S&P ups Grupo Aeromexico, rates notes B

S&P said it raised Grupo Aeromexico SAB de CV’s issuer rating to B- from D and assigned B issue-level and 2 recovery ratings to its new 8˝% senior secured exit notes due 2027. The 2 recovery rating indicates substantial recovery (70%-90%; rounded estimate: 80%) in default. The outlook is developing.

Aeromexico emerged from bankruptcy on March 17. The agency withdrew its D national and unsecured debt ratings at the company’s request.

“The reorganization plan included Aeromexico's intention to maintain its business model, while shifting to a more flexible cost structure and increasing its revenue generation, market share, and capacity. The new cost structure will mainly consist of changing its fleet to highly efficient Boeing 737s, reassessing future aircraft deliveries, pay-by-the-hour (PBH) contracts, and mark-to-market terms, which will reduce ownership costs, fuel burn and maintenance costs,” S&P said in a press release.

The outlook reflects the view that Aeromexico could suffer a slower-than-expected cash flow recovery if oil prices continue rising, while it takes the actions to mitigate the higher jet fuel costs. “This could impair its cost structure reorganization, which aims to raise EBITDA while air passenger traffic continues to recover,” S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.