Moody's upgrades Southwest Airlines

Moody's Investors Service said it upgraded Southwest Airlines Co.’s senior bonds to Baa2 from Baa3, its five pass-through trust certificates to Baa1 from Baa2, the A tranche of AirTran Airways, Inc.’s 1999-1 enhanced equipment trust certificates to A3 from Baa3 and the C tranche to Baa1 from Ba1. The A3 and Baa3 ratings on Southwest Airlines' 2007-1 enhanced equipment trust certificates were affirmed. The outlook is stable.

The agency said the upgrade reflects expectations of further strengthening of the company’s credit metrics, building on the improvements in cash flow, earnings and financial leverage that Southwest has achieved since the end of 2012. Moody's believes that Southwest is better positioned than it has been historically to manage the next cyclical downturn because of its lower funded debt, broader network and improved liquidity.

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