​Moody’s: Aviation sector will not fully recover until 2023

The credit rating agency Moody’s said Thursday that it was “unlikely” that the civil aviation sector would fully recover from the effects of the COVID-19 pandemic before 2023.

The credit rating agency admits that many airlines have improved their liquidity in recent years, but at the expense of increasing their debt.

As a result, airlines rated by Moody’s will have debt on average of around 29 to 49 billion euros in 2023, which corresponds to a 20% to 30% increase compared to 2019.

“The effects of coronavirus, such as health concerns, changes in corporate travel policies, possible restrictions on international arrivals and lower discretionary spending because of weaker GDP and higher unemployment, will restrict the demand for air passengers by 2022 and will place a huge debt burden on airlines, globally.”

Currently, global passenger volumes are between 80% and 90% below the levels of the previous year, according to forecasts by the International Air Transport Association (IATA) for 2020.

For 2021, Moody’s forecasts that the volume of passengers will be between 35% and 55% below what happened in 2019.

A depressed airline industry by 2021 will have far-reaching effects on related sectors and the economy in general, warns the rating agency.

A cut in passenger volumes of around 40% to 50% between 2020 and 2021 would directly lead to the loss of about 579 to 713 billion euros in the global economy, “and several times more” indirectly.

Notably, Moody’s has lowered the credit rating of 13 airlines since May 25, while the credit rating of 6 airlines has been confirmed at the same level.