March 25, 2020 / 4:20 PM / 10 days ago

UPDATE 1-Dufry expands measures to counter virus, sees no liquidity crunch

(Adds details about debt, comment from Dufry)

By John Miller

ZURICH, March 25 (Reuters) - Dufry has “considerably extended” measures to counter the coronavirus’s economic fallout, the company said on Wednesday, adding the Swiss airport retailer is talking with lenders but still does not foresee a liquidity crunch.

Moody’s Investors Service cut Dufry’s credit rating to “Baa3” from “Baa2,” a notch deeper into non-investment grade territory. The agency cited the “significant pace of negative developments and dramatically reducing international air traveler volumes.”

Dufry has initiated actions beyond the 60 million Swiss franc ($61.2 million) cost-saving program it announced this month, the spokesman said. Global travel that Dufry relies on has come to a virtual standstill, as the pandemic has infected some 422,000 people and killed more than 18,000, so far.

“The situation has changed and measures initially decided have been considerably extended,” the spokesman said. “There is much more flexibility than the 60 million francs i.e. further actions can be taken as and when required.”

Dufry is also eying governmental support programs launched in several countries, such as Spain, Italy, Great Britain, Netherlands and Switzerland, to help it stay afloat, the spokesman said. Switzerland on Wednesday, for instance, announced zero and low-interest loans to companies buckling under epidemic-linked disruptions.

Dufry’s net debt was 3.1 billion Swiss francs ($3.16 billion) at the end of 2019, or 3.52 times adjusted operating cash flow. Moody’s raised concerns the company may not be able to maintain financial metrics compatible with even its lowered Baa3 rating, should there be deeper and longer declines in airport passenger volumes.

“We are in contact with the lending partners and we have received positive feedback for receiving support, but there is nothing signed yet,” the spokesman said. “In any case, we do not anticipate having liquidity issues during the crises.”

$1 = 0.9801 Swiss francs Reporting by John Miller, editing by John Revill

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