Dublin Airport shrugs off passenger drop -- S&P
Ratings agency notes DAA's strong business risk profile
Published 05/04/2011 | 05:00
Dublin Airport's 2010 results will show improved earnings despite the dramatic slide in the passenger numbers, ratings agency Standard & Poor's (S&P) predicted yesterday.
The company's financials will show a "significant recovery'' in earnings, said the agency, which affirmed the company's BBB credit rating.
"The affirmations reflect our view of a recovery in DAA's financial performance in the 12 months to December 31, 2010, in spite of continued traffic contraction at DAA's three airports," said S&P credit analyst Aurelie Hariton-Fardad.
"The affirmations are supported by our assessment of DAA's strong business risk profile and significant financial risk profile,'' the analyst said.
Despite this, the agency still has a "negative outlook'' towards the company.
"The negative outlook reflects our view of the continued uncertainty surrounding a recovery in airport passenger traffic in 2011, which could put DAA's credit metrics under pressure,'' it said.
While Ireland has been downgraded on the back of last week's €24bn bank recapitalisation package, S&P said the Dublin Airport Authority (DAA), which owns Shannon and Cork airport, too, holds a "dominant'' position and has a "supportive'' stance from local regulators.
Passenger tariffs for Dublin Airport increased by 26pc in 2010, it pointed out.
The agency believes there is a "low" likelihood that Ireland would provide "sufficient extraordinary support'' to the DAA if it got into financial distress.
"Although the Government owns 100pc of DAA's capital, we anticipate that financial support will be primarily provided by the independent regulatory regime that was established under the Aviation Regulation Act 2001."
The agency said it could still change its view on the rating.
"In our view, there is a risk that DAA's financial risk profile may deteriorate if passenger traffic at Dublin Airport fails to improve. In our opinion, the ratings on DAA would come under pressure if its ratio of funds from operations to debt failed to remain close to 15pc in 2011,'' it said.
"Conversely, we could revise the outlook to stable if growth in passenger traffic at Dublin Airport returned to positive levels in 2011, as DAA expects, and profitability continued to improve."