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UAL Credit Rating Cut 2 Points  
User currently offlineSpin25 From United States of America, joined Mar 2008, 6 posts, RR: 0
Posted (5 years 6 months 3 weeks 8 hours ago) and read 2819 times:

Boy, that's harsh. From a B- to CCC. Someday the airline industry will catch a break and on that day I will have a drink of 2030 vintage nicely aged wine!

http://www.marketwatch.com/story/fit...ating-by-two-notches?siteid=yhoof2

9 replies: All unread, jump to last
 
User currently offlineUnited1 From United States of America, joined Oct 2003, 6137 posts, RR: 9
Reply 1, posted (5 years 6 months 3 weeks 8 hours ago) and read 2786 times:



Quoting Spin25 (Thread starter):
From a B- to CCC.

actually it was C to CCC on UAs senior unsecured debt

secured bank facility also went down a notch from B+ to BB-

Not exactly unexpected considering the drop in revenue all airlines are facing right now.

http://finance.yahoo.com/news/Fitch-...UAL-Corp-on-apf-15490536.html?.v=2



Semper Fi - PowerPoint makes us stupid.
User currently offlineFXramper From United States of America, joined Dec 2005, 7367 posts, RR: 85
Reply 2, posted (5 years 6 months 3 weeks 7 hours ago) and read 2762 times:
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UA wants to qualify for loans on new a/c orders with a CCC credit rating; doubtful.  no 

User currently offlineUnited1 From United States of America, joined Oct 2003, 6137 posts, RR: 9
Reply 3, posted (5 years 6 months 3 weeks 7 hours ago) and read 2745 times:



Quoting FXramper (Reply 2):
CCC credit rating; doubtful.

CCC is UA unsecured credit rating, aircraft are generally purchased under secured financing.



Semper Fi - PowerPoint makes us stupid.
User currently offlineHAJFlyer From Switzerland, joined Sep 2005, 1473 posts, RR: 9
Reply 4, posted (5 years 6 months 3 weeks 7 hours ago) and read 2721 times:

Quote from Fitch Press Release:


"UAL

--Issuer Default Rating (IDR) to 'CCC' from 'B-'.

United

--IDR to 'CCC' from 'B-';

--Secured bank credit facility (Term Loan and Revolving Credit Facility) to
'B+/RR1' from 'BB-/RR1';

--Senior unsecured debt to 'C'/RR6 from 'CCC'/RR6."


This looks really very nasty; I wonder whether they will get any loyalty discounts from their bankruptcy lawyers the second time around.  Wink


User currently offlineUnited1 From United States of America, joined Oct 2003, 6137 posts, RR: 9
Reply 5, posted (5 years 6 months 3 weeks 7 hours ago) and read 2657 times:

To put UAs downgrade in context with their peers.

DL B
CO B-
UA CCC
AA CCC
US CCC



Semper Fi - PowerPoint makes us stupid.
User currently offlineHAJFlyer From Switzerland, joined Sep 2005, 1473 posts, RR: 9
Reply 6, posted (5 years 6 months 3 weeks 7 hours ago) and read 2632 times:



Quoting United1 (Reply 5):
To put UAs downgrade in context with their peers.

DL B
CO B-
UA CCC
AA CCC
US CCC

Is it a coincidence that the biggest is also the most creditworthy (and the one with the best domestic product is also the second most creditworthy) or is there a lesson in here?

Be big, be good, be a nice player (like G4) or expect to vanish in the current environment.


User currently offlineSxf24 From United States of America, joined Aug 2007, 1262 posts, RR: 0
Reply 7, posted (5 years 6 months 3 weeks 7 hours ago) and read 2632 times:

For those who are interested, here's the definition of CCC. "An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation."

User currently offlineHAJFlyer From Switzerland, joined Sep 2005, 1473 posts, RR: 9
Reply 8, posted (5 years 6 months 3 weeks 7 hours ago) and read 2620 times:



Quoting Sxf24 (Reply 7):
In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation."

In other words: It might be a good idea to shop around for some debtor in possession financing  Wink


User currently offlineUnited1 From United States of America, joined Oct 2003, 6137 posts, RR: 9
Reply 9, posted (5 years 6 months 3 weeks 4 hours ago) and read 2439 times:



Quoting HAJFlyer (Reply 8):
n other words: It might be a good idea to shop around for some debtor in possession financing

If that is the case AA should have been looking for it since March and US quite a bit prior to that.

Quoting HAJFlyer (Reply 6):
Is it a coincidence that the biggest is also the most creditworthy (and the one with the best domestic product is also the second most creditworthy) or is there a lesson in here?

I think your reading to much into that, B/B- is still bellow investment grade WN is the only US airline that has a decent unsecured credit rating of BBB+.

Just in case anyone wants to know what the different rating mean.

Investment grade
AAA : the best quality companies, reliable and stable
AA : quality companies, a bit higher risk than AAA
A : economic situation can affect finance
BBB : medium class companies, which are satisfactory at the moment

Non-investment grade (also known as junk bonds)
BB : more prone to changes in the economy
B : financial situation varies noticeably
CCC : currently vulnerable and dependent on favorable economic conditions to meet its commitments
CC : highly vulnerable, very speculative bonds
C : highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations
D : has defaulted on obligations and Fitch believes that it will generally default on most or all obligations
NR : not publicly rated



Semper Fi - PowerPoint makes us stupid.
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