TAP downgraded by Moody’s
The international ratings agency Moody’s has cut the ratings of Portugal’s national airline TAP to ‘negative outlook’.
In its report into the airline, it has expressed the opinion that the company faces an increased likelihood of non-compliance or default, citing the airline’s exposure to Brazil, the United States and Europe during the Covid-19 crisis.
“Moody’s today lowered the ratings on the probability of non-compliance and default and as a business to Caa1-PD and Caa1 from B2-PD and B2, respectively.
The agency also downgraded its Basic Credit Evaluation to Caa2 from B3 and the rating associated to unsecured debentures totalling €375 million to Caa2 from B2.
The news, which was expected given the situation facing most of the world’s airlines at present, came as TAP announced that it had cancelled flights to 75 destinations with its operations reduced to just 15 destinations.
The decision was taken to operate only 15 destinations because of the construction currently being imposed by countries around the world to contain the coronavirus.
The decision comes into force on 23 March and can be revised at any time states the carrier.
“TAP informs the market and the general public that it will temporarily reduce its operations from 23 March until 19 April 2020. During this period TAP expects to continue operating 15 of its 90 destinations that it usually operates, with that decision liable to review at any time whenever circumstances dictate” says a communiqué sent to the markets supervisor CMVM.
TAP had been gradually reducing its flights but was forced to make more drastic cuts taking into account “the restrictions imposed on it by the various States in geographies to which it flies.
“Those restrictions, combined with a sharp fall in demand has caused the progressive cancellation of flights and suspension of routes, resulting in an overall reduction in global air traffic in recent weeks”, states the communiqué.