Research Update: Airline Caterer Gategroup Affirmed At 'CCC+' On Traffic Recovery, Though Burdensome Debt Lingers; Outlook Stable

Air traffic increased in the second quarter of 2022, after a short-lived disruption from omicron, and we forecast European traffic will reach 50%-65% of 2019 levels this year, rising to 70%-85% in 2023, while travel between Europe and North America will increase to 50%-65% of 2019 levels in 2022. We expect gategroup Holding AG's EBITDA will continue to recover when airlines restore their networks, but note that its capacity to deleverage is still limited and its debt burden remains considerable, resulting in a highly leveraged financial profile. We therefore affirmed our 'CCC+' issuer rating on gategroup. The stable outlook reflects our view that gategroup will sustain its adequate liquidity position, that financial leverage will remain high for the next 12

...- Air traffic increased in the second quarter of 2022, after a short-lived disruption from omicron, and we forecast European traffic will reach 50%-65% of 2019 levels this year, rising to 70%-85% in 2023, while travel between Europe and North America will increase to 50%-65% of 2019 levels in 2022. - We expect gategroup Holding AG's EBITDA will continue to recover when airlines restore their networks, but note that its capacity to deleverage is still limited and its debt burden remains considerable, resulting in a highly leveraged financial profile. - We therefore affirmed our '###+' issuer rating on gategroup. - The stable outlook reflects our view that gategroup will sustain its adequate liquidity position, that financial leverage will remain high for the next 12 months, and that the company is dependent upon favorable air traffic conditions to turn cash-flow positive, restore its balance sheet, and meet its financial commitments....

Research Update