穆迪全球航空企业信用评级方法

CORPORATES MAY 24, 2012Each of the factors (except the Financial Policy factor) also encompass a number of sub-factors that weexplain in detail. Since an issuer’s scoring on a particular grid factor often will not match its overallrating, in the Appendix we include a discussion of “outliers” – companies whose grid-indicated ratingfor a specific sub-factor differs significantly from the actual rating.This rating methodology is not intended to be an exhaustive discussion of all factors that Moody’sanalysts consider to be pertinent for ratings in the passenger airline sector. We note that our analysisfor ratings in this sector covers factors that are common across all industries (such as ownership,management, liquidity, legal structure in the corporate organization, corporate governance) as well asfactors that can be meaningful on a company-specific basis. Our ratings consider qualitativeconsiderations and factors that do not lend themselves to a transparent presentation in a grid format.The grid represents a compromise between greater complexity that would result in grid-indicatedratings that map more closely to actual ratings, and simplicity that enhances a transparent presentationof the factors that are most important for ratings in this sector most of the time.Highlights of this report include:»An overview of the rated universe» A summary of the rating methodology» A description of the key factors that drive rating quality»Comments on the grid assumptions and limitations, including a discussion of ratingconsiderations that are not included in the grid.The Appendices show the full grid (Appendix A), tables that illustrate the application of themethodology grid to the covered issuers with explanatory comments on some of the more significantdifferences between the grid-implied rating for each sub-factor and our actual rating (Appendix B)1.About the Rated UniverseWe presently rate fourteen passenger airlines using this methodology, covering approximately $30billion of rated debt. These companies represent a diverse group of issuers with ratings (seniorunsecured rating or Corporate Family Rating) ranging from Baa3 to Caa1.Seven of the rated airlines are based in the US; three are from Europe and the remainder come fromeither Australia, Brazil, Canada or New Zealand. Of the rated airlines, only three are investment gradebeing; Qantas, Air New Zealand and Southwest Airlines. The median rating for the industry issituated at B1.2 The relatively low ratings for the sector reflect the effect of high fuel prices on thesecompanies ability to generate earnings and free cash flow at levels that would lead to more supportivefinancial leverage measures. Additionally, sustained pressure on non-fuel costs, particularly labor as thework force becomes more tenured and the need to replace older, less fuel-efficient aircraft should limitthe extent of any improvement in credit profiles in upcoming years.1In general, the actual rating utilized for comparison to the grid-implied rating is the Corporate Family Rating (CFR) for speculative-grade issuers and senior unsecured rating for investment-grade issuers.2For the purposes of comparability in this methodology, Moody’s compares individual corporate family ratings (CFR) and senior unsecured ratings. As both Air New Zealand (ANZ) and Scandinavian Airlines System (SAS) are partially owned by their respective governments, their corporate family ratings reflect implied government support. However for the purpose of grid outliers, we will refer to the Baseline Credit Assessment (BCA) of these airlines, which represents an assessment of their credit standing excluding government support. ANZ’s BCA is 11, equivalent to Ba1, and SAS’ BCA is 18, equivalent to Caa2.The following table illustrates the distribution of ratings in the passenger airline industry.FIGURE 1Table of Passenger Airline RatingsC ompany Name Moody’s RatingOutlookDomicileRated DebtInstruments (US$ millions)1 Qantas Airways Ltd Baa3 Stable Australia 1,2852 Air New Zealand Limited Baa3 Negative New Zealand - 3 Southwest Airlines Co Baa3 Stable United States 2,6774 Deutsche Lufthansa Ba1 Stable Germany 2,755 5 Allegiant Travel Company Ba3 Stable United States 1256 British Airways Plc B1 Positive United Kingdom 9857 Continental Airlines, Inc B2 Stable United States 10,6618 Delta Air Lines, IncB2 Stable United States 8,2829 United Continental Holdings, Inc B2 Stable United States - 10 Gol Linhas Aereas Inteligentes