Research Update: American Airlines Group Inc. 'B-' Issuer Credit Rating Affirmed, Outlook Now Stable; Selected Ratings Raised

American Airlines Group Inc. is benefiting from a surge in domestic and nearby Latin American leisure travel, though business and intercontinental traffic is slower to recover. American reported an adjusted pretax loss of $1.5 billion (not including cash grants under the Payroll Support Program [PSP]) in the second quarter of 2021, and forecasts a negative pretax margin of 3%-7% in the third quarter (without any PSP grants), results that are not as strong as some U.S. airline peers but still much improved from 2020 and the first quarter of 2021. Liquidity is much improved following refinancings and $4.7 billion of PSP cash grants, with a record $21.3 billion of cash, short-term investments, and available credit lines at June 30, 2021.

...- American Airlines Group Inc. is benefiting from a surge in domestic and nearby Latin American leisure travel, though business and intercontinental traffic is slower to recover. - American reported an adjusted pretax loss of $1.5 billion (not including cash grants under the Payroll Support Program [PSP]) in the second quarter of 2021, and forecasts a negative pretax margin of 3%-7% in the third quarter (without any PSP grants), results that are not as strong as some U.S. airline peers but still much improved from 2020 and the first quarter of 2021. - Liquidity is much improved following refinancings and $4.7 billion of PSP cash grants, with a record $21.3 billion of cash, short-term investments, and available credit lines at June 30, 2021. - We affirmed our 'B-' issuer credit rating on American Airlines Group and subsidiary American Airlines Inc. and revised the rating outlook to stable from negative. - Following prepayment of a term loan secured by aircraft spare parts, we raised our...

Research Update