Fitch: North American Airlines Positive Outlook Sustained by Low Fuel Prices, Global Travel Demand

CHICAGO--()--Fitch Ratings' outlook for the North American airline sector remains positive. Continued low fuel prices and growing global demand for travel are expected to foster a positive operating environment for 2016. Fitch expects free cash flow (FCF) to expand and debt balances to come down incrementally, leading to further improvement in airline credit profiles. The outlook is tempered by a soft unit revenue environment, weakness in various international economies and potential for increased shareholder-friendly cash deployment.

Ongoing competition from low cost carriers and incremental capacity driven by low fuel prices will likely drive some unit revenue weakness through the first part of 2016. However, the credit implications of a weak revenue environment are more than offset by industry improvements achieved over the past decade through consolidation, the rise of ancillary revenue streams and low fuel prices.

Increasing shareholder friendly cash deployment will be an area to watch in 2016. Fitch does not view the trends towards larger share repurchases to be a near-term concern, though they could represent a greater concern if they were not pulled back in the case of an industry downturn or they were funded by debt.

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

2016 Outlook: North American Airlines

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874709

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Contacts

Fitch Ratings
Joe Rohlena
Director
+1-312-368-3112
Fitch Ratings, Inc.
70 W Madison Street
Chicago, IL 60602
or
Craig Fraser
Managing Director
+1-212-908-0310
or
Matthew Grayhack
Analyst
+1-312-606-2309
or
Media Relations:
Alyssa Castelli, +1-212-908-0540
alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Joe Rohlena
Director
+1-312-368-3112
Fitch Ratings, Inc.
70 W Madison Street
Chicago, IL 60602
or
Craig Fraser
Managing Director
+1-212-908-0310
or
Matthew Grayhack
Analyst
+1-312-606-2309
or
Media Relations:
Alyssa Castelli, +1-212-908-0540
alyssa.castelli@fitchratings.com