(Bloomberg) -- British Airways' credit rating was cut one notch to junk by Fitch Ratings, potentially complicating the IAG SA-owned carrier's access to new loans amid a sharp slump in global aviation.
Fitch lowered British Airways' long-term credit rating to BB+ from BBB-, it said Thursday in a statement, citing a “deep global recession” expected to hit air travel beyond the current shutdown brought about by the coronavirus pandemic. The ratings agency said it may cut the rating further.
The drop out of investment grade may make it harder or more expensive for British Airways, a former flag carrier, to access capital should it need it. The U.K.'s Covid Corporate Financing Facility is open only to investment grade companies, though the government has signaled flexibility.
British Airways declined to comment.
This week, rival EasyJet Plc said it had borrowed 600 million pounds ($747 million) through the facility.
British Airways has furloughed more than 30,000 employees to save cash and grounded almost all of its passenger fleet, as the virus effectively wipes out global travel demand. It's accessed state programs that subsidize worker salaries, but so far IAG Chief Executive Officer Willie Walsh has said the group has no plans to seek state funding.
Fitch estimates that British Airways' network capacity will shrink to nothing from April to the end of June, before a slow recovery in the second half running through 2022. Even then, it expects annual capacity to be 5% lower than 2019.
European carriers will be worst-hit by the crisis, and have enough cash to survive only two months on average, according to the International Air Transport Association. IAG is better placed, with more than 7 billion euros ($7.7 billion) in cash.
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