Standard & Poor’s (S&P) has just downgrade Air Canada for the second time in two months, highlighting the dependence of the carrier for international flights and business trips.
The agency in new york has raised the rating to Air Canada’s credit from BB to BB-. On 20 march, she had lowered from BB+ to BB.
“We believe that the ability of Air Canada will be down 50 to 60 % this year and that the company will generate a cash deficit from operations of about 3.5 to $ 4 billion. It is unlikely that the traffic returns to the levels of 2019 before 2023 at the earliest, ” wrote S&P in a note published last week.
The agency noted that Air Canada is more exposed than some of its competitors, to international travel, which accounted for 47 % of its revenue last year.
“In our opinion, the demand for international travel will resume later than that for the inner journeys of the fact that the health risks are perceived to be higher […] and restrictions on travel abroad will remain in place in most countries,” said S&P.
Air Canada is also vulnerable because of the large revenue it receives from business travel compared to the average for the airline industry.
“Many firms seek to reduce their travel spending given the more difficult economic environment in which we are, and some could adapt so well to the telecommuting less travel business would be required “, stated the agency.
More than$ 1 billion of new money
Air Canada has announced that, yesterday afternoon, she was going to make for a half-billion dollars of shares and U.S. $ 400 million ($550 MILLION AC) of bonds.
These funds will” increase the liquidity of Air Canada, which will provide more flexibility from an operational point of view and for the implementation of its mitigation measures and recovery in response to the pandemic, ” said the company.