Moody's cuts Alaska Air credit outlook to negative
NEW YORK—Moody's Investors Service suggested Wednesday it may cut Alaska Air Group Inc.'s credit rating amid concerns about fuel costs and the economy.
The rating agency lowered its outlook on the Alaska Airlines parent to "negative" from "stable" because it expects the Seattle-based carrier to post a loss this year due to "materially higher fuel costs and weakening economic conditions."
"Although the company has fuel hedges that are meaningfully more beneficial than competitors, Alaska will be challenged to generate positive cash flow from operations if current fuel prices persist," Moody's said.
Moody's rates the Alaska corporate family at 'B1', a speculative or "junk" grade.
Earlier in the day, Fitch Ratings cut JetBlue Airways Corp.'s debt ratings further into junk status on similar concerns.
Carriers have ratcheted up efforts to raise fares and cut costs in recent months as the price of jet fuel has skyrocketed. Most carriers are now expecting losses for the year.
Alaska late last month blamed rapidly rising fuel costs for its deeper first-quarter loss, and said it would cancel some service as it retired fuel-guzzling older planes.
Alaska shares fell 14 cents to $21.02 in after-hours trading, giving up some of their earlier gains. The stock rose 46 cents, or 2.2 percent, to $21.16 during the regular session.
