Moody's downgrades AMR
Megan Kuhn, Washington DC (01Aug08, 21:32 GMT, 277 words)
Despite capacity cuts and other saving initiatives, American Airlines parent company AMR Corp?s debt ratings has been downgraded by Moody?s Investors Service to Caa1 from B2.
The rating outlook is negative. :ermm:
?Despite some recent moderation in fuel costs and the benefit of capacity reductions and other management initiatives, Moody?s believes that AMR could experience further losses during the near term,? the company says in a statement.
Plans include the shedding of 75 mainline and regional jets and year-over-year mainline domestic capacity cuts during the fourth quarter of 11% to 12%
Moody?s notes AMR has $5.1 billion of unrestricted cash and marketable securities, an undrawn $255 million revolving credit facility and considerable amounts of unencumbered assets.
However, continued losses combined with material debt maturities, large scheduled aircraft deliveries and the potential for credit card processors to impose cash holdbacks, AMR?s liquidity could be considerably reduced next year, Moody?s says.
Capital spending requirements for new aircraft deliveries will likely exceed $1 billion, Moody?s adds.
While there is no holdback currently imposed by AMR?s credit card processing banks, the credit card processors could impose holdbacks as soon as late this year, Moody?s notes.
AMR plans to reduce mainline domestic capacity by about 5.7% this year from last year and reductions involve the idling of more than 30 Boeing MD-80 aircraft, which should help to reduce operating costs, Moody?s notes.
Despite capacity reductions, a fuel hedging program and other cost cutting efforts, ?Moody?s is not certain that these actions will be sufficient to stem cash losses?, it says.
AMR?s rating outlook could be stabilized with sustained revenue increases, reduced non-fuel costs or a decline in fuel costs that increases cash flow.
Source: Air Transport Intelligence news
Megan Kuhn, Washington DC (01Aug08, 21:32 GMT, 277 words)
Despite capacity cuts and other saving initiatives, American Airlines parent company AMR Corp?s debt ratings has been downgraded by Moody?s Investors Service to Caa1 from B2.
The rating outlook is negative. :ermm:
?Despite some recent moderation in fuel costs and the benefit of capacity reductions and other management initiatives, Moody?s believes that AMR could experience further losses during the near term,? the company says in a statement.
Plans include the shedding of 75 mainline and regional jets and year-over-year mainline domestic capacity cuts during the fourth quarter of 11% to 12%
Moody?s notes AMR has $5.1 billion of unrestricted cash and marketable securities, an undrawn $255 million revolving credit facility and considerable amounts of unencumbered assets.
However, continued losses combined with material debt maturities, large scheduled aircraft deliveries and the potential for credit card processors to impose cash holdbacks, AMR?s liquidity could be considerably reduced next year, Moody?s says.
Capital spending requirements for new aircraft deliveries will likely exceed $1 billion, Moody?s adds.
While there is no holdback currently imposed by AMR?s credit card processing banks, the credit card processors could impose holdbacks as soon as late this year, Moody?s notes.
AMR plans to reduce mainline domestic capacity by about 5.7% this year from last year and reductions involve the idling of more than 30 Boeing MD-80 aircraft, which should help to reduce operating costs, Moody?s notes.
Despite capacity reductions, a fuel hedging program and other cost cutting efforts, ?Moody?s is not certain that these actions will be sufficient to stem cash losses?, it says.
AMR?s rating outlook could be stabilized with sustained revenue increases, reduced non-fuel costs or a decline in fuel costs that increases cash flow.
Source: Air Transport Intelligence news