Lower American Airlines Rating from Standard & Poor’s

The ratings service Standard & Poor’s has lowered their ratings on American Airlines and their parent company AMR Corp, which is based in Fort Worth, Texas. The changes to their ratings include lowering the ratings for both of the entities from a B to a B- on corporate credit for long-term and removing their ratings from CreditWatch, which is where they were placed on May 22^nd with negative implications.

Standard & Poor’s made a statement that the downgrading of debt for the companies reflects an anticipated major losses and operating cash flow that is negative due to the record high price of fuel. Philip Baggaley, a credit analyst of Standard & Poor’s, said that they anticipate AMR to report having a major loss for this year, which they predict may be more than 2 billion dollars before gains on asset sales and asset write-downs are taken into consideration, and all of this is due to the very high price of fuel.

Positives that Standard & Poor’s pointed out are that they have a satisfactory liquidity of near-term with 5.1 billion dollars from unrestricted short-term investments and cash as of June 30th, as well as substantial positions in the United States’ domestic, Latin American, and trans-Atlantic markets, with a small presence also in the Pacific market. AMR has reported a 1.45 billion net loss for the 2nd quarter of the year. That loss included 55 million dollars of severance costs to employees and 1.1 billion dollars for the write-down of their Embraer RJ-135 and MD80 fleets.

Get more information on American Airlines at: www.aa.com