Moody’s assigns B1 CFR to American Airlines Group, outlook stable

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By TESTCustomwebLP TESTCustomwebLP December 6, 2013 12:59

Moody’s assigns B1 CFR to American Airlines Group, outlook stable

Moody’s Investors Service has assigned corporate ratings to American Airlines Group (AAG): Corporate Family (CFR) of B1, Probability of Default of B1-PD, and Speculative Grade Liquidity of SGL-1.

Moody’s assigned a Ba2 rating to the $1.9 billion senior secured term loan facility of American Airlines due in 2019 and to the $1.0 billion revolving credit facility maturing in 2018, both of which AAG, US Airways Group and US Airways will each guarantee. Moody’s also upgraded the ratings on the Series 2001-1 and Series 2011-1 Enhanced Equipment Trust Certificates (EETCs) of American Airlines. The outlook is stable.

The ratings have been assigned in anticipation of completion of the stock-for-stock merger between AMR Corporation (unrated) and US Airways Group, Inc. scheduled to occur on or within days after December 9, 2013. The merger will occur simultaneously with AMR Corporation’s (unrated) emergence from Chapter 11 bankruptcy protection. The ratings consider the company’s post-merger, consolidated credit profile, including very good liquidity, a leading industry EBITDA margin, improved domestic network efficiencies that we believe will flow from combining the airlines under a single operating certificate and some balance sheet de-levering from cash on hand. Upon completion of the merger, US Airways Group, Inc. will become a holding company subsidiary of AMR Corporation, which will change its name to American Airlines Group, Inc. AAG and American Airlines, Inc. will become guarantors of US Airways, Inc.’s $1.0 billion term loan facility due 2019 and $600 million term loan facility due 2016 (“Airways’ Term Loans”) and US Airways Group Inc.’s $500 million, 6.125% Senior Unsecured Notes due June 2018 (“Airways’ Notes”).

Moody’s has also resolved its review of its ratings of US Airways Group, Inc. that it had initiated on August 12, 2013. Moody’s raised its family ratings of US Airways Group, Inc. by two notches: Corporate Family to B1 from B3 and Probability of Default to B1-PD from B3-PD. Moody’s upgraded the rating on Airways’ Term Loan to Ba2 from B2 and on Airways’ Notes to B3 from Caa2. The assignments or upgrades of ratings on the companies’ credit facilities or bonds in this transaction are based on a consolidated Loss Given Default waterfall. Moody’s upgraded the ratings on each of US Airways, Inc’s or America West Airlines’ EETCs as detailed in the accompanying debt list. Moody’s has withdrawn the SGL-3 Speculative Grade Liquidity rating assigned to US Airways Group, Inc. and changed the outlook to stable. Upon completion of the merger, Moody’s will withdraw the B1 Corporate Family and B1-PD Probability of Default ratings assigned to US Airways Group, Inc.

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By TESTCustomwebLP TESTCustomwebLP December 6, 2013 12:59
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