angels
1st Jul 2003, 20:51
I hope this is the right forum (well it's news and it may affect pilots' jobs) -- but this has been running on the wires.
S&P cuts British Airways <BAY.L> to "junk" grade
LONDON, July 1 (Reuters) - Credit rating agency Standard & Poor's cut the long-term corporate credit rating of British Airways Plc to a "junk" grade BB+ from BBB- on Tuesday, drawing fire from Europe's biggest airline.
The downgrades conclude a review of the impact on BA's creditworthiness of the war in Iraq and of a slump in Asia ticket sales due to the deadly SARS virus.
BA shares sagged 5.3 percent to 143-1/2 pence.
In a statement, S&P said it had cut BA's senior unsecured debt rating to BB- from BB+. It assigned a stable outlook.
"As a result of the more challenging industry environment, S&P believes that British Airways' financial profile and credit measures are no longer, nor are likely to be, over the next several years, appropriate for an investment-grade rating," said S&P analyst Bob Ukiah in the agency's statement.
British Airways criticised the move.
"I am astonished that Standard & Poor's has chosen to downgrade us at this time," British Airways' Chief Financial Officer John Rishton said in a statement.
He added that since the last S&P review British Airways had achieved all of the financial and restructuring targets aimed at making the airline leaner and more efficient. Only last week credit agency Moody's confirmed its rating for BA, he said.
"The war is over, SARS is fading, the U.S. economy is showing signs of recovery and traffic volumes are improving from the worst levels," Rishton said.
S&P also downgraded its ratings on the New York City Industrial Development Agency's senior secured special facility revenue bonds, series 1998 and 2002 -- a British Airways project -- to BB- from BBB-. All ratings were removed from CreditWatch, where they were placed on March 18, S&P said.
S&P said the downgrade of the airport revenue bonds followed a recent review of protections available to bondholders.
The review concluded that recoveries in the event of a BA insolvency would be substantially similar to those of unsecured creditors, as bondholders are not secured by the underlying lease between the airline and The Port Authority of New York and New Jersey.
S&P's Ukiah said BA should be able to improve its financial position, despite the challenges and uncertain outlook for the airline industry.
"This should allow it to achieve credit ratios appropriate for the revised ratings over the next year or two," he added.
BA's chief executive Rod Eddington said on June 12 that he expected to slash net debt at the airline by two billion pounds over the next three years, from 5.15 billion pounds in May.
The airline has cut more than 10,000 jobs and reduced capacity in the face of a string of problems, including the Iraq war, sluggish economies, the SARS virus, corporate travel cutbacks and competition from no-frills operators.
Credit rating agency Moody's Investors Service said on March 21 that it may also cut BA's debt ratings as a result of the outbreak of war with Iraq and weak business trends.
Moody's rates the firm's debt a "junk" grade Ba2.
S&P cuts British Airways <BAY.L> to "junk" grade
LONDON, July 1 (Reuters) - Credit rating agency Standard & Poor's cut the long-term corporate credit rating of British Airways Plc to a "junk" grade BB+ from BBB- on Tuesday, drawing fire from Europe's biggest airline.
The downgrades conclude a review of the impact on BA's creditworthiness of the war in Iraq and of a slump in Asia ticket sales due to the deadly SARS virus.
BA shares sagged 5.3 percent to 143-1/2 pence.
In a statement, S&P said it had cut BA's senior unsecured debt rating to BB- from BB+. It assigned a stable outlook.
"As a result of the more challenging industry environment, S&P believes that British Airways' financial profile and credit measures are no longer, nor are likely to be, over the next several years, appropriate for an investment-grade rating," said S&P analyst Bob Ukiah in the agency's statement.
British Airways criticised the move.
"I am astonished that Standard & Poor's has chosen to downgrade us at this time," British Airways' Chief Financial Officer John Rishton said in a statement.
He added that since the last S&P review British Airways had achieved all of the financial and restructuring targets aimed at making the airline leaner and more efficient. Only last week credit agency Moody's confirmed its rating for BA, he said.
"The war is over, SARS is fading, the U.S. economy is showing signs of recovery and traffic volumes are improving from the worst levels," Rishton said.
S&P also downgraded its ratings on the New York City Industrial Development Agency's senior secured special facility revenue bonds, series 1998 and 2002 -- a British Airways project -- to BB- from BBB-. All ratings were removed from CreditWatch, where they were placed on March 18, S&P said.
S&P said the downgrade of the airport revenue bonds followed a recent review of protections available to bondholders.
The review concluded that recoveries in the event of a BA insolvency would be substantially similar to those of unsecured creditors, as bondholders are not secured by the underlying lease between the airline and The Port Authority of New York and New Jersey.
S&P's Ukiah said BA should be able to improve its financial position, despite the challenges and uncertain outlook for the airline industry.
"This should allow it to achieve credit ratios appropriate for the revised ratings over the next year or two," he added.
BA's chief executive Rod Eddington said on June 12 that he expected to slash net debt at the airline by two billion pounds over the next three years, from 5.15 billion pounds in May.
The airline has cut more than 10,000 jobs and reduced capacity in the face of a string of problems, including the Iraq war, sluggish economies, the SARS virus, corporate travel cutbacks and competition from no-frills operators.
Credit rating agency Moody's Investors Service said on March 21 that it may also cut BA's debt ratings as a result of the outbreak of war with Iraq and weak business trends.
Moody's rates the firm's debt a "junk" grade Ba2.