Moody's cuts SAS

Moody's Investors Service downgraded Scandinavian Airlines System including cutting its euro medium-term notes to B1 from Ba2 and perpetual subordinated bonds to B2 from Ba3. The outlook is stable.

Moody's said the action reflects prolonged weakness in travel volumes aggravated by the Iraq war and SARS, especially in the Scandinavian and European markets, intensified competition from low-cost airlines, the continued short fall in business class travel and a shift in passenger mix, which noticeably affected the group's operating performance.

Management's turnaround program is viewed positively but at the same time considered far reaching, with quick and successful implementation critical to dramatically cut costs, restore profitability and offset yield and market pressures to ensure a return to more conservative debt coverage ratios.

The stable outlook for the ratings is based on the expectation of improved operating performance for the remainder of the year, strong execution of substantial parts of the management's remedial operating plan, as well as management's strong commitment to deliver the expected cost reduction targets.

Moody's confirms British Airways, outlook negative

Moody's Investors Service confirmed British Airways plc including its £100 million 10.875% senior unsecured notes due 2008, £250 million 7.25% senior unsecured notes due 2016 and $115 million 5.25% senior unsecured industrial revenue notes due 2032 at Ba2 and €300 million 6.75% perpetual guaranteed non-cumulative preferred stock due 2004 issued by British Airways Finance (Jersey) LP at B1. The outlook is negative.

Moody's said the confirmation is in response to stabilizing business trends, ongoing benefits expected from BA's future size and shape program and the group's track record of effectively responding to competitive pressures and securing its long-term positioning.

The negative outlook reflects weak market trends and uncertainties in the industry environment.

The ratings are supported by BA's strong base at Heathrow benefiting from the sizable traffic flows from and to London, its international network and Oneworld member-ship, management's proven track record of cost cutting relating to the Future Size and Shape program and the stabilizing market trends in the U.K. and Europe after major shifts following the entrance of low-cost airlines, Moody's said.

Furthermore, the group's strengthened liquidity position relating to stronger operating cash flow generation, asset disposals and the completion of the fleet renewal program as well as improving profitability trends in underperforming segments (e.g. European traffic) leading to a more balanced geographical profit profile are also included in the rating.

However, the ratings also reflect BA's continued dependency on strong profits from premium traffic on North Atlantic routes, the weakness in travel volumes and ongoing yield and fare pressure, especially in the premium segment, which are expected to continue to dampen operating performance at least over the short term, Moody's said. The group's short-term outlook is subject to uncertainty with regards to economic development, especially the timing of a possible U.S. upturn, which is considered a key performance driver for BA, as well as ongoing geopolitical risks and more moderately to the impact of SARS.

S&P puts Acetex on watch

Standard & Poor's put Acetex Corp. on CreditWatch negative including its $190 million 10.875% senior notes due 2009 at B+.

S&P said the action follows Acetex's announcement that it has entered into a definitive agreement to merge with specialty plastics manufacturer, AT Plastics Inc.

The CreditWatch placement highlights risks associated with the transaction including the assumption of AT Plastics' heavy debt burden and Acetex's need to refinance this debt during the near-term, S&P said.

Moody's raises AES Red Oak outlook

Moody's Investors Service raised its outlook on AES Red Oak to stable from negative and confirmed its senior secured debt at B2.

Moody's said the action reflects improvement in the credit quality of Red Oak's tolling counterparty guarantor, The Williams Cos.

Earlier this month, Moody's upgraded the senior unsecured debt of Williams to B3 from Caa1.

Moody's raises AES Ironwood outlook

Moody's Investors Service raised its outlook on AES Ironwood to stable from negative and confirmed its senior secured debt at B2.

Moody's said the action reflects improvement in the credit quality of Ironwood's tolling counterparty guarantor, The Williams Cos.

Earlier this month, Moody's upgraded the senior unsecured debt of Williams to B3 from Caa1.

Moody's raises Cleco Evangeline outlook

Moody's Investors Service raised its outlook on Cleco Evangeline LLC to positive from negative and confirmed its senior secured debt at B3.

Moody's said the action reflects improvement in the credit quality of Cleco Evangeline's tolling counterparty guarantor, The Williams Cos.

The positive outlook also reflects the potential for Cleco Evangeline to be rated higher than Williams due to supportive factors in the structure of the project and its competitive positioning in its local power market.

Earlier this month, Moody's upgraded the senior unsecured debt of Williams to B3 from Caa1.

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