KBRA releases its outlook on the corporate aviation sector, examining key trends heading into 2022 and discussing various factors that will impact the sector’s recovery.

As the third year of the pandemic unfolds in January 2022, the global aviation industry is once again facing turbulence. A spike in COVID-driven travel restrictions around the world has led to many flight cancellations in recent weeks. Bookings for near-future travel have been impacted as the omicron variant disrupts short-term travel plans.

For most of 2021, however, passenger air traffic gradually improved. This was led by the strong recovery in domestic markets, which, together with robust global cargo demand, resulted in steady improvements in airline financial results throughout the year, albeit with regional variations. While domestic travel improved significantly in the U.S., Europe, and Latin America, inter-Asia traffic did not fare as well given more widespread travel restrictions, although domestic travel in China rebounded strongly. Following significant debt issuance in 2020 to boost liquidity, airlines’ balance sheets remain highly levered, although net debt levels are not as elevated as gross debt. KBRA remains cautious regarding the credit fundamentals of airlines in the short to medium term while they try to recover from the steep cash burn that has ensued throughout the pandemic—the timeline of which, along with the timing of a full recovery, remains very uncertain.

The report also highlights:

• KBRA’s outlook on the uneven recovery currently faced by the airline industry.
• Trends in aircraft leasing markets, including our take on consolidation in the industry.
• Capital markets activity as debt raised by airlines and lessors slowed following the record level issued in 2020.
• Complexities in the recovery of both demand and supply for different aircraft types.
• Macroeconomic and geopolitical factors impacting the recovery in air traffic numbers around the world.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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