Fitch: Negative Outlook for Latin American Airlines

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has published a new report on the 2016 outlook for Latin American Airlines sector.

'The outlook for the Latin America Airline sector is negative in 2016,' said Debora Jalles, a Director at Fitch. 'The tough environment will test companies' market positions, management effectiveness, and capacity to balance business growth and their hubs' strategies against capital structure strength.'

Fitch expects negative rating actions to prevail for Latin American airline companies during next year. Market fundamentals will be harsh in 2016, as a weakening macro environment, fierce competition and devaluated currencies across the region will continue to burden companies' operating cash flow generation.

Leverage ratios are already high for Latin America Airlines. Rating headroom is tight for LATAM Airlines Group S.A. (LATAM) and Avianca Holding S.A. (Avianca) given their weak positions within the 'BB' rating category. GOL Linhas Aeresas S.A.'s (GOL) 'B-' rating reflects the company volatile cash flow swings, but a recent cash burn trend increased credit risks.

Airline companies in the region are holding adequate liquidity, but the intensity of cash flow erosion during 2016 is a concern.

The full report 'Outlook 2016: Latin American Airlines (Cash Flow Burn a Concern)' is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

2016 Outlook: Latin America Airlines (Cash Flow Burn a Concern)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875007

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View source version on businesswire.com: http://www.businesswire.com/news/home/20151211005542/en/

Fitch Ratings
Debora Jalles
Director
+1-312-606-2338
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Jose Vertiz
Director
+1-212-908-0641
or
Media Relations
Alyssa Castelli, +1 212-908-0540
[email protected]

Source: Fitch Ratings

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