S&P ups Lufthansa to investment grade

S&P said it raised its ratings on Deutsche Lufthansa AG and its senior unsecured debt to BBB- from BB+ and its junior subordinated debt to BB from B+.

“Lufthansa's higher-than-expected yields, underpinned by uninterrupted robust demand for air travel and industrywide capacity constraints, translate into higher-than-forecast earnings this year. In the first nine months of 2023, the average unit revenue (passenger revenue divided by available seat kilometers [ASK]) in Lufthansa's passenger airlines business segment increased 11.5% year over year (after a 37.1% increase in 2022) and was therefore 23.8% above its pre-covid-19 level in 2019.

“Strong airfares continue to benefit from continual robust leisure demand and lingering industrywide capacity constraints,” the agency said in a statement.

S&P said it expects Lufthansa’s adjusted EBITDA to be flat-to-moderately higher in 2024.

The outlook is stable.

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