The group behind Manchester, Stansted and East Midlands airports is seeking approval to avoid any penalties on its near £2bn bonds and rolling credit facility after the Covid-19 pandemic shattered its finances.
Manchester Airports Group (MAG) is seeking waivers on £1.46bn of fixed rate bonds and its £500m revolving credit facility.
In a statement, MAG said it anticipates that its EBITDA will be "significantly lower" than expected for the financial year ending March 31, 2022, as a result of the continuing impact of the pandemic, with recovery to pre-Covid-19 passenger levels not expected until 2024.
MAG added that its strategy is to return back within compliance during the 2023 financial year.
A statement issued to the London Stock Exchange said: "Given that EBITDA is expected to be at significantly reduced levels, notwithstanding the mitigating actions taken by MAG, the disposal of the £400m of non-core investment property assets and the significant shareholder investment in 2020, the nature of the interest coverage ratio and the leverage ratio mean that the proposer expects that the security group will therefore breach the default ratios in respect of the interest coverage ratio and leverage ratio in the current financial year and is seeking the support of its secured creditors by means of a waiver in that regard."
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More than 58% of bondholders have signalled their approval so far ahead of the June 2 deadline.
MAG needs 75% acceptance to avoid any penalties for breaching the covenants.
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It added: "Following the severe disruption to the global travel industry caused by the outbreak of the Covid-19 pandemic in March 2020, the Covid-19 outbreak continues to affect the global travel industry and cause a significant drop in passenger traffic across each of the airports owned by the security group.
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"MAG faces into this in a strong and prudent financial position. Ratings action will be fluid during the impact phase of Covid-19.
"MAG reiterates its long-standing commitment to targeting BBB+/Baa1 ratings, underpinned by a track record of conservative financial management.
"As part of its strategic response to Covid-19 in 2020, MAG implemented a robust financial strategy. This included a combination of cash mitigation measures, together with a significant £300m of equity support from its shareholders, to maintain MAG's strong financial health through the period and to be well positioned for rebound and recovery.
"The security group has taken, and continues to take, immediate actions to mitigate the effects of the drop in passenger numbers by reducing both capital expenditure and operating costs, as well as successfully bringing forward the disposal of approximately £400m of non-core investment properties in two tranches and received in full in October 2020.
"MAG also continues to have supportive shareholders who provided a £300m support package to MAG in 2020."