Tear Sheet: Apple Bidco LLC (Atlantic Aviation)

As of Dec. 31, 2023, S&P Global Ratings-adjusted leverage declined to 6.3x, modestly beneath our 6.5x rating upgrade threshold, from 6.7x following the May 2023 dividend recapitalization transaction. We forecast leverage will decline toward the high-5x area by year-end 2024 through earnings growth, assuming no leveraging dividends or acquisitions. While not considered under our base-case, we expect Atlantic will continue to pursue leveraging shareholder returns to recoup the owner?s significant initial equity investment of about $2.9 billion. Additionally, we believe debt-funded acquisitions are likely as the company looks to continue to realize scale benefits for fuel purchases, insurance and pilot incentives, and other benefits. In our view, dividends are more likely than large acquisitions, given the lack of scaled targets

...April 26, 2024 We forecast Apple Bidco LLC's (Atlantic Aviation) leverage will likely remain below our 6.5x rating upside trigger in 2024. As of Dec. 31, 2023, S&P Global Ratings-adjusted leverage declined to 6.3x, modestly beneath our 6.5x rating upgrade threshold, from 6.7x following the May 2023 dividend recapitalization transaction. We forecast leverage will decline toward the high-5x area by year-end 2024 through earnings growth, assuming no leveraging dividends or acquisitions. While not considered under our base-case, we expect Atlantic will continue to pursue leveraging shareholder returns to recoup the owner's significant initial equity investment of about $2.9 billion. Additionally, we believe debt-funded acquisitions are likely as the company looks to continue to realize scale benefits for fuel purchases, insurance and pilot incentives, and other benefits. In our view, dividends are more likely than large acquisitions, given the lack of scaled targets across the industry, but...

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