Fitch Ratings has affirmed the debt ratings of AMR Corp. and its principal operating subsidiary American Airlines, Inc. as follows: AMR: Issuer Default Rating (IDR) at ‘CCC’; Senior Unsecured Rating at ‘C/RR6′. American Airlines, IDR at ‘CCC’.
Fitch has also assigned a rating of ‘B+/RR1′ to American’s recently issued $1 billion senior secured notes due in 2016. The notes are collateralized by airport slots, gates and international route authorities. The senior unsecured rating at the parent level applies to approximately $885 million of outstanding debt.
The ratings affirmation and the ‘CCC’ IDRs reflect continuing concerns surrounding the airline’s very weak free cash flow generation profile, the need to meet heavy cash obligations and limited scope for debt reduction over the next coming quarters. Although AMR’s relatively strong liquidity position and its continued ability to access the capital markets should provide the carrier with sufficient flexibility to meet upcoming cash commitments, the cash flow margin of safety in 2011 has been eroded by the recent increases in fuel prices.