Air New Zealand's relatively "good performance and resilience through the downturn" has earned it a credit rating upgrade from Moody's Investors Service.
The credit rating company has raised Air New Zealand's issuer rating one notch from Ba1 to Baa3. The outlook is stable, reflecting the airline's strong liquidity position and
an expectation that it will gradually improve performance in 2011.
"Relative to its international peer group, the company has performed at levels - and demonstrated financial metrics - which are indicative of a resilient business model and sound management through the cycle", says Ian Lewis, a Moody's senior analyst.
Moody's expects Air New Zealand's financial profile to strengthen gradually but the company will continue to face volatility in exchange rates, fuel prices and customer demand as well as bouts of intense competitive pressure.
Because Air New Zealand is majority owned by the Government it is considered to be a government-related issuer. Its rating incorporates the likelihood of government support as high.
The rating could also be pressured if Air New Zealand's liquidity deteriorates meaningfully, including its cash balances falling below $NZ500 million, or should the company pay excessive dividends to its shareholders.
- NZPA
