LONDON (S&P Global Ratings) --We have updated our global air passenger traffic forecasts and now expect traffic to fall by as much as 60%-70% in 2020 versus 2019, says S&P Global Ratings in a report published today on RatingsDirect ("From Bad To Worse: Global Air Traffic To Drop 60%-70% In 2020").

"This is weaker than the 50%-55% drop we forecast at the end of May and we now also foresee a more gradual recovery to pre-COVID-19 levels by 2024," said S&P Global Ratings credit analyst Rachael Gerrish.

The COVID-19 pandemic is the most severe crisis that the airline industry has ever faced. In the six months following the 9/11 attacks, previously considered the most severe aviation crisis, air passenger traffic measured in revenue passenger-kilometers (RPKs) declined by 12%, much less than the 60%-70% drop we forecast for 2020.

We do not believe that the revision of our global air passenger traffic forecasts will have a widespread rating impact across the global portfolio of airlines we rate. However, as we continue to review our rated airlines, it may affect some individual companies.

We have lowered our ratings by multiple notches (between one and eight notches) on most airlines since the outbreak of the COVID-19 pandemic. Pre-COVID-19 just over one-third of our global airlines portfolio was rated at the 'B' level and below, and now this has risen to about two-thirds of the total.

The more negative air traffic outlook increases pressure on all airlines' credit quality. Cost reductions, fleet right-sizing, and liquidity preservation will be critical measures to partly counterbalance the depressed demand for air travel.

"It is impossible to predict the pace, extent, and timing of recovery in travel patterns with any certainty," said Ms. Gerrish. "We will likely continue to revisit our assumptions as the pandemic continues to evolve."

This report does not constitute a rating action.

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