Leaving for a U/LCC
01-21-2020 | 07:55 AM
#111
Perennial Reserve
Joined: Jan 2018
Posts: 14,248
Likes: 257
And as long as we are talking ratings, Fitch rates American Airlines creditworthiness as BB-. This is their rating scale:
The Fitch rating system is as follows:
Investment grade
and this is their most recent assessment of American Airlines:
BREAKING DOWN Fitch Ratings
Along with Moody's and Standard & Poor's (S&P’s), Fitch is one of the top three credit rating agencies in the world. The Fitch rating system is very similar to S&P's in that they both use a letter system.The Fitch rating system is as follows:
Investment grade
- AAA: companies of exceptionally high quality (established, with consistent cash flows)
- AA: still high quality; slightly more risk than AAA
- A: low default risk; slightly more vulnerable to business or economic factors
- BBB: low expectation of default; business or economic factors could adversely affect the company
- BB: elevated vulnerability to default risk, more susceptible to adverse shifts in business or economic conditions; still financially flexibility
- B: degrading financial situation; highly speculative
- CCC: real possibility of default
- CC: default is a strong probability
- C: default or default-like process has begun
- RD: issuer has defaulted on a payment
- D: defaulted
and this is their most recent assessment of American Airlines:
Fitch Ratings - Chicago - 25 November 2019:
Fitch Ratings has affirmed American Airlines Group Inc.'s (American) Long-Term Issuer Default Rating (IDR) at 'BB-'. The ratings also apply to American's primary operating subsidiary American Airlines, Inc. In addition, Fitch has taken various rating actions on American's EETCs as detailed at the end of this release.
American Airlines Group Inc.'s 'BB-' rating is supported by the company's market position as one of the largest airlines in the world, a dominant position in key hubs and prospects for improving FCF and declining leverage over Fitch's forecast period. However, Fitch considers some of American's credit metrics to be weak for the rating. Credit metrics have been pressured over the past two years by a combination of one-time events including labor issues and the 737 MAX grounding, and by rising labor costs and by an intensely competitive environment. Fitch expects metrics to improve over the next 1-2 years as declining capital expenditures allow for debt reduction and as various revenue initiatives continue to take hold.
American's adjusted leverage at Sept. 30, 2019 was 5.1x, up from 4.9x at the same point in 2018, which Fitch considers high for the rating. EBIT margins declined in the LTM period to 8.2% from 8.5%. Fitch previously stated that American's metrics would need to improve in order to avoid a negative rating action. The Stable Rating Outlook reflects the one-time nature of some of American's performance in 2019. However, failure to see material improvement in leverage and profitability metrics in 2020 is likely to lead to a negative rating action.
Fitch Ratings has affirmed American Airlines Group Inc.'s (American) Long-Term Issuer Default Rating (IDR) at 'BB-'. The ratings also apply to American's primary operating subsidiary American Airlines, Inc. In addition, Fitch has taken various rating actions on American's EETCs as detailed at the end of this release.
American Airlines Group Inc.'s 'BB-' rating is supported by the company's market position as one of the largest airlines in the world, a dominant position in key hubs and prospects for improving FCF and declining leverage over Fitch's forecast period. However, Fitch considers some of American's credit metrics to be weak for the rating. Credit metrics have been pressured over the past two years by a combination of one-time events including labor issues and the 737 MAX grounding, and by rising labor costs and by an intensely competitive environment. Fitch expects metrics to improve over the next 1-2 years as declining capital expenditures allow for debt reduction and as various revenue initiatives continue to take hold.
American's adjusted leverage at Sept. 30, 2019 was 5.1x, up from 4.9x at the same point in 2018, which Fitch considers high for the rating. EBIT margins declined in the LTM period to 8.2% from 8.5%. Fitch previously stated that American's metrics would need to improve in order to avoid a negative rating action. The Stable Rating Outlook reflects the one-time nature of some of American's performance in 2019. However, failure to see material improvement in leverage and profitability metrics in 2020 is likely to lead to a negative rating action.
01-21-2020 | 08:31 AM
#114
Gets Weekends Off
Joined: May 2019
Posts: 189
Likes: 0
The economists have been predicting a recession for the last several years. The experts don't know. Each time the market sinks, people and companies have bought up the drop within a week. The market will continue going up until it decides it won't go any further. The experts don't know.
01-21-2020 | 08:51 AM
#115
Perennial Reserve
Joined: Jan 2018
Posts: 14,248
Likes: 257
The economists have been predicting a recession for the last several years. The experts don't know. Each time the market sinks, people and companies have bought up the drop within a week. The market will continue going up until it decides it won't go any further. The experts don't know.
). Eventually there will come a time when another recession hits and being over leveraged will matter.And the problem with being too big to fail is that...well, it’s the whole premise behind the RLA. You aren’t a free agent, you are sort of a public utility, and the easy solution is bankruptcy where a decade of management failure can be eliminated in a single year by paying bond holders pennies on the dollar and cancelling labor contracts won through a decade of hard fought negotiations.
When half the country flies with you and the new management tells the NMB they need increased regional scope and a halving of their “excessive” CBA pay scales, who do you think the NMB and the politicians are going to listen to, the millions of people who fly on AA or the fifteen thousand guys flying for a legacy that all make four or five times the median family income?
01-21-2020 | 10:23 AM
#117
Perennial Reserve
Joined: Jan 2018
Posts: 14,248
Likes: 257
01-21-2020 | 10:47 AM
#118
Porco Rosso
Joined: Apr 2018
Posts: 2,522
Likes: 0
Pop quiz: what was US Airways' last stock ticker symbol before they took over AA?
01-21-2020 | 10:55 AM
#119
Line Holder
Joined: May 2018
Posts: 261
Likes: 6
01-22-2020 | 12:15 PM
#120
Gets Weekends Off
Joined: Sep 2018
Posts: 199
Likes: 0
From: Flying with my right hand again
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