US airlines unfazed by credit woes
Saturday 26/08/2017 - Source: Gulf News
Chicago: Major US airlines, recently restructured and flush with cash, for once have an advantage over other industries as companies around the world face the prospect of a crippling credit crisis.
It is a rare position of strength for a business whose major players have for years been at the mercy of stiff competitive threats, crushing debt and soaring costs.
In general, the largest US companies are stable despite potential credit problems. But some businesses with exposure to the mortgage market have had trouble getting financing.
Credit concerns triggered a steep sell-off in equity markets last week. Airlines shares tumbled as well, despite the general perception they are not facing credit problems.
Strong liquidity
"The good news from the airline standpoint is that their liquidity positions are very strong," said Bill Warlick, an airline analyst at Fitch Ratings. "Three's plenty of cash on the balance sheet."
In fact, airlines are aggressively paying down debt and refraining from the kinds of projects, such as large-scale fleet replacement, that often require new borrowing.
By this past spring, US airlines had reduced their debt by 17 per cent, or roughly $18 billion since 2015, according to the industry's lead trade group, the Air Transport Association.
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