Over the lockdown months between March and
"We have updated our recovery scenario to a 45%-60% decline in passenger traffic in 2020, down from our previous forecast of up to a 35% decline," said S&P Global Ratings credit analyst
Although we assume that the recovery will be gradual, it might not occur in a linear fashion, but could ebb and flow. In the near term, we forecast that passenger numbers will remain as subdued in the upcoming winter months as in August and September. Passenger numbers could then remain below pre-pandemic levels in 2021 and 2022 considering capacity shortages due to social distancing; potential changes in commuter behavior; a slow return of customer confidence in public transport; and the uncertain macroeconomic backdrop and rising unemployment rates.
Downside risk to our forecast could result from further lockdowns affecting general mobility, and more stringent requirements to self-isolate after crossing borders to countries with high infection rates. At the same time, travel could rebound more quickly if a vaccine or effective treatment becomes widely available, which we assume will happen around mid-2021.
Weaker passenger numbers put pressure on European rail operators' underlying (stand-alone) credit metrics and could result in negative rating actions without extraordinary government support. Even moderate revenue shortfalls can lead to a significant worsening in financial credit ratios. This is because European rail operators have relatively high operating leverage compared to other transport infrastructure issuers, and are either not able or not allowed to easily scale down services to respond to falling demand. The rating impact will depend heavily on the extent of governments' support measures.
This report does not constitute a rating action.
S&P Global Ratings is the world's leading provider of independent credit ratings. Our ratings are essential to driving growth, providing transparency and helping educate market participants so they can make decisions with confidence. We have more than 1 million credit ratings outstanding on government, corporate, financial sector and structured finance entities and securities. We offer an independent view of the market built on a unique combination of broad perspective and local insight. We provide our opinions and research about relative credit risk; market participants gain independent information to help support the growth of transparent, liquid debt markets worldwide.
S&P Global Ratings is a division of
.
(C) 2020 M2 COMMUNICATIONS, source