S&P cuts Hawaiian Holdings certificates

S&P said it trimmed Hawaiian Holdings Inc.’s 2013-1 class A enhanced equipment trust certificates to B- from B.

“In our review of Hawaiian's EETCs, we focus primarily on current market values, given the wide gaps between base and current market values for the A330-200s that collateralize its EETCs. For the 2013-1 class A tranche, the loan to value (as measured by appraised current market values) has weakened further since our last review and is now above 100%. Therefore, we lowered our affirmation credit by one notch because we believe an attempt to restructure the EETCs in a hypothetical bankruptcy scenario is increasingly plausible, given the certificates' high loan to value,” S&P said in a press release.

Concurrently, the agency changed Hawaiian’s outlook to positive from negative and affirmed its CCC+ issuer rating.

“The positive outlook reflects Hawaiian's significantly improved liquidity position and our expectation that the company's performance will improve gradually in the second half of 2021 and into 2022. We expect credit metrics to remain weak in 2021, with FFO to debt remaining negative, then increasing to the mid-single-digit-percent area in 2022,” S&P said.

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