Moody’s alters Avolon view to negative

Moody’s Investors Service said it revised Avolon Holdings Ltd.’s outlook to negative from under review, but confirmed its ratings, including the Baa3 backed issuer rating and the Baa3 backed long-term senior unsecured ratings of subsidiaries Avolon Holdings Funding Ltd. and Park Aerospace Holdings Ltd.

The agency also confirmed the B1 long-term senior unsecured rating of Global Aircraft Leasing Co., Ltd., which holds Bohai Leasing Co. Ltd.'s 70% interest in Avolon.

These actions conclude the review started Feb. 1, which was precipitated by the bankruptcy petition of HNA Group and its subsidiary airlines, collectively Avolon's largest customer exposure, the agency said.

“Avolon has not revealed the details of the restructured agreements with HNA, but it is likely that rental revenues will decline, pressuring the company's earnings and cash flow. However, because the aircraft remain in place, Avolon avoids unproductive downtime, transition costs and remarketing challenges associated with a return of the aircraft. This could have delayed the company's return to stable profitability, a key concern that led Moody's to initiate a review for downgrade on the company's ratings, now concluded,” Moody’s said in a press release.

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