We may assign a one-notch uplift if we see more headroom in the expected recovery on a sustained basis. BA's 'BB' Long-Term IDR reflects our expectation for easing travel restrictions to allow a meaningful recovery in its operations after being hit particularly hard by the pandemic. Subdued recovery has been mitigated by its rebased cost base as well as by the balance-sheet repair undertaken at BA's parent, International Consolidated Airlines Group, S.
The Negative Outlook reflects continued volatility in demand with risks from new coronavirus variants and resulting travel restrictions as well as uncertainty around the future of premium demand, especially from corporate clients. We expect fiercer competition, with yields under pressure from aggressive expansion and pricing strategies from ultra low-cost carriers on intra-European routes, and slower recoveries of corporate demand and long-haul traffic.
However, we may revise the Outlook to Stable once we see evidence of extended forward bookings and revenue recovery. Relative to other EETCs, BA features a higher LTV, which will decrease more slowly due to its slow amortisation schedule, mitigated by new and diversified assets in the collateral pool.
The 'A-' rating on the class A certificates reflects limited headroom in the 'A' level stress scenario, mitigated by the collateral quality.
Fitch's key assumptions within our rating case include a harsh downside scenario in which BA declares bankruptcy, chooses to reject the collateral aircraft, and where the aircraft are remarketed during a severe slump in aircraft values. Specific assumptions regarding value stress rates are covered elsewhere in this commentary.
An upgrade may be possible if collateral coverage continues to increase as the transaction amortises. The class A certificates' rating is primarily based on a top-down analysis using the value of the collateral. Therefore, negative rating action could be driven by an unexpected decline in collateral values. International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario defined as the 99th percentile of rating transitions, measured in a positive direction of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario defined as the 99th percentile of rating transitions, measured in a negative direction of four notches over three years.
The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Steve Gunning. Chief Financial Officer. Adam Daniels. Sean Doyle. Chief Executive Officer of British Airways. New Stories. The author is a Reuters Breakingviews columnist. The opinions expressed are their own. British Airways owner International Airlines Group on Friday said it had signed a multi-year renewal agreement with American Express, extending its worldwide commercial partnership with the payments company.
Spanish airline Air Nostrum, Iberia's regional franchise airline, has become the second foreign airline to seek permission to operate domestic flights in Brazil, civil aviation regulator ANAC said on Friday. This Feb. The chief executive of International Airlines Group IAG said he believes the overall impact of coronavirus on global air travel demand will be marginal.
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