EMEA transport infrastructure sector outlook is improving
The improving sector outlook for EMEA transport infrastructure reflects Fitch Ratings‘ expectations of a further recovery in the operating environment over the next one to two years. The pace of recovery among sub-sectors is uneven, mirroring the impact from the pandemic-induced crisis.
Sub-segments focused on moving people, including airports and toll roads, were the most affected and are still recovering, whereas infrastructure assets mostly involved in moving goods, such as ports, were less affected and have already exceeded their 2019 levels.
We expect their growth to stabilise from next year. The emergence of more infectious coronavirus variants that could lead to renewed lockdowns is a key risk for the sector.
The airport industry’s near-term prospects are fragile due volatile border rules, spikes in Covid-19 cases and growing concerns about the environmental impact of aviation. We expect the recovery to be steady as passengers become accustomed to flying again, increasing the 2022 traffic in our portfolio to about 65% of 2019 levels.
Ports proved exceptionally resilient during the pandemic as purchasing activity was transferred to goods from experiences. However, we expect this additional spending on goods purchases to reverse, as people start to resume service consumption, and therefore our long-term view of ports resilience is unaffected by the pandemic.
The gradual easing of government-imposed restrictions is sustaining a toll-road traffic recovery across Fitch-rated EMEA issuers. Modal shifts from international airports to domestic toll roads are likely to improve the toll roads’ performance further.
Most recently, light vehicle traffic growth has been faster than that of heavy vehicles, reversing the 2020 trend, and we expect this to continue into 2022.