B3 Stable Brazil - 11 JetBlue Airways Corp B3 Stable United States 793 12 Air CanadaCaa1 Stable Canada 1,100 13 U.S Airways Group Inc. Caa1 Stable United States 1,168 14Scandanavian Airline SystemCaa1StableSweden138About This Rating MethodologyThis report explains the rating methodology for global passenger airlines in six sections, which are summarized as follows. The first three sections are embedded in the rating factor discussions. The fourth section (Mapping Issuers to the Grid and Discussion of Grid Outliers) is in Appendix B. The last two sections follow the rating factor discussions.1. Identification and Discussion of the Key Grid FactorsThe grid in this rating methodology focuses on four broad rating factors and weightings. The four broad factors are further broken down into eight sub-factors.FIGURE 2:Global Passenger Airline IndustryBroad Rating factorsFactor WeightingsRating Sub FactorSub-Factor WeightingCost Structure 16%Fleet Age (average in years) 8%EBITDA Margin 8% Market Conditions 28%Business Profile 20%Geographic Diversity8%Coverage and Leverage 36%EBIT/Interest12%RCF/Net debt 12%Debt/EBITDA 12% Financial Policy 20% Financial Policy 20% Total100%100%2. Measurement or Estimation of the Key Grid FactorsWe explain below how the sub-factors for each grid factor are calculated or estimated for the grid and the weighting for each individual sub-factor. We also explain the rationale for using each particular factor, and the ways in which we apply them during the rating process. The information used in scoring the sub-factors in the grid is found in or calculated from information in company financial statements, derived from other observations or estimated by Moody’s analysts.Moody’s ratings are forward-looking and incorporate our expectations for future financial and operating performance. We use both historical and projected financial results in the rating process. Historical results help us understand patterns and trends for a company’s performance and facilitates peer comparisons under a particular set of industry conditions. We utilize historical data (in most cases, the last 12 months of reported results) in this methodology publication to illustrate the application of the rating grid. All of the quantitative credit metrics incorporate Moody’s standard adjustments to income statement, cash flow statement and balance sheet amounts for restructuring, impairment, off-balance sheet accounts, receivable securitization programs, under-funded pension obligations, and recurring operating leases.For definitions of most common ratio terms please see Moody’s Basic Definitions for Credit Statistics, User’s Guide (June 2011, document #78480). For a description of Moody’s standard adjustments, please see Moody’s Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations (December 2010, document #128137). These documents can be found at .3. Mapping Grid Factors to the Rating CategoriesAfter estimating or calculating each sub-factor, the outcomes for each of the eight sub-factors are mapped to a broad Moody’s rating category (Aaa, Aa, A, Baa, Ba, B, Caa, or Ca).4. Mapping Issuers to the Grid and Discussion of Grid OutliersIn this section (Appendix B), we provide a table showing how each company maps to grid-indicated ratings for each rating factor and sub-factor. The weighted average of the sub-factor ratings produces a grid-indicated rating for each factor. We highlight companies whose grid-indicated performance on a specific sub-factor is two or more broad rating categories higher or lower than its actual rating and discuss (also in Appendix B) general reasons for such positive and negative outliers for a particular sub-factor.5. Assumptions and Limitations and Rating Considerations Not Included in the GridThis section discusses limitations in the use of the grid to map against actual ratings, additional factors that are not included in the grid that can be important in determining ratings and limitations and assumptions that pertain to the overall rating methodology.6. Determining the Overall Grid-Indicated RatingTo determine the overall grid-indicated rating, we convert each of the eight sub-factor ratings into a numeric value based upon the scale below.Aaa Aa A Baa Ba B Caa Ca1 3 6 9 12 15 18 20The numerical score for each sub-factor is multiplied by the weight for that sub-factor with the results then summed to produce a composite weighted-factor score. The composite weighted factor score is then mapped