S&P lifts American Airlines debt

S&P said it affirmed the BB- corporate credit rating on American Airlines Group Inc. and its subsidiaries, American Airlines Inc. and US Airways Inc.

The outlook is stable.

The agency also raised the ratings on the companies' unsecured debt to BB- from B+ and revised the recovery ratings on the debt to 4 from 5 based on an expectation that the unsecured creditors would receive greater recovery in a default scenario because of American Airlines' improving aircraft fleet.

The 4 recovery rating indicates 30% to 50% expected default recovery.

The agency also said it affirmed the ratings on most of the companies' enhanced equipment trust certificates (EETCs), though S&P also said it raised and lowered the ratings on select certificates.

The company is expected to report solid earnings and cash flow in 2016 and 2017, though at levels that are somewhat below the very strong results the company posted in 2015, the agency said.

Heightened competition in certain markets and the negative effects of foreign-currency translation are pressuring American Airlines' revenue, S&P said.

This is similar to the near-term challenges that are facing other U.S. airlines, the agency said.

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