S&P cuts Global Aviation

Standard & Poor's said it lowered the corporate credit rating on Global Aviation Holdings Inc. to CCC+ from B and the issue-level rating on the company's first-lien secured debt to B from BB-. The notes are being co-issued by the company's two airline subsidiaries, World Airways Inc. and North American Airlines Inc.

S&P placed all ratings on CreditWatch with negative implications following the company's announcement that it's deferring the interest payment on its first-lien debt and using the 30-day grace period to negotiate covenant relief.

The company was in compliance with covenants in the second quarter ended June 30 but expects to be out of compliance in the third quarter absent covenant relief and success with other cost-cutting initiatives.

The ratings on Global Aviation reflect its participation in the cyclical, competitive and capital-intensive heavy airfreight business; its highly leveraged capital structure; and concerns regarding covenant compliance, which results in a current weak liquidity position, the agency added.

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