Fitch downgrades Russia’s Aeroflot to BB-, outlook Negative

MOSCOW, Apr 17 (PRIME) -- International rating agency Fitch Ratings has downgraded the long-term issuer default rating of Russian national flagship carrier Aeroflot to BB- from BB with a Negative outlook, the agency said in a statement on Friday.

“The downgrade reflects our updated macroeconomic and global aviation industry expectations and a weakening of Aeroflot's business and financial profiles over the next four years. With a deep global recession in 2020 in Fitch’s baseline forecast hitting air travel demand well beyond the ongoing restrictions related to the coronavirus pandemic, we now assume Aeroflot's revenue passenger kilometers to recover to its 2019 level only in 2023. This will leave profit margins and credit metrics weak for the previous rating level,” Fitch said.

The Negative Outlook reflects uncertainty around travel restrictions and recovery of demand. There are risks for Aeroflot adjusting its operational base, investment program, and capital structure. Liquidity will be drained during 2020, but it will be sufficient to maintain operations in April–June and to start recovery in July–December if the company introduces measures to preserve cash, the agency said.

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