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Moody’s lifts American Airlines
Moody’s Investors Service said it upgraded its ratings for American Airlines Group Inc. and American Airlines, Inc. (American), including the corporate family rating to B1 from B2, the probability of default rating to B1-PD from B2-PD, the senior secured to Ba2 from Ba3 and its senior unsecured to B3 from Caa1. Moody's also boosted the senior secured rating assigned to the term loan and notes issued by AAdvantage Loyalty IP Ltd., to Ba1 from Ba2.
All but four of the ratings on the company's enhanced equipment trust certificates were also upgraded a notch. The agency affirmed the senior secured enhanced equipment trust series 2019-1 class B at Ba2 and at Baa3, the class A EETCs for series 2016-1, series 2015-2 and series 2016-2.
Finally, Moody’s improved the group’s speculative grade liquidity rating to SGL-1 from SGL-2.
“The upgrade of the CFR and PDR reflects the company's improved operating performance. Moody's projects a 300 basis point improvement in operating margin to 8% in 2023 as travel demand completes its recovery from the coronavirus pandemic. Moody's expects credit metrics to strengthen, with debt/EBITDA near the mid-five times at the end of 2023 and near 5x or lower by the end of 2024. Moody's expects FFO + interest/interest of near 3x at the end of 2023 and near 4x at the end of 2024,” the agency said in a press release.
Moody’s said it estimates American will deliver annual free cash flow of at least $2 billion in 2023 and 2024 and will shave at least $5 billion from its reported debt by at least $5 billion between the end of 2022 and the end of 2024 and by at least $3.5 billion in 2025.
The outlook is stable.
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