Danske Bank analyse: SAS – downgraded to Caa1 by Moody’s

SAS (MW) has been downgraded to Caa1/Negative Outlook from B3 which reflects the sharp deterioration in SAS’ liquidity profile since the material capital injection by its shareholders in October last year with a need of securing additional funding sources over the next months according to Moody’s. Furthermore, Moody’s notes the weaker short term passenger traffic outlook which is impacted by a very slow start to the vaccination campaign across most European countries. We note that SAS’ cash and cash equivalent position dropped from SEK10.2bn in Q4 20 to SEK4.7bn in Q1 21. The majority of the drop (SEK3.7bn) was due to extraordinary high working capital outflows which mainly related to refund payments. We believe most of this outflow was a one-time issue but acknowledge the weaker cash position and the more difficult outlook in terms of passenger traffic during the summer holiday season. Overall credit negative.