Fitch Ratings has affirmed the
RATING RATIONALE
The affirmation is mainly driven by traffic recovery during 2022 and so far in 2023 across its leisure-driven airport network and the returning strength of cash flow generation amid modest domestic investments and tight cost control.
However, Aena's operating environment is subject to political interference, medium-term challenges to the aviation industry and potential opportunistic M&As, which are being considered in our analysis. In particular, past political intervention, which unilaterally changed the contractual agreements between Aena and its retail tenants in 2021, casts uncertainty over the predictability of the Spanish legal and operating environment in which Aena operates.
Recent difficulties in the duty-free contract tender for the
All of the above comfortably position Aena at the 'A-' rating with a projected 2.5x Fitch-adjusted net debt/EBITDA for 2023-2027.
KEY RATING DRIVERS
Volume Risk - 'High Midrange': Large, Diversified Airport Network
Aena is the largest airport operator in the world by number of passengers with a monopolistic position in
The network is well-diversified and includes two hub airports (
Revenue and Price Risk - 'Midrange': Protective Dual-Till, Political Interference
Aena's regulatory framework is a dual-till system based on its regulatory asset base (RAB). DORA 2, which covers 2022-2026, includes 0% real annual tariff growth on a maximum annual price per passenger basis. The new real pre-tax weighted average cost of capital (WACC) dropped to 6% from around 7%, reflecting low Spanish bond yields over the past five years.
Aena's moderate tariffs compared with European peers' combined with a commercial rebate programme based on volume targets, should continue to consolidate volumes, benefiting its price-sensitive customer base. However, 7th Final Provision of Act 13/2021 (DF7) adds some unpredictability to Spanish airports' legal and operating environment, which could affect Aena's future pricing power.
Infrastructure Dev. & Renewal - 'Stronger': Fairly New Assets, Significant Excess Capacity
Aena has considerable experience of managing its own asset base and has carried out significant works in recent years to maintain and improve its infrastructure. Short-and medium-term maintenance needs are well-defined at around
Capital investments are funded by internal cash flows and committed facilities. Spare capacity at the airports is currently significant, which Fitch expects to be sufficient until 2025. DORA 2 did not include any large expansion capex and this should help boost cash flows for the next four years.
Debt Structure - 'Midrange': Largely Amortising, Adequate Liquidity
Part of Aena's senior unsecured debt (around 60%) benefits from covenants on net debt-to-EBITDA and interest charge cover, as well as from other protective covenants (asset disposals, negative pledges). More than half of its debt is fully amortising. Around 80% is fixed-rate or hedged.
Aena's cash totaled
Financial Profile
Under the updated FRC, leverage is forecast to stabilise at 2.5x by 2027, with traffic recovering to 2019 level in 2023 and flattening in 2024, but excluding further M&A activity.
PEER GROUP
Aena's strategic importance, monopolistic position and lower leverage compared with that of Aeroporti di Roma S.p.A. (BBB-/Stable),
Aena's predominantly leisure and O&D traffic put the company ahead of other Fitch-rated EMEA airports in traffic recovery, resulting in credit metrics that are commensurate with its rating.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Traffic and cash flow below Fitch's expectations, leading to Fitch-projected net debt/adjusted EBITDA to rise substantially above 4.0x.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Positive rating action is unlikely until there is increased visibility of the legal proceedings related to the unconstitutionality of the DF7 and of any impact on the capital structure from potential M&A activity.
Best/Worst Case Rating Scenario
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
TRANSACTION SUMMARY
Aena is a listed company registered in
Fitch assesses Aena as a government-related entity due to a controlling interest of 51% ownership by Enaire, a Spanish government-owned entity under the
CREDIT UPDATE
Traffic Back to 'Normal'
In
New Accounting Treatment Improves Transparency
In 2022, Aena changed the accounting policy applied in recording the impact of reductions in minimum annual guaranteed rents, as a consequence of the DF7, and the agreements reached with its lessees. The new accounting treatment retroactively led to the restatement of the consolidated annual accounts for 2021, and in 2022 led to revenue that was higher by
Strong Retail Performance
Fixed and variable revenue invoiced and collected in 2022 have already matched 2019 figures and have increased revenues per passenger to
Additional Acquisition in
During 2H22, Aena won a concession to operate for 30 years 11 airports in
FINANCIAL ANALYSIS
The FRC projects stable leverage for 2023-2027 of around 2.5x, assuming traffic to recover to 2019 levels in 2023 and flatten in 2024, almost stable aviation tariffs in nominal terms, and retail revenues per passenger growing at low single digits.
We expect medium-term EBITDA margin of about 52%-53% and annual average investments of around
FRC assumes the current dividend policy (80% pay out of net income) to remain unchanged during our forecast horizon to 2027.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
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