Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's upgrades Air Canada's CFR to Ba2, outlook stable

29 May 2018

NOTE: On June 15, 2018, the press release was corrected as follows: In the Regulatory Disclosures section, the following was added as the sixth paragraph: “The person who approved Air Canada credit ratings is Donald S. Carter, CFA, MD - Corporate Finance, Corporate Finance Group, JOURNALISTS: 1 212 553 0376, Client Service: 1 212 553 1653. The person who approved Air Canada Series 2015-2 Pass Through Trusts, Air Canada Series 2017-1 Pass Through Trusts, Air Canada 2013-1 Pass Through Trusts credit ratings is Robert Jankowitz, MD - Corporate Finance, Corporate Finance Group, JOURNALISTS: 1 212 553 0376, Client Service: 1 212 553 1653.” Revised release follows.

NOTE: On May 31, 2018, the press release was corrected as follows: In the first sentence of the methodology paragraph, the principal methodology was changed to Passenger Airline Industry published April 2018. Revised release follows.

Toronto, May 29, 2018 -- Moody's Investors Service ("Moody's") upgraded Air Canada's corporate family rating (CFR) to Ba2 from Ba3, probability of default rating to Ba2-PD from Ba3-PD, first lien senior secured rating to Ba1 from Ba2 and senior unsecured rating to Ba3 from B2. The company's speculative grade liquidity rating was affirmed at SGL-2. Moody's rates eight tranches of enhanced equipment trust certificates (EETCs) across three Air Canada EETC transactions, Series 2013-1, Series 2015-2 and Series 2017-1. Moody's affirmed five of the tranches, downgraded one and upgraded two. The outlooks for Air Canada and its Pass Through Trust Certificates remain stable.

"The upgrade reflects Air Canada's continued reduction of leverage and its commitment to further debt reduction" said Jamie Koutsoukis, Moody's Vice President, Senior Analyst.

Upgrades:

..Issuer: Air Canada

.... Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD

.... Corporate Family Rating, Upgraded to Ba2 from Ba3

....Senior Secured Bank Credit Facility, Upgraded to Ba1 (LGD2) from Ba2 (LGD3)

....Senior Secured Regular Bond/Debenture, Upgraded to Ba1 (LGD2) from Ba2 (LGD3)

....Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 (LGD5) from B2 (LGD5)

..Issuer: Air Canada Series 2015-2 Pass Through Trusts

....Senior Secured Enhanced Equipment Trust, Cl. B, Upgraded to Baa2 from Baa3

..Issuer: Air Canada Series 2017-1 Pass Through Trusts

....Senior Secured Enhanced Equipment Trust, Cl. B, Upgraded to Baa2 from Baa3

Downgrades:

..Issuer: Air Canada 2013-1 Pass Through Trusts

....Senior Secured Enhanced Equipment Trust, Cl. A, Downgraded to Baa1 from A2

Outlook Actions:

..Issuer: Air Canada

....Outlook, Remains Stable

Outlook Actions:

..Issuer: Air Canada 2013-1 Pass Through Trusts

....Outlook, Remains Stable

..Issuer: Air Canada Series 2015-2 Pass Through Trusts

....Outlook, Remains Stable

..Issuer: Air Canada Series 2017-1 Pass Through Trusts

....Outlook, Remains Stable

Affirmations:

..Issuer: Air Canada

.... Speculative Grade Liquidity Rating, Affirmed SGL-2

..Issuer: Air Canada 2013-1 Pass Through Trusts

....Senior Secured Enhanced Equipment Trust, Cl. B, Affirmed Baa3

..Issuer: Air Canada Series 2015-2 Pass Through Trusts

....Senior Secured Enhanced Equipment Trust, Cl.A, Affirmed A2

....Senior Secured Enhanced Equipment Trust, Cl. AA, Affirmed Aa3

..Issuer: Air Canada Series 2017-1 Pass Through Trusts

....Senior Secured Enhanced Equipment Trust, Cl. A, Affirmed A2

....Senior Secured Enhanced Equipment Trust, Cl. AA, Affirmed Aa3

RATINGS RATIONALE

Air Canada's Ba2 corporate family rating (CFR) benefits from its strong market position in the duopolistic Canadian market, Moody's expectation that adjusted debt/EBITDA will remain near 3.5x, its declining cost structure (CASM excluding fuel of CAD 11.6 cents in 2017) which has become competitive with some of its North American peers, and an expected reduction in capacity growth as Air Canada shifts from wide-body growth to mainline narrow-body fleet replacement over the medium term (Available seat miles increased 11.6% in 2017). Rating constraints include foreign exchange volatility, exposure to fuel costs and the risk of market capacity additions exceeding demand.

Air Canada has good liquidity (SGL-2), supported by CAD4.5 billion of cash and short-term investments at March 31, 2018 and a US$300 million unused revolving credit facility due in 2021. We also expect Air Canada to generate about CAD 200 million of positive free cash flow in each of 2018 and 2019. These sources are more than sufficient to fund mandatory annual debt and lease repayments of CAD 445 million for the remainder of 2018 and CAD 531 million in 2019. Air Canada has flexibility to raise capital from asset sales to boost liquidity should the need arise.

