Moody’s upgrades SAS

Moody’s Investors Service said it upgraded SAS AB’s corporate family rating to B2 from B3 and probability of default rating to B2-PD from B3-PD.

The agency also said it upgraded its subsidiary, SAS Denmark-Norway-Sweden’s backed subordinated loan rating to Caa1 (LGD 6) from Caa2 (LGD 6) and backed senior unsecured medium-term notes rating to provisional B3 (LGD 4) from provisional Caa1 (LGD 5).

Moody’s also said it affirmed the not-prime commercial-paper rating and the provisional not-prime backed other short term rating.

The outlook is stable.

The ratings reflect the company’s material earnings improvement in fiscal year 2015 and its solid financial performance in the first half of fiscal year 2016, which strengthened the company’s credit metrics, Moody’s explained.

The agency also said it anticipates that SAS’s performance will continue to be challenged by the expansion of low-cost competitors, including Norwegian Air Shuttle ASA.

But, the forecast of low oil prices for the next two years and SAS’s ongoing cost saving initiatives will support a stable operating performance over the next 12 to 18 months, Moody’s said.

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