Heathrow’s credit ratings update

31 March 2021

Heathrow's credit ratings update

Credit rating agency Fitch affirmed Heathrow Funding Limited's investment grade ratings at A- for Class A debt and BBB for Class B debt as well as Heathrow Finance's credit rating at BB+. The outlook on all classes remains unchanged at negative.

Fitch notes that the CAA has ruled out a "no intervention" approach when considering adjusting Heathrow's RAB in light of the COVID-19 pandemic. The ratings affirmation also reflects Fitch's expectation that the regulator will allow the airport to generate sufficient cashflows to maintain investment grade ratings.

The credit rating agency recognised Heathrow's continued strong liquidity position and valued the benefits of its cost mitigation plans in response to the pandemic. Heathrow has sufficient financial cover for the next 18-24 months after achieving nearly £400 million of gross operating savings, cancelling or deferring £700 million of capital expenditure and completing a £600 million capital injection to protect investors.

Heathrow Chief Financial Officer Javier Echave said:  

"Given the unprecedented challenges we have been facing over the past year of travel restrictions and border closures, we've focussed on taking swift action to protect the business. We've made great strides in cutting costs and making the airport more efficient and competitive while expanding our liquidity and protecting our investment grade credit ratings. It's great to see these efforts recognised by Fitch as well. We will continue to work hard to restore a strong A- in the medium term, but for this to happen the regulator must also deliver on its duties to ensure Heathrow remains financeable."

Heathrow published its full year 2020 financial results on 24 February 2021 and forecasts no covenant breach in 2021.

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