back to an alphanumeric rating based on the ranges in the table below. For example, an issuer with a composite weighted factor score of 11.7 would have a Ba2 grid-indicated rating.Grid-Indicated RatingGrid-Indicated Rating Aggregate Weighted Total Factor ScoreAaa x < 1.5Aa1 1.5 ≤ x < 2.5Aa2 2.5 ≤ x < 3.5Aa3 3.5 ≤ x < 4.5A1 4.5 ≤ x < 5.5A2 5.5 ≤ x < 6.5A3 6.5 ≤ x < 7.5Baa1 7.5 ≤ x < 8.5Baa2 8.5 ≤ x < 9.5Baa3 9.5 ≤ x < 10.5Ba1 10.5 ≤ x < 11.5Ba2 11.5 ≤ x < 12.5Ba3 12.5 ≤ x < 13.5B1 13.5 ≤ x < 14.5B2 14.5 ≤ x < 15.5B3 15.5 ≤ x < 16.5Caa1 16.5 ≤ x < 17.5Caa2 17.5 ≤ x < 18.5Caa3 18.5 ≤ x < 19.5Ca x ≥ 19.5Discussion of the Key Grid FactorsMoody’s analysis of passenger airlines focuses on four broad factors:»Cost Structure»Market Conditions»Coverage and Leverage»Financial PolicyRating Factor 1: Cost StructureWhy it mattersOperating costs are an important factor in the ratings of most issuers, and particularly so in the airline industry, given the usually high operating leverage and the continued growth of LCC’s (Low Cost Carriers) with lower cost structures.The increased presence of LCCs focusing on lower operating costs and competing on price has prompted legacy airlines, with higher cost bases and less operating flexibility, to react by attempting to reduce costs or operate their own low cost carriers. LCC’s have benefitted from economic downturns in recent years relative to legacy carriers with their higher cost structures, but their inroads into the market have changed the structure of the industry. LCCs also tend to focus on point-to-point routes, which are simpler to schedule than the routes of legacy carriers. The latter tend to have a hub-and–spoke network, which has more complicated schedules and connections. This difference results in lower costs for LCCs.Airlines tend to lease a high proportion of their fleet, which we capitalize as debt in our debt metrics (including Debt/EBITDA and RCF/Net Debt). Airlines have been able to terminate certain leases to adjust to changes in demand, although this can be a slow process while demand can fluctuate much more rapidly. I n addition, airlines are frequently reluctant to give up slots at airports during a downturn, meaning that certain routes operate at sub-optimal capacity. Finally, a substantial portion of an airline’s costs are partially out of its control, such as fuel prices and landing charges, or are subject to regulatory requirements, such as maintenance and mandated sizes for flight crews. These characteristics make it challenging to adjust the cost base to changes in demand.Fleet ageWe use fleet age as a proxy indicator for operating efficiency. More specific data, such as operating and maintenance costs, are not transparently and consistently disclosed by the airlines.A young fleet has several advantages:»Younger fleets need less maintenance (in the near term), which in some cases is covered by manufacturers warranties, and thus are generally cheaper to operate in the early years;»Newer aircraft are more fuel efficient, also decreasing operating costs; and»Newer aircraft are better matched to the near-term needs of the airline, as opposed to older fleets.The latter may have outlived the needs prevailing at the time of their purchase and are now used sub-optimally.»An airline with a younger fleet has more time before major capital expenditures are required for re-fleeting, whereas an older fleet implies greater capex over the near to medium termFleet age doesn’t encompass all fleet characteristics that are important to credit quality. Our ratings also consider other fleet characteristics on a qualitative basis. Some other characteristics that can result in credit differentiation are:More homogeneous fleets (as exhibited by some LCCs) are cheaper to maintain as there is less demand for maintenance staff to become qualified across different aircraft types, and such fleets require lower parts inventories and can be advantageous when routes are of similar distance. Airlines that operate onregional, short-haul and long-haul routes will require a number of different types of aircraft due torange considerations, passenger demand on certain routes and differing airport infrastructures; andDifferences in the way an airline finances its fleet. Some airlines own large portions of their fleet,financed with retained cash flow, equity and unsecured debt, others enter into operating or financeleases to finance particular aircraft, while others enter into wet leases3 which