DBRS Warns of Aviation Sector Disruption Amid US Debt Ceiling Crisis
According to DBRS Morningstar, the failure to raise the US debt ceiling could lead to temporary disruptions in the operations of global airlines and airports. However, the impact would primarily affect air travel scheduled for later this year, as most summer flights have already been booked.
The US ratings agency suggests that if the debt ceiling is not increased promptly, the Treasury would prioritize debt payments. In the event of a short-lived impasse, the macroeconomic effects are expected to be moderate. However, if the situation persists throughout the summer months, the consequences would be more severe.
DBRS notes that a potential default by the Treasury on a debt payment could result in negative rating actions in the aviation sector. Consequently, this could adversely affect consumer confidence and spending, particularly in discretionary tourism-related air travel.
To address these concerns, DBRS placed USA's AAA issuer ratings under review with negative implications on 25 May.