How Well Prepared Are European Airlines For The Turbulence Of Another Recession? Mar 12

Standard & Poors, March 2012

Abstract
Just as Europe's airlines have recovered from the sharp downturn of 2009, a weakening economic environment is again threatening to blow them off course. Standard & Poor's Ratings Services' economists currently see a 40% likelihood of a true double-dip recession, leading to a decline in GDP in Western Europe over 2012. Yet we believe a recession would likely not affect the ratings of European carriers Deutsche Lufthansa AG (BBB-/Stable/A-3) and British Airways PLC (BB-/Stable/--), because they benefit from strong liquidity positions that should cushion them against short-term industry shocks or unavailability of funding. In contrast, SAS AB (B-/Negative/--) would in our opinion be vulnerable to weakening conditions. Our downside credit scenario assumes a modest recession in the airlines' home markets...

Companies mentioned in this report are: Deutsche Lufthansa AG,British Airways PLC,SAS AB

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

Deutsche Lufthansa AG,British Airways PLC,SAS AB

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