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S&P alters Avolon view to stable
S&P said it changed Avolon Holdings Ltd.’s outlook to stable from negative and affirmed its ratings, including the BBB- issuer rating.
“We expect Avolon's largest airline customer, the HNA group of airlines, to increase lease payments in the near future, some of which were suspended even before the onset of the pandemic. Like other aircraft lessors, Avolon's revenues and cash flow have been negatively affected by the unprecedented sharp decline in air traffic that began in 2020 due to the Covid-19 pandemic, which has resulted in airline lease restructurings or payment deferrals,” the agency said in a press release.
S&P said it forecasts Avolon's credit metrics improving in 2022, but not to the previous levels achieved in 2019 until 2023.
“Similar to other aircraft lessors, we expect Avolon to benefit from growing demand for narrowbody aircraft as domestic leisure short haul airline traffic continues to recover. We expect EBIT interest coverage of only around 1x in 2021 (similar to the 2020 level) and to improve to the mid-1x area thereafter,” S&P said.
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