Research Update: American Airlines Group Inc. Downgraded To 'B-' On Steep Demand Decline Due To The Coronavirus, Outlook Negative

With the continued steep decline in airline bookings due to the coronavirus outbreak, we expect American Airlines Group Inc. to generate a substantial cash flow deficit in 2020, but to return to positive cash flow in 2021. American is undertaking various steps to partly offset this decline through capacity reductions, cost savings, and liquidity initiatives. However, we believe such initiatives will be insufficient to offset the effects of sharply lower demand from the impact of the virus on the company's credit metrics. As of now, we expect air traffic to begin to recover in the second half of 2020, but any delay will prolong weakness in credit metrics. Therefore, we are lowering all ratings, including lowering the issuer credit rating

...- With the continued steep decline in airline bookings due to the coronavirus outbreak, we expect American Airlines Group Inc. to generate a substantial cash flow deficit in 2020, but to return to positive cash flow in 2021. - American is undertaking various steps to partly offset this decline through capacity reductions, cost savings, and liquidity initiatives. - However, we believe such initiatives will be insufficient to offset the effects of sharply lower demand from the impact of the virus on the company's credit metrics. - As of now, we expect air traffic to begin to recover in the second half of 2020, but any delay will prolong weakness in credit metrics. - Therefore, we are lowering all ratings, including lowering the issuer credit rating on the company to 'B-' from 'B', and removing them from CreditWatch where they were placed with negative implications on March 13, 2020. - We are also revising our recovery rating on American's senior unsecured debt to '6' from '4', reflecting...

Research Update