Moody's rates American Airlines notes B1

Moody's Investors Service said it assigned a B1 rating to the new senior unsecured notes due 2022 that American Airlines Group Inc. announced earlier today.

The new notes will be guaranteed by subsidiary American Airlines, Inc.

The proceeds will become contributions to the company's pension plans.

The Ba3 corporate family rating and stable outlook are unaffected by this issue.

The ratings reflect the company's position as the world's largest airline based on its $44.5 billion of revenue in 2018, Moody's said.

Leverage is elevated because of the heavy reliance on debt for repurchasing shares while funding the majority of almost $27 billion of capital investment over the last five years with operating cash flow, the agency said.

The ratings consider the company's inferior operating margin and weak free cash flow relative to its U.S. legacy airline peers – Delta Air Lines and United Airlines, Moody's said.

The stable outlook reflects an expectation that American will maintain its competitive network, sustain annual operating cash flow of at least $5 billion through 2019 and modestly strengthen credit metrics in the next 12 months, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.