Ratings agency Moody's has warned that the UK's withdrawal from the European Union without a deal would be a "significantly credit-negative" event for European airlines.
In a newly published report, the agency forecasts that a no-deal outcome would have "severe" short-term financial implications for European carriers.
This risk becomes more "modest" in the long term, as time should allow for comprehensive agreements to be reached and airlines to adjust their operations.
Moody's identifies five main risks to EU airlines from a no-deal outcome.
One is the risk that traffic rights between the UK and the European Common Aviation Area could be lost.
Likewise, traffic rights between the UK and other third countries that have aviation agreements with the EU, including the USA, are at risk.
Further risk arises from the need to meet ownership and control conditions in order to retain valid operating licences.
Additionally, a question mark hangs over the UK's continued membership in the European Aviation Safety Agency and certifying compliance with internationally recognised safety requirements.
Finally, there is the risk of weaker macroeconomic conditions.
The report's author Jeanine Arnold – a Moody's vice-president and senior credit officer – says a no-deal scenario could interfere with an airline's ability to increase yields, raise load factors and generate cost efficiencies. "Ultimately, it could lead to cash-flow and liquidity pressures," she notes.
British Airways, EasyJet, Ryanair, Thomas Cook, TUI and Virgin Atlantic are identified in the report as being some of the "most exposed" carriers in the event of a no-deal Brexit.
It points out that the "strong liquidity" of BA, EasyJet and Ryanair should enable them to weather the financial impact of a no-deal Brexit, even if flights are disrupted for an extended period. However, for airlines negatively affected by a no-deal Brexit, a sustained deterioration in liquidity and key credit metrics such as "gross leverage" or cash-flow coverage could lead to negative rating actions, the Moody's report warns.
"Broadly, an airline will be less exposed if it has a more flexible operating model and cost structure, greater network diversification and scale, and has begun to implement contingency measures," it states.
Moody's says Norwegian is less exposed to the risks it has identified, but believes the Scandinavian airline's "very weak liquidity" leaves it more sensitive to flight disruption or macroeconomic factors.
Responding to the Moody's note, Norwegian says it "continues to fly an increasing number of passengers and generate more revenue than ever" as it focuses on "building a strong, sustainable and global business".
The airline is "continuously monitoring the situation and evaluating steps to mitigate any risk to our operation from Brexit", it adds. "Structurally, Norwegian is well-positioned to protect our flying rights both in Europe and the UK, including in the unlikely event of a no-deal Brexit."
Noting that a "positive agreement" is "clearly in the common economic interests of the EU and the UK", Norwegian expresses confidence that one will be reached, "ensuring continued access to affordable air travel for citizens of both parties".
This article has been updated to include Norwegian's statement