Privately held WestJet Airlines has received a ratings downgrade due to elevated debt levels that have risen since the COVID-19 pandemic began in March 2020.
Fitch Ratings downgraded WestJet’s long-term issuer default ratings to B- from B, and the airline’s secured term loan and revolver rating was downgraded one notch to B+/RR2.
The ratings agency said that rising jet fuel costs, a strong U.S. dollar, and a weakening Canadian economy will delay the timeline for WestJet Airlines to recover from the pandemic when its fleet of aircraft were grounded.
Fitch Ratings added that WestJet Airlines is also facing aggressive competition from a growing number of start-up low-cost carriers entering the Canadian marketplace.
The ratings agency did say that WestJet’s extended loan maturity date of 2026 and strong liquidity position should allow the airline to meet its near-term obligations.
WestJet is owned by Onex Corp. (ONEX), whose stock is down 31% this year at $69.63 per share.
