...A tempered outlook for airlines. Passenger air travel demand remains solid and capacity expansion is likely to be subdued this year, but labor and maintenance expenses are appreciably higher and jet fuel prices remain elevated. The network carriers are best positioned to mitigate cost headwinds and pockets of market overcapacity, led by higher- margin premium and loyalty revenues and positive free cash flow generation. However, earnings growth will prove challenging. Smaller domestic airlines have endured negative rating actions, and pressure on cash flows and liquidity is mounting. Logistics and trucking ratings are under pressure. Persistent freight market weakness has underpinned several negative rating actions. Demand remains subdued and excess truckload capacity has yet to be resolved, culminating in near-trough prices. Acquisitions within these sectors have not led to credit profile improvement. Railroad financial policies have been tested. Certain Class 1 railroads scaled back or...
