Aer Rianta break-up boost from credit ratings agency

THE proposed break-up of Aer Rianta has been given a boost with a leading credit ratings agency saying that it does not see the split having a major impact on the company's ability to repay its debt.

There have been fears that Aer Rianta's bankers would call in their loans early because of uncertainty about the future viability of the three airports once Aer Rianta is split up.

However, Standard & Poor's, the world's biggest credit ratings firm, said that the break-up should not result in the immediate repayment of Aer Rianta's €479 million debt. Questions were raised last week about Aer Rianta's debt position by Labour Party leader Pat Rabbitte, who said that the company could be forced to repay some of its loans if the Government went ahead with setting up Cork, Shannon and Dublin airport companies.

Though Standard & Poor's said that though the plan created a degree of uncertainty down the line for Aer Rianta, it maintained its 'A' long-term and 'A-1' short-term corporate credit ratings on the company.

S&P analyst Jan Willem Plantagie said: "The implementation of the restructuring could take more than a year and the credit quality of the 'new' Aer Rianta will only become apparent as new regulatory tariffs are proposed and its business plan developed.

"Potential future competition from Shannon or Cork is expected to be limited and these two airports contribute little cash flow at present."

A letter from Aer Rianta's solicitors to chief executive Margaret Sweeney, which was leaked to a daily newspaper, said that the break-up could trigger an early repayment of some of the company's debt.

However, Standard & Poor's does not expect the restructuring "to result in an immediate requirement to repay" its Eurobond or European Investment Bank loans.

However, Mr Plantagie added: "Uncertainty surrounds the company's future credit profile. The competitive position is expected to remain strong, but the outcome of the expected regulatory regime will be key for the ratings. Furthermore, any decision to approve an independent terminal at Dublin Airport could be detrimental to credit quality."

Earlier this week the legislation to pave the way for Aer Rianta's break-up was passed by the Seanad.

The three independent boards will have until next April to develop business plans for the airports.