Dépêches
Fitch Rates Southwest Airlines' Revolving Credit Facility 'BBB'
Dépèche transmise le 3 mai 2011 par Business Wire
CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned a rating of 'BBB' to Southwest Airlines Co.'s new $800 million unsecured revolving credit facility. The facility, upsized from the previous $600 million revolver following the closing of Southwest's acquisition of AirTran Holdings, Inc., matures in 2016. Southwest's Issuer Default Rating (IDR) is 'BBB' and the Rating Outlook is Stable.
The facility, which is undrawn, includes a fixed charge coverage covenant and a requirement that Southwest maintain a specified level of unencumbered asset coverage. The $800 million in available liquidity through the facility supplements combined Southwest and AirTran unrestricted liquidity of approximately $5.0 billion as of March 31. The $518 million cash portion of the AirTran acquisition was funded out of cash on the balance sheet. Fitch sees opportunities for Southwest to reduce debt levels over the coming year as maturities are met out of free cash flow (FCF) generation and excess liquidity. As of March 31, stand-alone Southwest reported $905 million in current debt maturities.
Following the closing of the AirTran acquisition, Fitch continues to view Southwest's credit profile as generally stable, despite the rapid rise in crude oil and jet fuel prices since the fall of 2010. The airline reported strong passenger yield and revenue per available seat mile (RASM) growth in the first quarter, reflecting the impact of numerous fare hikes that are helping to offset increases in fuel costs.
The addition of AirTran to Southwest's route network opens up opportunities for the carrier to expand into new markets, notably Atlanta, potentially driving significant revenue synergies. The airline estimates ultimate net synergies of $400 million annually in 2013. AirTran's competitive unit cost profile should allow Southwest to manage non-fuel cost pressures through the integration process. A single operating certificate is expected to be awarded in 2012.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Corporate Finance Rating Criteria Hierarchy (Interactive Compendium of Criteria Reports)' (April 5, 2011).
Applicable Criteria and Related Research:
Corporate Finance Rating Criteria Hierarchy (Interactive Compendium of Criteria Reports)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=520046
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