Luftansa was upgraded to Ba1 from Ba2 by Moody’s upon a “very swift deleveraging path over the last 12 months”. Luftansa’s adjusted gross debt/EBITDA has improved significantly from a negative number in 2021 to 4.2x as per the TTM ended March 2023 thanks to from a lower pension deficit and gross debt repayments. Luftansa’s liquidity is “more comfortable” than its pre-pandemic levels – cash-to-revenue stands at ~25% end-2022 vs. less than 10% at the end-2019. Balance sheet cash stands at €8.4bn vs. €3.4bn in 2019 and adjusted free cash flows came at €2.1bn for the TTM ended March 2023. Moody’s expects 2023 to be a “strong year” for Lufthansa’s passenger airlines business. This comes on the expectations of a continued improvement in traffic and strong passenger yields (20% above pre-pandemic levels). Besides, Moody’s sees no signs that inflationary pressures affect unit pricing.

Luftansa’s bonds were trading stable with its 3.5% 2029s up 0.2 points to 91.4, yielding 5.17%.

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