S&P slashes TAP rating to ‘junk’ status
The ratings agency Standard & Poor’s have cut the rating of Portugal’s national airline TAP to the sixth level of ‘junk’ status.
Standard & Poor’s have cut the financial rating of six European airlines, including TAP which was down pegged to just one level above C.
The agency cut the investment rating of the national carrier from ‘B’ to ‘B-,’ which corresponds to the sixth level of ‘junk’ status or highly speculative investment rating.
S&P also cut the ratings of Air Baltic, Easy Jet, Deutsche Lufthansa, International Consolidated Airlines Group and SAS.
The airline company IAG, which includes British Airways and Iberia, has gone from BB to BBB- which is also at ‘junk’ status.
These cuts are as a result of the effects of the Covid-19 pandemic on the activity of airline companies and in the case of TAP at a time in which a State rescue package is being discussed with the Minister of Infrastructure, Pedro Nuno Santos admitting to various scenarios being on the table from nationalisation to allowing the airline to go bankrupt.
TAP’s rating has fallen one level and is now on the last level of B. Furthermore, the ratings agency has put the airline on ‘Credit Watch’ with negative outlook. This means that S&P is threatening to downgrade the national carrier to level C, which means ‘Substantial Risks’ of default (CCC+) or an ‘Extremely Speculative Investment’ (CCC). A rating of CCC- or less means ‘Imminent Default’