Moody’s revises outlook on MAHB to ‘negative’

PETALING JAYA: Moody’s Investors Service has changed its outlook on Malaysia Airports Holdings Bhd (MAHB) to negative from stable due to the high degree of uncertainty over the next 12 months associated with passenger growth from its Turkey airport operations.
“The change in outlook to negative principally reflects heightened operating challenges for MAHB’s wholly owned subsidiary, Sabiha Gokcen International Airport (SGIA), which owns and operates the second largest airport in Istanbul, Turkey.
“We expect SGIA to experience a material decline in passenger traffic growth in the next 12-18 months, following the coup attempt that ended on July 16, as well as the terrorist attacks that occurred earlier this year,” Moody’s vice-president and senior analysts Ray Tay said in a statement yesterday.
He added that passenger service fees for international passengers are much higher than those for domestic passengers.
The expected weakness in the Turkish operations would be occurring at a time when MAHB’s Malaysia operations are experiencing modest growth following the series of airline disasters that occurred in 2014 as well as the completion of route rationalisation by Malaysia Airlines Bhd in 2016.
Moody’s expects passenger traffic at the Malaysian operations to grow by low to mid-single digit in 2016 and 2017, but to improve after that period.
Previously, traffic growth at SGIA, which was at least in the high teens over the past two years, provided a mitigant against the slow recovery in passenger traffic growth at MAHB’s operations in Malaysia.
“For these reasons, we lowered the baseline credit assessment to baa3 from baa2 reflecting our expectation of a weaker financial profile over the medium term compared to previous expectation,” said Tay.