The stable outlook reflects Moody's expectation that Air Canada will maintain leverage near 3.5x as it spends on its aircraft replacement program and the market continues to see capacity additions.

An upgrade could occur if Air Canada is able to reduce and sustain adjusted leverage towards 3x, and (FFO + Interest Expense) / Interest remains above 6x. (adjusted debt/EBITDA was 3.5x and (FFO + Interest Expense) / Interest was 6.1x LTM Mar 2018). Downward rating pressure could occur if Air Canada's adjusted debt/EBITDA moves above 4x and (FFO + Interest Expense) / Interest falls towards 4x. Deterioration in liquidity or margins could also cause a downgrade.

Moody's rates eight tranches of enhanced equipment trust certificates (EETCs) across three Air Canada EETC transactions, Series 2013-1, Series 2015-2 and Series 2017-1. Moody's affirmed five of the tranches, downgraded one and upgraded two. The composition of the collateral and Moody's varying estimates of loans-to-value across the three transactions resulted in different rating actions on the various tranches relative to the one-notch upgrade of the Corporate Family rating. EETC ratings also consider that the weight of the corporate credit and of the collateral attributes shifts over Moody's corporate rating scale; generally, the higher the corporate rating, the less weight in the collateral.

The downgrade of the Class A rating of Series 2013-1 to Baa1 from A2 reflects Moody's projection of significantly smaller equity cushions over the remaining life of this transaction relative to its prior expectations, based on applying a steeper annual depreciation rate for Boeing B777-300ERs than it had used in the past. Specifically, Moody's is now using a 6% annual rate of decline for wide-body aircraft models except the B787 and A350 families, for which it now uses 5% rates of decline in value. Having only B777s in the collateral for Series 2013-1 results in the largest erosion of the equity cushion. Moody's now estimates the peak LTVs over the remaining lives of the Class A and Class B tranches at about 79% and 86%, respectively, both of which occur at the respective maturity dates. The LTV curves are now upward sloping, eroding equity cushion with the passage of time. The sharper decline in values Moody's now applies are based on observations of trends in values supplied by various industry sources including appraisers.

The upgrades of the Class B tranches of Series 2015-2 and Series 2017-1 to Baa2 from Baa3 are in step with the upgrade of the Corporate Family rating. The peak LTVs of these two tranches of about 75% and about 70%, respectively provide greater equity cushion than does the Class B of Series 2013-1. These curves remain downward sloping, building equity cushion with the passage of time. Moody's considers that the mix of collateral of the two later transactions, including 787-9s wide-bodies in Series 2015-2 and only B737 MAX 8 narrow-bodies and 787-9s in Series 2017-1, makes them relatively stronger than the Series 2013-1 transaction.

The affirmations of the Class AA ratings of Aa3 for Series 2015-2 and 2017-1 reflect that these are the strongest ratings for senior most EETC tranches for non-investment grade rated airlines. The affirmations of the Class A tranches for Series 2015-2 and Series 2017-1 consider the relative estimated peak LTV differentials within and across the three transactions.

Five Boeing B777-300ERs delivered new between June 2013 and February 2014 secure the Series 2013-1 transaction. Two B777-300ERs and three Boeing B787-9s delivered in 2015 secure the Series 2015-2 transaction. Nine Boeing B737MAX-8 and four B787-9s collateralize the Series 2017-1 transaction.

The ratings of the EETCs reflect Moody's belief that Air Canada would retain the aircraft in each transaction under a reorganization scenario because of the importance of these models to the fleet strategy and the long-haul network over the 12-year lives of each transaction and their relatively young ages. Any combination of future changes in the underlying credit quality or ratings of Air Canada, unexpected material declines in the current or projected market value of the aircraft and/or an unexpected significant reduction in the size of Air Canada's long haul network could lead to further changes to the ratings of Air Canada's EETCs.

The principal methodology used in rating Air Canada was Passenger Airline Industry published April 2018. The principal methodologies used in rating Air Canada 2013-1 Pass Through Trusts, Air Canada Series 2015-2 Pass Through Trusts and Air Canada Series 2017-1 Pass Through Trusts were Passenger Airline Industry published in April 2018 and Enhanced Equipment Trust and Equipment Trust Certificates published in December 2015. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

Air Canada is the largest provider of scheduled airline passenger services within, and to and from Canada. Revenue in 2017 was C$16.3 billion. The company is headquartered in Saint-Laurent, Quebec, Canada.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

The relevant office for each credit rating is identified in "Debt/deal box" on the Ratings tab in the Debt/Deal List section of each issuer/entity page of the Website.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead analyst and the Moody's legal entity that has issued the ratings.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Jamie Koutsoukis
Vice President - Senior Analyst
Corporate Finance Group
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Donald S. Carter, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​
Moodys.com