Moody’s, the ratings agency, has issued a report giving a negative outlook to European transportation as the continent’s mild recession, declining sovereign credit quality and tighter and more expensive bank credit all take their toll on Europe’s transport companies.
If there is one thing that stands out from the Moody’s report is that a clear rift is emerging between the performance of transport companies in northern Europe and those located in peripheral and/or bailed-out economies in the south.
For example, “airports in southern European countries subject to austerity measures suffered in Q4 2011 and Q1 2012. In contrast, the northern European hubs performed strongly helped by solid transfer traffic,” Moody’s highlighted.
Looking ahead, Moody’s expects “airports in the core EU will see low single-digit positive traffic growth underpinned by very modest local growth,” with hub airports in particular poised to do well. “However, the severe economic circumstances in peripheral EU countries suggest that traffic will decline. The declines in 2012 are likely to be significant, while any growth in 2013 is unlikely and may even decline,” the ratings agency reports.
Much the same picture emerged from the European toll road sector. Throughout 2011, French motorways recorded modest growth of 1.6 percent whereas roads in Portugal, Italy and Spain saw traffic declines.
The start of 2012 has, however, mostly equalised performance across Europe’s roads network, with all rated motorways having experienced negative traffic during the first quarter of the year. Portugal’s Brisa, with its 14 percent traffic fall in Q1, stands as the hardest hit concessionaire of early 2012.
High fuel prices, among other factors, have contributed to the traffic declines, according to Moody’s. And heavy goods vehicle traffic, widely known to be more correlated with the health of the general economy, continues to be roughly 10 percent below pre-crisis levels.
Lastly, Moody’s points out that declining bank credit quality across Europe is also hitting the continent’s transport companies, making debt more expensive, less available and with more strings attached. Still, the ratings agency believes the “capital and banking markets will remain open to transport infrastructure companies, particularly the largest and most established companies”.