17 June 2020 by jbchevrel
Heathrow CDS was in the Main back in series s03 04 05 and in XO back in s09 and has not been in any iTraxx since. The 5y contract has now fully retraced the ‘covid widening’. It started the covid crisis at 75bp, peaked at 285bp in March and closed 75bp today as well, relatively stable so far this week. This week Heathrow published its investor report which includes their most up to date forecasts. In this reported, they predict a -64% decline in FY 2020 traffic. The passenger forecasts were more pessimistic than S&P’s latest forecasts (-50%/-55% for FY 2020) or Gatwick last updates, but Heathrow’s are more recent too. As a result, they expect a -81% drop in FY 2020 EBITDA to +£357m, despite their efforts to achieve £300m of cost savings. CapEx is also being cut by -£650m, but they will still be burning -£160m of cash per month. Without these efforts, they would be burning -£240m per month. Heathrow said they do not expect traffic to return to pre COVID-19 volumes until after 2022. Although that looks far, this is in line with what several airliners have also communicated on various occasions, some even mentioned 2023. Heathrow net debt is expected to increase by +£800m during 2020 to a stock of £13.5b. Liquidity is expected to be £2.2b at the end of this month.