Standard&Poor's has changed the outlook on its rating of Christchurch International Airport to negative, citing uncertainty about the attractiveness of the city as a travel destination after the magnitude 6.3 earthquake last month and other factors
Standard&Poor's has changed the outlook on its rating of Christchurch International Airport to negative, citing uncertainty about the attractiveness of the city as a travel destination after the magnitude 6.3 earthquake last month and other factors.
The credit rating company affirmed its A minus long-term rating on the airport and said the negative outlook reflected the uncertain market demand facing the airport in the wake of the devastating earthquake. The airport is 75 percent owned by Christchurch City Holdings, a wholly owned subsidiary of Christchurch City Council.
Credit analyst Danielle Kremzer said there was uncertainty about the attractiveness of Christchurch as a travel destination and the ability of the city to continue to support domestic passenger levels given the region's anticipated economic weakness through the reconstruction period.
She also questioned the airport's ability to retain and attract key airline partners.
"A rating downgrade is likely if we believe the earthquake will lead to a sustained weakening in the airport's competitive position," she said.
A downgrade was likely if the airport's ratio of funds from operations to interest cover fell below a ratio of 2.5 or funds from operations to total debt fell below 10 percent for a sustained period, or if the rating of the majority owner fell more than two notches.
If an anticipated decline in passenger traffic is temporary and the airport's competitive position remains strong the rating outlook could return to stable.
