British Airways’ credit rating has been cut to junk status by Standard & Poors.
The ratings agency today downgraded BA’s long term corporate credit and senior unsecured ratings to BB+ and BB- respectively after it completed a review of the airline’s creditworthiness in the wake of the Iraq conflict and SARS.
Standard & Poors said the new ratings reflected BA’s high level of leverage, its future pensions liabilities, and the competition it faces in its key markets.
“As a result of the more challenging industry environment, Standard & Poor’s believes that British Airways’ financial profile and credit measures are no longer, nor are likely to be, over the next several years, appropriate for an investment-grade rating,” says Bob Ukiah, a credit analyst at S&P.
BA has £6.8 billion of on balance sheet debt.
