London, 06 March 2018 -- Moody's Investors Service, ("Moody's") has today changed the outlook on all the ratings of Swissport Group S.a r.l. ("Swissport"), Swissport Investments S.A., Swissport Financing S.a r.l., and Swissport International AG to negative from stable. The B3 corporate family rating ("CFR") and the B3-PD probability of default rating of Swissport have been affirmed.

Concurrently, Moody's downgraded to B2 from B1 the rating on the €460 million term loan B ("TLB"), to B2 from B1 the rating on the €363.5 million senior secured notes ("SSN"), and to Caa2 from Caa1 the rating on the €264.6 million senior unsecured notes ("SN") issued by Swissport Financing S.a r.l. Moody's also downgraded to B2 from B1 the rating of the CHF110 million revolving credit facility (RCF) issued by Swissport International AG. The downgrades are driven by the issuance of an incremental Term Loan B which increased the proportion of senior secured debt in the capital structure and Moody's view that the company's credit standing has deteriorated.

Moody's also assigned a provisional (P)B2 rating to the €325 million incremental term loan B ("incremental TLB") to be issued by Swissport Financing S.a r.l. The assignment of a (P)B2 rating to the incremental TLB follows the company's announcement in January 2018 that it secured funding to finance the acquisition of Aerocare. Pro-forma for the transaction the term loan B is expected to increase to €785 million from €460 million.

Finally, Moody's downgraded to Caa3 from B1 the rating of the original €400 million senior secured notes ("old SSN"), and to Caa3 from Caa1 the rating of the original €290 million senior unsecured notes ("old SN"), issued by Swissport Investments S.A.. The remaining notes outstanding, €36.5 million for the old SSN and €16.9 million for the old SN, have not been exchanged as part of the debt restructuring completed in August 2017 and therefore sit outside of the restricted group and no longer benefit from the original security package.

"Moody's decision to change the outlook to negative from stable reflects sustained negative free cash flow generation in 2016 and 2017, as well as concerns over the timely repayment in May 2018 of the loan provided to an affiliate of HNA. We expect free cash flow generation to improve in 2018, allowing the company to maintain an adequate liquidity profile" says Emmanuel Savoye, a Moody's Assistant Vice President and lead analyst for Swissport.

A full list of affected ratings can be found at the end of this Press Release.


Based on Moody's estimates, Swissport generated negative free cash flow of €102 million in LTM Q3 2017 during a period of increased airline traffic and cargo activity. This stems from the inherently low margin of the business, significant interest expenses, adverse working capital changes and capital expenditures, including investments in its global IT infrastructure. Liquidity remained adequate during this period due to net proceeds from an equity injection of €718 million after taking into account the €200 million TLB partial repayment and the €400 million loan provided to an affiliate of HNA, and we anticipate that a stronger Q4 performance will lead to an improvement in free cash flow for 2017 as a whole. Pro-forma for the acquisition of Aerocare, we estimate Swissport's cash position of approximately €160 million and available liquidity under the revolving credit facility of €43 million. We expect free cash generation to remain negative although improving significantly during 2018 as a result of lower exceptional costs, better working capital management, and the contribution from Aerocare.

Swissport benefitted from excellent liquidity following the equity injection from HNA in the first half of 2017. However, its cash balance has reduced in the following quarters due to 1) a use of cash of €200 million to refinance and partially repay the TLB in July 2017, as well as transaction fees incurred during the restructuring to resolve the technical event of default; 2) the issuance of a €400 million loan to an affiliate of HNA in August 2017 (the "Affiliate Loan"); and 3) a deposit payment for the Aerocare acquisition.

The Affiliate Loan, due for final repayment in May 2018, has been renewed on several occasions by Swissport. In Moody's view, these loans reflect an aggressive financial policy especially at a time when Swissport is in the process of closing the sizeable acquisition of Aerocare. In addition, we understand that pro-forma for the transaction, any further repayment of the Affiliate Loan will be used for deleveraging.

Despite negative trends in cash flow generation, Swissport's revenues have increased by 6.2% on a constant currency basis in the first nine months of 2017 to €2.1 billion and net contract wins totaled €60 million. This reflects strong growth in cargo handling activities and a stable performance in ground handling which will continue in light of a good macro-economic backdrop. Additionally, the acquisition of Aerocare will be an important step forward in the penetration of the Asian market which is one of Swissport's strategic objectives.

The B3 CFR assigned to Swissport reflects the company's leading market positions in ground handling and cargo, its geographical diversification which we expect to be further enhanced with the acquisition of Aerocare, and the growth opportunities from more profitable emerging markets, particularly China, following the acquisition by HNA Group in 2016.

However, the B3 CFR also takes into account the limited free cash flow generation partly stemming from airlines' focus on costs for ancillary services, and the Moody's adjusted leverage of 6.5x as of 30 September 2017 pro-forma for Aerocare.


The negative outlook reflects that, despite Swissport's adequate liquidity profile, free cash flow generation has been negative over a number of quarters and is likely to remain negative in 2018 although improving. It also assumes that the company will continue to successfully achieve organic growth while renewing existing contracts, and focus on measures aimed at improving profitability across its network.


Upward pressure on the ratings would develop upon improvements in free cash flow generation resulting in a stronger liquidity position.

Downward pressure on the ratings would develop in case of negative free cash flow generation over the coming quarters, or in case of non-repayment of the affiliate loan in May 2018.


Issuer: Swissport Group S.a r.l.


....Long-term Corporate Family Rating, affirmed B3

....Probability of Default Rating, affirmed B3-PD

..Outlook Action:

....Outlook changed to Negative from Stable

Issuer: Swissport Investments S.A.


....Backed Senior Secured Regular Bond/Debenture, downgraded to Caa3 (LGD6) from B1 (LGD3)

....Backed Senior Unsecured Regular Bond/Debenture, downgraded to Caa3 (LGD6) from Caa1 (LGD5)

..Outlook Action:

....Outlook changed to Negative from Stable

Issuer: Swissport Financing S.a r.l.


....Senior Secured Bank Credit Facility, downgraded to B2 (LGD3) from B1 (LGD2)

....Backed Senior Secured Regular Bond/Debenture, downgraded to B2 (LGD3) from B1 (LGD2)

....Backed Senior Unsecured Regular Bond/Debenture, downgraded to Caa2 from Caa1


....Senior Secured Bank Credit Facility, assigned (P)B2 (LGD3)

..Outlook Action:

....Outlook changed to Negative from Stable

Issuer: Swissport International AG


....Senior Secured Bank Credit Facility, downgraded to B2 (LGD3) from B1 (LGD2)

..Outlook Action:

....Outlook changed to Negative from Stable

The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on for a copy of this methodology.

Headquartered near Zurich Airport, Swissport is the world's largest independent ground handling services company, based on revenue and number of ground handling stations, and ranks first globally in terms of metric tonnes of cargo handled. In 2016, Swissport handled approximately 4.1 million flights and around 4.3 million tonnes of cargo, for approximately 800 passenger airlines and freight carriers.

Ground handling represented 82% of Swissport's 2016 revenue, with cargo revenues contributing the remainder. For the FY 2016 ending 31 December 2016, Swissport generated revenues and management adjusted EBITDA of €2.7 billion and €206 million, respectively.