S&P trims Grupo Aeromexico

S&P Global Ratings lowered its issuer credit rating on Grupo Aeromexico, SAB de CV to B+ from BB-. At the same time, the agency lowered the issue credit rating on Aerovias de Mexico, SA de CV to B+ from BB-. The recovery ratings on the debt remain unchanged at 4. S&P also placed all the ratings on CreditWatch with negative implications.

“We believe that Aeromexico was already in a weaker position to cope with these new challenges, with depressed market conditions as well as lower demand. As a result, the company's leverage will significantly increase and liquidity will be constrained. Although the company somewhat benefits from lower jet fuel prices, this won't be sufficient to mitigate the impact of lower demand,” said S&P in a press release.

The CreditWatch negative placement reflects uncertainty about the extent of the negative effect of Covid-19 on the airline industry, and therefore on Aeromexico's operations. S&P sees resolving the placement as it learns more about the effect of the coronavirus on the company.

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