have more flexibility, butwill generally be subject to more price variability than either of the two other options;EBITDA MarginPersonnel, fuel costs and maintenance account for most of the individual elements of the operatingcosts of any airline. EBITDA margin is an indicator of overall cost efficiency.An airline’s EBI TDA margin captures the relationship between the revenue gained from all airlinerevenue-generating activities (both passenger and non-passenger) and the costs of operations. I tillustrates the airline’s cost discipline and flexibility in line with its revenue-generating opportunities.The ratio reflects the changes in a number of underlying variables (including revenue yield, loadfactors and cost structure). Such variables are also considered in isolation.I n addition, most larger airlines tend to be members of one of the major global airline alliances(Oneworld, Star Alliance, SkyTeam), which enables them to codeshare or maintain virtual networks,share airport lounges, and other facilities and services and provides a cost advantage.Cost Structure - How We Measure or Estimate It For The Grid:Fleet ageAverage age of the fleet in yearsEBITDA MarginEBITDA divided by net revenueFACTOR 1Cost StructureFactor Sub-Factor Moody'sWeight Aaa Aa A Baa Ba B Caa Ca1 3 6 9 12 15 18 20COST STRUCTURE Fleet Age (averagein years)8% <3, with oneaircraft type<3, with more thanone aircraft type3-5 5-8 8-11 11-15 15-18 >= 18EBITDA Margin 8% >= 40% 35% - 40% 30% -35%25%-30%20%-25%15%-20%10-15% <10%3 A wet lease is generally a short-term lease under which an airline leases aircraft and crew.Rating Factor 2: Market ConditionsWhy it MattersThe business profile and geographic diversity sub-factors consider how differences in an airline’s operating model affect its ability to preserve its credit standing over the course of the economic cycle.We typically consider diversification, be it product, service line, or geography, as a positive factor for an issuer’s credit strength. The more exposure to multiple markets, the greater the ability for the results of the consolidated company to withstand an adverse event isolated to a specific market.We also consider the diversity of an airline’s network within a given geographic market. For example, while lacking diverse international networks, Southwest Airlines and Gol Linhas Aereas have diverse domestic networks and strong market penetration within their respective countries. We score each of these issuers’ geographic diversity at “B” using the Grid. However, the high market share within their respective geographies reflects positively in our deliberations of the rating we assign to each of these companies.In assessing diversity, we also take into account the percentage of revenue an issuer derives from its largest market. A company with a diversified network that derives no more than 50% of revenue from one continent can score in the investment-grade range for geographic diversity.The business profile sub-factor considers how well a carrier can withstand a downturn in demand in order to manage and reduce volatility in earnings. Recent years have been volatile even by airline industry standards due to high fuel prices and the global financial crisis of 2008. Fuel represents the largest single cost for most, if not all airlines.Challenging fundamentals caused airline management teams to abandon the market share strategies that the industry had executed for many years. Capacity discipline, fare increases and a sharp focus on non-fuel costs are the primary levers that the airlines have to pull when facing high fuel costs or weak demand in the current environment where airline companies are trying to improve generally very weak returns on invested capital.At about sixty to seventy percent of total operating expenses, fuel and labor comprise the majority of operating expenses. The airlines have little flexibility on each of these cost lines, which compounds the need for extreme diligence on managing the remainder of its operating expenses to help reduce the extent of operating losses during cyclic troughs or periods of high fuel. Operating losses or modest operating profit margins in recent years because of the inability to completely offset higher fuel prices highlights the challenges the industry has in maintaining profitability. However, the prioritization of returns on invested capital ahead of market share, if maintained, should help to lessen the amplitude of swings in profits over