SAS AB Monitoring early warning signals of credit risk

This article is written and published by S&P Global Market Intelligence; an independent division of S&P Global Ratings. S&P Global Ratings does not contribute to or participate in the creation of credit ratings generated by S&P Global Market Intelligence. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence PD credit model scores from credit ratings issued by S&P Global Ratings.

Summary of bankruptcy:

SAS AB is a Stockholm-based airline that provides international passenger flights and cargo services.

On July 5, 2022, SAS AB filed a voluntary Chapter 11 reorganization petition with the United States Bankruptcy Court for the Southern District of New York. COVID-19, which spread globally in 2020, severely affected SAS AB.

The COVID-19 pandemic has caused a global recession and disruption, plunging global demand for air traffic. Travel restrictions and strict government shutdowns have forced many airlines to temporarily suspend operations. Flights have been cancelled, revenues have shrunk and liquidity has deteriorated, impacting airlines’ ability to repay debts.

Air traffic levels lower than before the pandemic, cash shortages and a 2-week pilot strike costing $12.5 million a day[1] exacerbated their liquidity and financial situation, forcing them to file for bankruptcy.

Activity Descrition:

SAS AB, founded in 1946 and based in Stockholm, Sweden, is the largest commercial airline in Scandinavia and the eighth largest in Europe, providing passenger air transport services on the Nordic and international network.

The company also offers air cargo services, in-flight sales, ground handling and technical maintenance services, as well as travel-related loyalty programs. It operates a fleet of 135 aircraft, including 12 long-haul aircraft, 95 short-haul aircraft and 28 aircraft flown by regional production partners.

The evolution of credit risk for SAS AB

PD Model Market Signals (PDMS), one of S&P Global Market Intelligence’s credit analysis models, is a market-driven model that relates market movements to a company’s probability of default (PD). The model generates short-term, point-in-time PD values ​​that reflect recent market information and are updated daily.

PD Model Market Signals combines multiple indicators into an early warning signal of credit risk movement. For example, historical observations between 2002 and 2018 show that half of defaulting companies had their PD above 8% 12 months before default, rising to 22% at the date of default.[2].

Also, the same industry PD provides a relative benchmark, which can be used to compare and contrast company creditworthiness.

Figure 1: PD market signal and stock price movement

Source: S&P Global Market Intelligence. As of July 27, 2022. For illustrative purposes only.

Before the pandemic, PDMS had a much lower risk. At the start of the pandemic, stock prices fell sharply due to unfavorable market conditions during the first half of 2020. As a result, the PDMS climbed well above 8%, indicating a distressed outlook.

The easing of lockdown restrictions and the generalization of vaccines in mid-2021 reflected a positive market outlook for the post-pandemic recovery, leading to a steady improvement in the PDMS, bringing it down to 3%.

However, in November 2021, the PDMS rose sharply to 12% due to declining equity returns, due to weaker than expected customer demand and weak operational performance, thus providing a signal for timely early warning of credit risk.

Figure 2: Escalating PD Market Signal and Comparison to Industry Median

Source: S&P Global Market Intelligence. As of July 27, 2022. For illustrative purposes only.

Additionally, the median global industry PD remained relatively stable following the post-COVID-19 recovery, contrasting sharply with SAS AB, providing another early warning signal of credit deterioration.

Table 1: Main developments



Big title


Job Related Announcement

SAS reaches agreements with SAS Scandinavia pilot unions, ending pilot strike


Decrease in index constituents

SAS AB (publ)(OM:SAS) removed from S&P Global BMI Index


Credit Rating – S&P – Downgrade[3]

Issuer credit rating: D; NM of CC; Negative: Local currency LT


Announcement of operating results

SAS AB (publ) publishes traffic results for the month and year to date of June 2022


Bankruptcy – Other

Motion for joint administration filed by SAS AB (publ)


Bankruptcy – Filing

SAS AB (publ) filed for bankruptcy


Job Related Announcement

SAS Scandinavia pilot unions choose to strike


Job Related Announcement

SAS AB (publ) announces that the SAS Scandinavia pilot unions strike has been postponed until 4 July 12:01 CET


Job Related Announcement

SAS and SAS Scandinavia pilot unions extend deadline for mediation


Announcement of operating results

SAS AB (publ) publishes traffic results for the month and year to date of May 2022

Source: S&P Global Market Intelligence. As of July 27, 2022. For illustrative purposes only.

If you would like to learn more about how to track entity early warning signals, contact us here.


[2] S&P Global Market Intelligence: “PD Model Market Signals (PDMS) 2.0”, White Paper, January 2020.

[3] Credit ratings are prepared by S&P Global Ratings, which is analytically and editorially independent of any other S&P Global analytical group.

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