Incheon International Airport Corp.

Overview Key strengths Key risks Dominant international airport in Korea and Northeast Asia. Weak passenger traffic due to COVID-19, resulting in deteriorating profitability and cash flows. Solid record in non-aeronautical revenue, particularly in the duty-free business. Financial metrics weighed down by ongoing large capital spending for phase-4 expansion. Almost certain likelihood of extraordinary government support in case of financial stress. Inflexible cost structure with large operating expenses, given high portion of labor and outsourcing costs. We expect the company's passenger traffic to be stagnant in 2022, remaining at 10%-20% of pre-pandemic levels. Passenger traffic in 2021 was 3.2 million, only equal to 4% of 2019 figures and down from 12 million in 2020. Despite Korea's successful vaccination rollout, the outbreak

...Prolonged COVID-19 disruptions will slow down the recovery in Incheon International Airport Corp.'s (IIAC) passenger traffic volume in 2022. We expect the company's passenger traffic to be stagnant in 2022, remaining at 10%-20% of pre-pandemic levels. Passenger traffic in 2021 was 3.2 million, only equal to 4% of 2019 figures and down from 12 million in 2020. Despite Korea's successful vaccination rollout, the outbreak of the omicron variant and a record surge in COVID-19 cases during the first quarter of 2022 limited a rebound in passenger traffic. We believe IIAC's passenger traffic will remain soft during the first half of 2022 even though the government has gradually eased quarantine restrictions on inbound travelers. The traffic turnaround could stretch over the next few years, and we assume a full recovery only in 2025....

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