the course of the economic cycle.Allegiant Travel Company scores higher than its much larger network peers because of its differentiated business model. Providing non-stop service to certain leisure destinations with mainline aircraft from smaller cities with no direct competition helps Allegiant demonstrate less volatility in earnings. The company’s fleet strategy of operating MD-80 aircraft that require capital investment of below $5 million per aircraft is a key factor of its operating profit advantage.Airlines with younger fleets could also benefit in the scoring of this sub-factor if they can demonstrate lower volatility of earnings. Additionally, carriers with other operations, such as maintenance and orfood service segments, could also demonstrate lower earnings volatility because of relateddiversification benefits.Market Conditions - How We Assess It For The Grid:Business ProfileThis sub-factor is assessed by considering the variability in an airline’s earnings, the relative positioningof its non-fuel unit operating costs, the structure of its fleet and its market and competitive positions.Geographic DiversityThis sub-factor considers the breadth of an airline’s route network across the globe. We typicallyestimate geographic diversity by the revenues derived from an issuer’s various markets. Because ofvariations in the level of detail the airlines provide in their financial reports, we may make estimatesscoring this sub-factor.FACTOR 2Market ConditionsSub-Factor Moody'sWeight Aaa Aa A Baa Ba B Caa Ca1 3 6 9 12 15 18 20Business Profile 20% Expectedvolatility inresults isalmost non-existent.Supported by acommandingmarketposition.Entrenchedstructural costadvantages. Very lowexpectedvolatility inresults.Supported by aleading andhighlydefensiblemarketposition. Verystrong anddurable costadvantages.Low expectedvolatility inresults.Supported by astrong marketposition andvisiblecompetitiveadvantages.Strong costadvantages.Moderateexpectedvolatility inresults.Supported by asolid marketposition and atleast one clearcompetitiveadvantage.Costefficiencies aregood comparedwith theindustry.Results arevulnerable toperiods ofheightenedvolatility. Suchexposure istempered by anestablishedmarketposition. Costadvantages areunlikely to bedurable.Results areexpected to behighly volatile.Market positioncould quicklyerode. Weakcostadvantages.Results areexpected to beextremelyvolatile. Highexposure toemerging andnewtechnology.Volatileoperating costs.Near termresults aredifficult topredict withany degree ofconfidence.Geographic Diversity 8% Extensivelydiversifiednetwork withno continentaccounting formore than 20%of revenueHighlydiversifiednetwork withno continentaccounting formore than 30%of revenueDiverse rangeof destinationson differentcontinents withno singlecontinentaccounting formore than 40%of revenueWell diversifiednetwork.Reliant on onecontinent formore than 40%of revenueDestinationsare located onat least threedifferentcontinents, butone continentaccounts formore than 50%of revenueDestinationsareconcentratedwithin one ortwo continentsRegional/localnetworkFragmentedregionalnetworkRating Factor 3: Coverage and LeverageWhy it mattersWe use various financial metrics to compare the financial strength of one airline with that of anotherand to assess performance over time. A period of several years is usually more significant, given thelevel of volatility in earnings in the airline sector . Financial metrics used in the grid are adjusted as perMoody’s Global Adjustments in the Analysis of Financial Statements for Non-FinancialCorporations4. These metrics are often used in our analysis of issuers in other industries and providethe basis for comparing airlines with each other and other rated entities.Notes on measurement criteriaWe include three fundamental credit ratios in the grid: EBIT/Interest, RCF/Net Debt, andDebt/EBITDA. We focus on both gross and net debt (debt less cash) ratios. While cash holdings canbe used to support the business by funding operating costs or capital expenditures, or for retiring debt,cash can also be paid-out to shareholders.Interest CoverageInterest coverage is one indication of a company’s ability to fund the cost of its borrowed capital.Weak interest coverage can indicate elevated default risk as well as limited ability to generate sufficientcash flow to fund capital expenditures which are significant in the airline sector.Leverage and cash flowDebt-to-EBITDA is an indicator for the degree to which a