Published on : Tuesday, March 24, 2020
PJSC Aeroflot’s long-term issuer default rating at “BB” has been affirmed by the Fitch Ratings as part of its annual review of the airline’s credit ratings. The outlook has changed from “stable” to “negative”.
Due to the impact of COVID -19 on the company’s metrics Fitch noted the impact. The agency said that the rapidly spreading coronavirus led to the unprecedented lockdowns and borders closures and a dive in the customer confidence in air travel. In 2020 this is consistent with a similar or more pronounced deterioration for other airlines.
Fitch noted that “Aeroflot’s cash and credit facilities provide sufficient buffer against the expected cash burn” and that the Company has “started to reduce operating expenses and manage working capital outflows”. Uunlike for many rated airlines, about 40% of Aeroflot revenues are generated on domestic routes which are currently less impacted compared to international flights.
Andrey Chikhanchin, Aeroflot’s Deputy CEO for Commerce and Finance said that they welcome Fitch’s decision to affirm Aeroflot’s long-term credit rating, especially in the face of increased turbulence in the aviation industry. COVID-19 has put unprecedented pressure on the sector, and there is hardly an airline in the world that has not felt the impact. They are focused on maintaining liquidity and reducing costs in order to preserve all the resources that we will need when the market begins to recover.