S&P says may cut AMR Corp.'s debt ratings
NEW YORK, NY (Reuters) - Standard & Poor's on Wednesday said it may cut its debt ratings on AMR Corp. AMR.N and its American Airlines Inc. unit, citing heavy losses and dwindling sources of backup liquidity.
S&P said it may cut AMR's and American's long-term corporate credit rating of "BB-minus," its third-highest junk grade.
While near-term liquidity remains adquate, American Airlines faces a potential requirement to pay back more than $800 million of bank debt by June 30 because of violations of borrowing agreements, said S&P credit analsty Philip Baggaley. The airline alrleady has used up most of its readily available collateral borrowing to cover cash losses, he said.
"Any war between the U.S. and Iraq, a prospect that has already raised airline fuel prices, would likely cause a further erosion of revenues, widening the company's losses," Baggaley said.
The action came on the same day that AMR posted a 2002 loss of $3.5 billion, the largest in aviation history, and warned that it must cut costs drastically if it wants to keep flying.