Fitch Ratings has downgraded Air Canada's 2013-1 class A certificates to 'BBB' from 'A-' and affirmed the airline's other three existing EETC transactions rated by Fitch, including eight tranches. Fitch has also removed Air Canada's 2017-1 transaction from Rating Watch Negative.
The Rating Watch was primarily driven by the inclusion of 737 MAXs in the collateral pool and concern about the aircraft type during the MAX grounding. The Rating Watch also reflected general concerns around ratings in the 'AA' category that are supported by aircraft valuations given the severity of the pandemic's impact on aviation.
Fitch has affirmed Air Canada's 2020-2, 2017-1 and 2015-1 Class A certificates at 'A-', 'A', and 'A', respectively.
Fitch has downgraded Air Canada's 2013-1 Class A notes to 'BBB' from 'A-' as values for the 777-300ERs that back the transaction have declined by roughly 18% year over year according to recent appraisals. Declining aircraft values have caused the class A certificates to no longer pass Fitch's 'A' level stress test, prompting the downgrade.
Fitch has affirmed all of Air Canada's class B certificates. Fitch has affirmed the 2020-2 and 2013-1 class B ratings at 'BBB-'.
Fitch has also affirmed Air Canada's 2017-1 and 2015-1 class B certificates at 'BBB', one notch higher than AC's other class B certificates reflecting better recovery prospects.