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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TRANSPORTATION
FY24 outlook (to Dec) is for 82.4m passengers (prev. 81.4m, S&P was looking for 81m) and for EBITDA of £1.9b (unch, S&P saw £1.8-1.9b). Cash lines unch.
- 18.5m passengers (+9%yoy), revenue £808m (-1%), operating costs £365m (+11%) to leave adj. EBITDA £443m (-9%). Most of the rise in operating costs came from a +22.5% bump in employee costs (to £114m).
- It's highlighting UK passenger growth in 1Q was only beat by APAC (+18%) and Latin America (+20%), and more relevant for local credit, coming higher than Europe (+9%) and NA (+8%).
- Cash flow looks fine (£460m from operations) but capex has nearly doubled to £320m.
- BS: Senior totalling £14.5 (NR/BBB+/A-), Junior debt of £1.9b (NR/BBB-/BBB). Heathrow Finance (HF) (B1/NR/BB+) has another £2.5b. Cash totalled £2.3b (£0.5b in HF).
- It left net at £16.6b (net £2b under HF) and vs. reg. Asset base of £20.1b left gearing at 82.8% vs. covenant 92.5%. All levels at low end vs. recent history (84.9% end of last year).
- Heathrow has issued a £350m junior line and £400m under Heathrow Finance vs. funding plan for c£1b. It had £600m in junior and £650m in senior (including £350m CHF) roll off this year with has term debt remaining this year.
- 1H results come 24th July, no firm view from us. Note earlier this month offer details re revised after issues around tag-along rights to shareholders {NSN SF2QEGMB2SJU <GO>} (CoC was not there on debt ex. the Heathrow Finance lines). Senior debt does trade at wide end of airports but Sydney 28s (Baa1/BBB+) and Melbourne 33/34s (Baa1/BBB+) are equal rated alternatives with little to no spread give up.
- new Fraport 32s that were 1k denominated have continued to be bid in; now at Z+125, flat to Heathrow and -30 in from pricing. It's running heavy capex for terminal developments and runs ~half the margins vs. Heathrow's stellar ~60s. Offsets supporting it may be better leverage (net 6.4x) and publicly traded equities.
- We don't have much interest in airports given spreads here; see Dufry for a name we prefer to trade similar exposure.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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