"European airports could face weak medium-term credit quality on Iraq war - S&P"

Tuesday, March 25, 2003

European airports could face weak medium-term credit quality on Iraq war -
S&P


LONDON (AFX) - European airport operators could find their credit quality
under threat over the medium term from the Iraqi war, Standard & Poor's
Ratings Services said in an excerpt from its study 'War Jitters Cloud
Outlook for European Airports'.

So far, the only rating action has been the cut in the long-term rating of
Aeroporti di Roma SpA to BBB+ last Friday, but similar actions or a change
in outlook on other European airport operators cannot be ruled out, S&P
said. Any downgrades are expected to be restricted to a single notch.

Rated European airports have shown resilience to major shocks and since Sept
11, 2001, S&P said. Most airports have cut costs, increased charges,
effectively administered their investments, managed conservative balance
sheets, and are currently well financed.

However, passenger traffic to and from the US and maybe other long-haul
destinations is likely to be disrupted, as a result of the war and the
threat of, or actual, terrorist attacks. In the first four months of the
Gulf War in 1991, and after Sept 11, 2001, airport traffic fell on average
by 12 pct and 11 pct respectively, S&P said.

They also face uncertainty with regard to the credit quality of airlines,
and charter airlines in particular, during and after the war, the ratings
agency said.

In addition, the airport operators' ability to cut costs further from
pre-Sept 11 levels could be limited, because of increased costs arising from
additional security measures.

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