NEW YORK--(BUSINESS WIRE)--While Brazilian airports and airlines have benefited from extraordinary passenger volume growth, they now face challenges related to their ability to manage traffic growth rates in a sustainable and economic manner, according to a new Fitch Ratings report.
From 2007 to 2011, the number of passengers served by Brazilian airports surged by approximately 75%. The speed of passenger growth in Brazilian airports continues to outperform global peers.
In comparison to other regions globally, the Brazilian domestic market is the fourth largest in terms of passengers transported.
Airline growth resulting from the growing Brazilian economy coupled with a rising middle class has created solid traffic growth rates. Passengers transported in the domestic and international segments grew approximately 61% and 31%, respectively, during the last three years.
Government actions - most notably tax provisions reducing income tax on project bonds and the use of public private partnerships to build three new terminals - should spur development to support increased demand. However, with the 2014 World Cup and the 2016 Olympics, there is limited margin for error.
Fitch expects overall credit quality for the Brazilian Airline sector to deteriorate in 2012, driven by the imbalance between revenue generation relative to costs. Domestic airlines remain unable to improve yields and maintain margins due to cost escalations.
Credit profiles of airport infrastructure debt will depend largely on the resilience of passenger volume, carrier diversity and regulatory framework transparency.
The full report, titled 'Higher Altitude for Brazilian Airports & Airlines', is available on the Fitch Ratings web site at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Higher Altitude for Brazilian Airports and Airlines: Navigating Through Growing Demand Challenges
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681388
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