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American Airlines lands a better outlook and higher ratings from S&P Global

Seeking Alpha logo Seeking Alpha 3/24/2023

S&P Global Ratings boosted its outlook on American Airlines Group (NASDAQ:AAL) to Positive from Stable and boosted certain issue ratings.

The ratings agency expects American Airlines Group (AAL) will continue to improve its earnings and cash flow this year off of strong passenger demand and industry capacity constraints that should support high fares.

While a softer U.S. economy and elevated jet fuel prices are notable risks to the company's operating results, S&P believes the airline company is well positioned to generate strong credit measures even as it faces debt maturities.

"The positive outlook on the ICR reflects the increased potential for an upgrade later this year, as we estimate American's funds from operations-to-debt ratio will increase to about 15% in 2023, which is above our threshold for the rating"

S&P noted that it could raise the AAL rating within the next 12 months if the ratings agency gains further conviction that American will meet its estimates for its FFO-to-debt ratio to exceed expectations following seasonally stronger summer months in the U.S. 

The Seeking Alpha Quant Rating on American Airlines was out ahead of S&P with a Strong Buy rating in place for all of 2023.

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