In an accompanying note, Fitch explains that the downgrading is the result of “expected severe volume shock in 2020 driven by significant restrictions on mobility, together with the weakening macroeconomic environment in Russia, including ruble depreciation and low oil prices.”
However, it added that “DME has sufficient liquidity to meet short-term needs” in the coming 12 to 18 months, as well as “some financial flexibility to partially offset the expected revenue shortfall.”
The overall negative outlook is attributed mainly to a combination of the “ongoing uncertainty around the duration and severity of the current Coronavirus crisis”, the policy response of the government – and the subsequent weakening of airline financial positions, including potential bankruptcies, which could hamper volume recovery. It is also taking into account the “increasing re-financing risk given the approaching bullet maturity of US$350 million in 2021.”
Russia’s second-largest airport’s traffic is projected to decline by around 20 percent year-on-year in 2020 due to changes in passenger behavior relating both to business commuting and leisure travel, along with the travel bans introduced by the Russian and the European governments.
“Plunging traffic numbers and significant stress for airlines” is an inevitable consequence of these measures, it says. Direct foreign traffic represented around 45 percent of Domodedovo’s volume in 2019, Fitch notes. Although, as of March 30, domestic air travel has not been restricted, in the event of a possible full lock-down of travel in Moscow, air travel volume “is likely to be slashed even more severely,” the agency notes.