Approximately $1.1 Billion of Debt Affected
Toronto, April 03, 2012 -- Moody's Investors Service lowered Air Canada's corporate family rating and probability of default ratings to Caa1 from B3, its 1st lien senior secured rating to B2 from B1 and its 2nd lien senior secured rating to Caa2 from Caa1. The company's speculative grade liquidity rating was affirmed at SGL-2, indicating good liquidity. The company's rating outlook is stable.
"We have lowered Air Canada's ratings because we expect its adjusted leverage will remain in excess of 8x through at least 2012, which is higher than we previously expected", said Darren Kirk, a vice president with Moody's. "We are concerned with the company's ability to absorb higher capital expenditures for new planes and additional funding requirements for its sizeable pension shortfalls beginning in 2014".