S&P cuts Hawaiian Holdings certificates

S&P said it lowered its issue-level ratings on Hawaiian Holdings Inc.’s 2013-1 class A certificates to B (sf) from BB- (sf) and the class B certificates to CCC+ (sf) from B (sf).

“We lowered the ratings to reflect very weak current market values for widebody aircraft such as the Airbus A330-200 that secure Hawaiian’s certificates,” S&P said in a press release.

With a weaker than previously forecasted outlook for air traffic, S&P said it is now focusing more increasingly on current market values of aircraft, instead of or in addition to, base values (a term used by aircraft appraisers for their value estimates that do not incorporate the current balance of supply and demand for a particular type of aircraft).

“We do this because the scenario in which current market values would become directly relevant – a bankruptcy and repossession and sale of aircraft collateralizing defaulted EETCs – are increasingly likely,” S&P said.

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