Moody's downgrades SAS

Moody's Investors Service said it lowered the corporate family and probability of default ratings of SAS AB to Caa1 and Caa1-PD from B3 and B3-PD, respectively.

Concurrently the agency downgraded SAS Denmark-Norway-Sweden's backed senior unsecured medium-term program rating to (P)B3 from (P)B2 and the instrument rating of its Swiss franc perpetual guaranteed subordinated notes to Caa2 from Caa1. Moody’s changed to the outlook to negative from stable.

“SAS' liquidity profile has deteriorated markedly over the time frame of a single quarter to Jan. 31, 2021, with the group's cash & marketable securities dropping from SEK 10.2 billion at the beginning of the quarter to SEK 4.7 billion at the end of the quarter. The deterioration in the group's liquidity profile was exacerbated by a reduction in available backup credit lines to SEK 1.1 billion from SEK 2.8 billion at the beginning of the quarter,” Moody’s said in a press release.

The downgrade also reflects the weaker forecast for short-term passenger traffic outlook for European airlines than projected back in November 2020, and the very slow start to the vaccination campaign across most European countries, which could hurt traffic in the important summer season, the agency said.

“The negative outlook reflects the group's weak liquidity profile and the risk that its liquidity cushion will erode further to an unsustainable level over the next few months,” Moody’s said.

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