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Moody's rates United Air Lines loan B1
Moody's Investors Service said it assigned a B1 rating to United Air Lines Inc.'s $3 billion senior secured credit facility. Moody's also assigned the company a B2 corporate family rating and an SGL-2 speculative grade liquidity rating.
The outlook is stable.
The ratings take into account that, through its bankruptcy reorganization, United Air will be able to decrease its debt load by $13 billion and materially reduce its cost structure to become more competitive within its industry. The ratings also consider United Air's extensive route network, the agency said.
Nevertheless, Moody's said that financial metrics remain relatively weak (with EBIT to interest expense expected to be approximately 1x) and that the operating environment is likely to remain difficult given high jet fuel costs and increasing competition from low-cost carriers.
The SGL-2 speculative grade liquidity rating reflects good liquidity given the expectation that United Air will generate modest free cash flow over the near term.
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