Air Canada's debt rating lowered by Moody's

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Associated Press

Posted on April 3, 2012 at 3:01 PM

TORONTO (AP) — Moody's Investor Service has lowered Air Canada's debt rating.

The new Moody's rating is Caa1, which is applied in situations where the company that issued the debt may have trouble meeting all its obligations to debt holders.

Under the Moody's rating scale, Air Canada's debt securities were previously rated B3 — already below what many funds would consider investment grade.

Air Canada's shares fell 4 cents to 89 cents in afternoon trading on Tuesday. The stock has been battered over the past year as it endured higher fuel prices and tense negotiations with labor unions.

The rating agency notes the airline's spending on new planes will increase and the cap on its pension contributions will end in the next two years, putting additional demands on its financial resources.

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