of managing its own asset base and has carried out significant works in recent years to maintain and improve its infrastructure. It completed a significant capacity expansion and facilities upgrade programme, spending
In general, short-and medium-term maintenance needs are well-defined. Most of the capex programme relates to the regulated business and Aena has limited flexibility to reduce it if needed. Capital investments are funded by internal cash flows and committed facilities. Capacity at the airports is currently significant. Given the big drop in traffic, Fitch expects capacity to be sufficient until 2025.
Debt Structure - Midrange: Mostly Amortising, Substantially Fixed-Rate Debt
Aena's senior unsecured debt benefits from a covenant package based on net debt-to-EBITDA and interest charge cover, as well as other protective covenants (asset disposals, negative pledges). Most of the debt is fully amortising, except for a
We believe that Aena's current cash position of
Financial Profile
Under the FRC, leverage remains elevated around 8.5x in 2021, before progressively easing in 2022 to within our current rating sensitivity of 4.0x in 2023, indicating only a temporary impairment of the credit profile.
PEER GROUP
Aena's lower leverage, larger scale and lower airline concentration compared with Aeroporti di
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Greater visibility on the evolution of the operating environment and medium-term traffic path, leading to a quicker-than-expected recovery of the leverage metrics to levels stronger than outlined in the negative sensitivities below would allow us to revise the Outlook to Stable.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Sustained traffic and cash flow underperformance beyond our expectations, leading to Fitch projected net debt-to-adjusted EBITDA rising above 4.0x by the end of 2023.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
TRANSACTION SUMMARY
Aena is a listed company registered in
Aena has a large diversified network of airports with more than 90% O&D traffic and low concentration of airlines. Its pricing is regulated under a RAB, dual till regime.
Fitch assesses Aena as a government-related entity due to a controlling interest of 51% ownership by Enaire, a Spanish government-owned entity under the
CREDIT UPDATE
Operational Update
Traffic at Aena was down 72% in 2020 compared with 2019 due to the coronavirus pandemic and restrictions on mobility. Reported EBITDA fell 74% to
Covenants:
On
Regulatory Period
Aena has carried out the consultation process with airlines and submitted its final proposal to the Comision Nacional de los Mercados y la Competencia (CNMC). Deadline for approval of the proposal by the
Aena is proposing an IMAP of 0.5% yoy growth in 2022-2025 and 3.29% in 2026 and capex of about
Minimum Annual Guaranteed Revenues Update
Following Royal Decree-Law 35/2020 coming into force to support commercial business, Aena has proposed applying certain discounts to the contractual 2020 minimum annual guaranteed revenues (MAGR). Aena's proposed discounts exceed the discounts established by the law. However, five big commercial operators, representing about 85% of the total contractual MAGR, are legally challenging the proposed discounts. There is no clarity on the timing or amounts Aena may recover. Fitch has taken the most conservative view of deducting the challenged amounts from the reported revenue.
FINANCIAL ANALYSIS
Fitch Cases
Under the FRC, we assume traffic to remain at around 59% in 2021 and 25% in 2022 versus the 2019 base line, respectively, before gradually recovering by 2025. In addition, we assume a flat average tariff charged to airlines (aero yield) in 2021 and a tariff in the next
We expect moderate increases in opex from a much-reduced level as cost-cutting measures have been broadly applied in response to the pandemic. Opex remains below 2019 levels until 2023. We assume regulated capex in
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
RATING ACTIONSENTITY/DEBT RATING PRIOR
Aena S.M.E. S.A. LT IDR A Affirmed A
ST IDR F1 Affirmed F1
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
(C) 2021 Electronic News Publishing, source
