S&P rates Transportes Aereos Portugueses, notes BB-

S&P said it assigned preliminary BB- ratings to Transportes Aereos Portugueses SGPS, SA, its core operating subsidiary Transportes Aereos Portugueses, SA and its proposed €300 million senior unsecured notes due 2024. The agency also assigned a recovery rating of 3 with prospects of 50%.

“Our BB- preliminary issuer credit rating on TAP Group reflects the airline’s leading position in its Lisbon airport hub, where it holds 55% of slots, and which it leverages for connections throughout Europe. Lisbon is a slot-constrained airport, which helps TAP Group defend its competitive advantage against competing airlines. TAP Group is the No.1 player on the normally high-demand Europe-Brazil routes, where it generates about 25% of its total earnings and faces lower competition than in the European short-haul segment. That said, this emerging market exposes TAP Group to higher trading volatility, as was seen in 2018 when political instability and government elections hampered air traffic volumes both to and from Brazil,” said S&P in a press release.

The outlook is stable.

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