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Airports Credit Outlook 2023: Air Travel Recovery in the U.S., Canada, and Europe to Continue but Likely to Face Some Headwinds

Since the beginning of the Coronavirus Disease (COVID-19) pandemic, the publicly rated Canadian airport issuers in our portfolio have demonstrated their ability to adjust operations quickly and maintain financial flexibility by deferring some of their planned capital programs. However, we expect our portfolio of publicly rated Canadian airport issuers' financial metrics to become weaker than pre-pandemic levels even when passenger volume has fully restored to 2019 levels. This will likely reduce the capacity of the Canadian airport issuers to take on additional debt in the future to support any significant expansionary capital projects at the current rating levels, all else being equal.

In general, we believe the large domestic market segment in the U.S. will provide more stability and mitigate any global factors that may adversely affect passenger traffic in 2023. Moreover, U.S. airports have had greater financial support from the federal government, which helped maintain their financial capacity, resiliency, and competitiveness.

In our view, there are more challenging regional factors that may dampen the outlook of the airports in Europe. Given the uneven recovery across the region, some airports may face more financial pressure than others in light of certain ongoing regional factors that are unlikely to subside materially in 2023.