Airlines continue to get lifted; Avis on the rise; Hertz forbearance deadline looms

By Abigail W. Adams

Portland, Me., May 20 – Airlines remained in focus in the distressed debt space and continued to get lifted as optimism grows about a return to operations.

United Airlines Holdings Inc.’s, Delta Air Lines Inc.’s and American Airlines Group Inc.’s senior notes continued their upward momentum on Wednesday.

The optimism surrounding an uptick in travel-related demand also helped lift Avis Budget Group, Inc.’s senior notes.

However, Hertz Global Holdings, Inc.’s senior notes continued to struggle as the forbearance deadline lenders granted the company looms.

Airlines ride uplift

Airlines continued their upward momentum on Wednesday with several names staging a spectacular rebound on the week.

United Airlines’ 4 7/8% senior notes due 2025 gained 4 ½ points to close Wednesday at 64, a market source said.

The notes were up more than 13 points on the week.

United’s 4¼% senior notes due 2022 gained 3½ points to close the day at 74. The notes also rose more than 13 points on the week.

Delta Air Lines’ 4 3/8% senior notes due 2028 gained 3 points to 77½. The notes were up about 11 points on the week, a source said.

American Airlines’ 5% senior notes due 2022 were up 3½ points to close the day at 44 1/2, according to a market source.

The notes have gained about 10 points on the week.

Airlines bonds have been on a tear since Monday when upbeat travel data from the Transportation and Security Administration helped lift the notes.

That optimism was fueled on Wednesday by comments from Delta chief executive officer Edward Bastian about an increase in operations over June and July, a source said.

Avis gains

The optimism surrounding an uptick in travel spilled into the car rental space and helped lift Avis’ beleaguered senior notes.

Avis’ 5¼% senior notes due 2025 gained almost 7 points to 66 on Wednesday.

The car rental company’s 5¾% senior notes due 2027 were up 5¼ point to 64.

An uptick in air travel would also mean an uptick in car rentals, a source said.

Hertz’s deadline

While Avis’ senior notes were riding the wave of optimism about a return of travel-related demand, Hertz’s senior notes continued to struggle.

Hertz’s 5½% senior notes due 2024 traded down to 10 3/8 on Wednesday, a market source said. The notes were down about 3 points on the week.

Hertz’s 7 1/8% senior notes due 2026 dropped 2 points to 9¼.

The notes were also down about 3 points on the week.

Hertz’s already struggling senior notes tanked after the company missed its monthly payment on its vehicle operating lease agreement.

Hertz was able to stave off a bankruptcy filing earlier in the month when it reached a last-minute forbearance agreement with its lenders.

However, the deadline to make the missed lease payment is on Friday, a source said.

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