UBS has downgraded its recommendation on Athens International Airport shares to “Sell” in its latest report, while cutting its target price to €10.3 from €10.7. The new target implies downside of about 19% from current levels, as the share’s strong 17% rise since the start of the year is no longer in line with its short-term earnings prospects, the bank says.
At its current valuation, the airport trades at a 2027 EV/EBITDA multiple of around 11.4x. That is in line with Spain’s Aena, while representing a premium of 15% to 30% to peers such as ADP, FHZN and Fraport, despite Athens International Airport having a higher proportion of regulated activities in its revenue mix. At the same time, its current valuation retains a premium of about 25% to its historical valuation, at a time when yields on Greek 10-year bonds were 50 to 100 basis points lower.
The cut in the target price to €10.3 reflects a lower valuation for the airport’s non-regulated (commercial) activities, with the target 12-month EV/EBITDA multiple reduced to 13.5x from 15x previously. The adjustment was deemed necessary because the latest capital expenditure (capex) programme entails limited commercial expansion.
High jet fuel prices and uncertainty over passenger traffic
Higher oil prices pose downside risks to passenger traffic in 2027 as airlines review their flight capacity. Flight schedules at Athens International Airport are being repeatedly revised downwards, while Aegean, which accounts for about 43% of total capacity, is among the European airlines with the least protection against fuel price fluctuations. It has hedged just 15% of its needs for 2027 and forecasts no capacity growth that year.
With further cuts to available capacity expected, UBS forecasts that passenger traffic at Athens International Airport will be flat in 2027, compared with the 2% growth projected by the market consensus.
Investment delays constrain scope for higher charges
Lower passenger traffic could, under normal circumstances, create scope for higher charges in the future. However, slower investment implementation limits that possibility.
As a result, market assumptions about the path of charges may prove overly optimistic, while the airport’s earnings will be more exposed to any decline in passenger traffic.
Meanwhile, management’s guidance for core operating expenses in 2026, at €6.4 per passenger, implies an acceleration in the annual rate of increase to around 15% in the second half, excluding exceptional costs. This raises questions about cost control as the inflationary environment becomes more challenging.