Moody’s ups TAP rating to B1 with positive outlook

The US ratings agency Moody’s has increased the debt rating of Portuguese airline TAP from B2 to B1 with a stable outlook ahead of its privatisation next year.

It said that its “strong and continued operational profitability was behind the upgrade and added that TAP’s prospects continue to be positive, and paves the way for another upwards rate increase in future.
Since its last evaluation in April 2023, and simultaneously, there has been a continued improvement in credit metrics according to Moody’s communiqué published on Friday.
Moody’s expects “a continued recovery in passenger traffic in 2023 and 2024, although yields should fall back to normal given recent high levels.”
Last week TAP posted a third quarter result of €180.5 million between July and September, 69.2% above the like-for-like period last year.
The net result for the first nine months of the year was €203.5 million. The company also reduced its net debt by €31.3 million to €670.7 million, the equivalent of 2.4 times the EBITDA.
Moody’s highlights the buoyant traffic on the North Atlantic routes and Brazil in 2023 and points out that TAP’s capacity is already 101% of 2019 levels, with a seat occupation rate also above pre-pandemic levels. TAP showed “a stronger recovery than some (other) companies with a better rating such as Lufthansa and IAG”, it says.