company has borrowed against earnings. Alower level of adjusted debt relative to EBITDA is indicative of a company’s ability to service debt andits degree of flexibility to incur additional debt to maintain and improve its competitive positionthrough investing in new aircraft or routes.Retained Cash Flow to Net Debt is an indicator for a company’s cash generation ability relative to itsdebt burden, and its potential to pay down debt after payments of dividends (depending on its capitalexpenditure requirements). The comparison of this metric between the majority of airline and non-airline companies can be skewed because many airlines no longer pay dividends (or pay materiallyreduced dividends) on account of weak industry earnings.An investment grade rating is consistent with a low, and sustainable, adjusted gross leverage ratio in theairline industry. In recent years, even the strongest airlines have seen significant volatility in their ratios.Coverage and Leverage - How We Measure Or Estimate It For The Grid :»EBIT/InterestLTM5 EBIT divided by LTM total interest expense»RCF/Net DebtRatio of LTM Retained Cash Flow (funds from operations minus dividends) to consolidated netdebt»Debt/EBITDARatio of consolidated debt to LTM EBITDA4Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations – December 20105“LTM” : last twelve monthsFACTOR 3Coverage and LeverageFactorSub-FactorMoody's WeightAaaAaABaaBaBCaaCa1 3 6 9 12 15 18 20 COVERAGE AND LEVERAGEEBIT/Interest12% >= 8x 6.0x - 8.0x 4.5x - 6.0x 3.5x - 4.5x2x - 3.5x1x - 2x 0-1x <0x RCF/Net Debt 12% >= 55% 45% - 55% 35% - 45% 25% - 35% 15% - 25%5% - 15%3%-5%< 3%Debt/EBITDA12%<1.0x1.0x -2.0x 2.0x –3.0x 3.0x -4.0x 4.0x to 6.0x 6.0x - 8.0x 8.0x - 10.0 x >= 10.0 xRating Factor 4: Financial PolicyWhy it mattersManagement and board tolerance for financial risk is an important indicator for credit risk, as it influences leverage and financial stability over time.Financial Policy - How We Assess It For The Grid:We consider the company’s desired capital structure, its financing, liquidity and hedging strategies and its proclivity for strategic changes, including acquisitions. We assess previous adherence to statedcommitments, how cash flow has been used in the past, including the record of balancing shareholder and debtholder interests and level of caution in management of the company’s liquidity profile. Based on our understanding of past actions, the incentives and pressures on management and its strategic goals, we form a subjective forward looking view about likely future performance.FACTOR 4Financial PolicyFactor Moody's WeightAaa Aa A Baa Ba B Caa Ca13 6 9 12 15 18 20 FINANCIAL POLICY20% Expected tohave a highly conservative financial policy with an ability and willingness to fund all requirements from internal sources and alwayssubstantially FCF positive. Commitment to highest credit quality.Expected to have a very conservative financial policy with an ability and willingness to fund all requirements from internal sources and always FCF positive.Commitment to very high credit quality.Expected to have aconservative and balanced financial policy with an ability and willingness to fund all requirements from internal sources and consistently FCF positive through the cycle.Commitment to high credit quality.Expected to have a balancedfinancial policy however with potential for rating migration followingacquisitions. An ability to fund allrequirements from internal sources with a solidcommitment to metrics that are consistent withinvestment grade levels.Expected to have a financial policy that favorsshareholder returns;elevated event risk related to acquisitions or capital structure change. Likely to be largely FCF neutral: able to fund all requirements, including some portion of growth capex from internal sources. Bank credit facilities are secured; substantial covenant room.Expected to have a financial policy that is very focused on shareholder returns; FCF is frequently negative. Alternate sources of liquidity are limited; bank credit facilities maybe be fully secured with modest covenant cushion.Expected to have a financial policy that is unfavorable to creditors; ability tointernally fund working capital andmaintenance capex is highly uncertain, alternate sources of liquidity are not available; debtrestructuring likely.Expected to have financial policies that couldcontribute to a high likelihood of default although one that isovershadowed by the severity of credit metrics.。