Moody's decision to downgrade Scandinavian Airline Systems (SAS) by three notches was clear evidence that the airline sector has yet to recover from the downturn resulting from the September 11 attacks on the US.

Moody's cut SAS to Baa3 from A3, putting the company one notch above junk bond status. It also pushed SAS's commercial paper rating to Prime-3 from Prime-2. The rating agency blamed SAS-specific issues such as likely delays in debt reduction due to a fleet renewal programme. It also highlighted a sharp downturn in passenger traffic, particularly in business class, the most lucrative customer pool for airlines and the absence of which contributed to the collapse of Belgium's Sabena and Swissair.