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Behind S&P's Downgrade of Five Large U.S. Airlines Jul 02
Standard & Poors, July 2002
Abstract
A disappointing revenue outlook for airlines combined with concerns over continued long-term risks relating to airport security, rising low-fare competition, increased use of discounted tickets by business travelers, and limited flexibility to reduce labor costs prompted Standard & Poor's downgrades on the corporate credit and other ratings of five large U.S. airlines on June 28, 2002 (see list below). This commentary will review the rating actions and expand on the reasoning behind them, providing tables and a chart illustrating recent industry trends and comparing individual company performance. The ratings for each airline's securities were lowered one notch in all cases, excepting bond-insured obligations. Following the downgrades, the ratings of AMR Corp. (and subsidiary American Airlines Inc.) and Delta Air Lines...
Companies mentioned in this report are: AMR Corp.,American Airlines Inc.,Continental Airlines Inc.,Delta Air Lines Inc.,Northwest Airlines Inc.,United Air Lines Inc.,United Continental Holdings Inc.,Northwest Airlines Corp.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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