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S&P takes Easyjet of CreditWatch, reaffirms long-term debt at BBB- with 'negative' outlook

By Alexander Bueso

Date: Friday 25 Sep 2020

S&P takes Easyjet of CreditWatch, reaffirms long-term debt at BBB- with 'negative' outlook

(Sharecast News) - Analysts at Standard&Poor's reaffirmed their rating on Easyjet's long-term debt, removing it from CreditWatch, but cautioned that the budget airline's risk metrics would remain under "considerable pressure" over the next few quarters due to the heightened uncertainty around the pandemic and economic recession.
Despite the measures adopted by Easyjet to contain costs, "adjust" capacity and reduce cash burn, the debt rating agency surmised that the carrier was still staring at a "substantial" operating cash flow for its full-2020 financial year ending on 30 September.

"However, assuming a vaccine or effective treatment for COVID-19 becomes widely available in the second half of 2021 and restores passenger confidence in flying, we expect easyJet's OCF will turn positive in FY2021," they went on to add.

In line with the above, the outlook for the company's debt rating was kept at negative.

"The negative outlook reflects our view that easyJet's financial metrics will be under considerable pressure in the next few quarters, as well as the high uncertainty regarding the pandemic and economic recession and their impact on air traffic demand and the improvement of easyJet's financial position."

As of 1506 BST, shares of Easyjet had managed to climb off their session lows and were 0.45% higher to 490.7p.

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