United Airlines notes eyed amid deal with pilots; Hertz driven lower in travel space

By James McCandless

San Antonio, Sept. 25 – At the end of the week in the distressed debt space, newsmakers in the travel space were in focus.

United Airlines Holdings, Inc.’s notes varied in direction after the company came to an agreement to delay pilot furloughs.

Sector peer American Airlines Group, Inc.’s issues also diverged.

Elsewhere in the travel space, Hertz Global Holdings, Inc.’s paper was pushed lower as the company seeks a deal to restock its fleet of vehicles.

As oil futures ended the session weaker, Occidental Petroleum Corp.’s notes were mixed while Oasis Petroleum, Inc.’s and Transocean Ltd.’s issues gained.

In the retail space, Rite Aid Corp.’s paper drifted apart in the wake of the company’s second-quarter earnings report.

Specialty store name L Brands, Inc.’s notes were under water.

Meanwhile, theater operator AMC Entertainment Holdings, Inc.’s issues were seen falling as the company begins a stock sale.

Airlines in focus

United Airlines’ notes varied in direction at the conclusion of the week, traders said.

The 4¼% senior notes due 2022 shaved off ½ point to close at 92 bid. The 5% senior notes due 2024 closed level at 86½ bid.

On Thursday, news broke that the Chicago-based air carrier had reached an agreement with a union representing 13,000 of its pilots to delay potential furloughs by a month.

Originally, the company had planned to furlough some of its pilots on Oct. 1, when the federal government’s $25 billion in payroll aid is set to expire.

The two parties have agreed to extend the deadline for any furloughs until Oct. 30, though pilots will not be paid if a new round of funding is not approved.

In the last month, the industry has been lobbying Congress and the White House to approve additional funds before the first round expires, warning of thousands of furloughs and layoffs.

The proposal has the support of the Trump administration but the legislation has stalled in Congress.

Fort Worth-based sector peer American Airlines’ issues also diverged.

The 5% senior notes due 2022 added ½ point to close at 66½ bid. The 11¾% senior notes due 2025 shed ¼ point to close at 95 bid.

Hertz lower

Elsewhere in the travel space, Hertz’s paper was pushed lower, market sources said.

The 6¼% senior paper due 2022 lost 1¾ points to close at 44½ bid.

This week, the Estero, Fla.-based car rental company told its bankruptcy court judge that it is seeking to raise $400 million through an asset-backed securities deal.

The deal would allow the company to continue stocking its car fleet with new vehicles, giving it the ability to pay third-party car supplier Donlen without constricting liquidity.

So far, Hertz has loaned Donlen $173 million to purchase new cars.

“They have to do something to keep the focus on the consumer when the demand for travel eventually rises,” a trader said.

On Monday, reports indicated that the company is seeking debtor-in-possession financing to the tune of $1 billion to $1.5 billion.

Proposals from unsecured creditors and first-lien holders are being weighed.

The name filed for bankruptcy in May.

Oil differs

As oil futures ended the session weaker, distressed energy tranches trended upward, traders said.

West Texas Intermediate crude oil futures for November delivery dipped 6 cents to cap the week at $40.25 per barrel.

North Sea Brent crude oil futures for December delivery finished at $41.92 per barrel after giving up 5 cents.

Houston-based independent oil and gas producer Occidental Petroleum’s notes were mixed.

The 2.9% senior notes due 2024 picked up ¼ point to close at 83¼ bid. The 2.7% senior notes due 2022 moved down ¾ point to close at 92 bid.

Oasis Petroleum, another Houston-based producer, saw its issues gain.

The 6 7/8% senior notes due 2022 shot up 2½ points to close at 15 bid. The 6 7/8% senior notes due 2023 tacked on 3¾ points to close at 16¼ bid.

Steinhausen, Switzerland-based contract driller Transocean’s paper picked up steam.

The 7½% senior notes due 2031 rose ¾ point to close at 15 bid.

Rite Aid drifts

In the retail space, Rite Aid’s notes drifted apart as the day ended, market sources said.

The 7½% senior secured notes due 2025 rose ½ point to close at 99½ bid. The 8% notes due 2026 fell ½ point to close at 100½ bid.

Early Thursday, the Camp Hill, Pa.-based drug store chain saw negative attention despite reporting positive earnings for the second quarter.

The company reported a per share profit of 25 cents and revenues of $5.98 billion, both exceeding analyst expectations.

The negativity stemmed from the company’s forward guidance for the rest of the year, where it expects a GAAP net loss of between $190 million and $140 million and net income from a $0.09 per share profit and a loss of $0.67 per share.

Columbus, Ohio-based specialty store name L Brands’ issues were under water.

The 6¾% senior notes due 2036 were docked 1¼ points to close at 96½ bid. The 5¼% senior notes due 2028 dropped 1½ points to close at 94 bid.

AMC falls

Meanwhile, theater operator AMC’s paper was seen falling, traders said.

The 12% notes due 2026 slipped 3 points to close at 24 bid.

The Leawood, Kan.-based movie theater company announced on Thursday that it would begin an at-the-market offering for 15 million shares of its common stock.

Citigroup and Goldman Sachs are part of the agreement to sell the shares, with the proceeds being used for general corporate purposes.

In the last month, the company has tried to execute a plan to drive up revenue by reopening 70% of its locations, which were previously closed due to the coronavirus pandemic.

Lackluster box office receipts, however, have kept the negative pressure on the name.

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