S&P cuts some American Airlines ratings

S&P said it downgraded the ratings and recovery ratings of selected American Airlines Group Inc. and American Airlines Inc. secured bank facilities and cut the rounded recovery estimate for senior unsecured debt.

American Airlines Inc. will have access to an added $2 billion on its $5.5 billion commitment for a term loan secured by the AAdvantage frequent flyer program and extended by the U.S. Treasury.

“Because of this potential additional debt, which we treat as a priority claim in modeling a hypothetical bankruptcy scenario, we are lowering our ratings and recovery ratings on certain secured bank facilities and reducing our rounded estimate of recovery for senior unsecured debt,” S&P said in a press release.

Also, American reported it plans to to accelerate the retirement of its A330-200 widebody aircraft as part of a fleet rationalization plan, S&P said.

“Because of the increased likelihood that American would reject enhanced equipment trust certificates (EETCs) originally issued by US Airways Inc. (since merged into American Airlines Inc.) that have A330 aircraft forming part of their collateral in a bankruptcy scenario, we are lowering our ratings on seven such EETCs,” S&P said.

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