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Air Methods Moody's





Air Methods Moody's  

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Author: BigT   Date: 11/18/2022 12:38:31 PM  +9/-0  

New York, November 04, 2022 -- Moody's Investors Service ("Moody's") downgraded Air Methods Corporation's ("Air Methods") ratings, including the Corporate Family Rating (CFR) to Caa3 from B3 and the Probability of Default Rating (PDR) to Caa3-PD from B3-PD. Moody's also downgraded the company's first lien bank credit facility rating to Caa2 from B2, and the senior unsecured notes rating to Ca from Caa2. The outlook remains stable.

The ratings downgrade reflects Moody's view that the company's capital structure will become increasingly unsustainable. Moody's believes that Air Methods' high financial leverage along with Moody's expectation for continued negative free cash flow, partly due to rising interest rates, will not enable the company to successfully refinance its debt obligations that mature in approximately 18 months. The downgrade is also supported by weak year-to-date operating performance driven by the impact of the No Surprises Act on revenues, as well as persistent inflationary pressures such as rising fuel prices and upward wage pressures due to pilot and clinical labor shortages.

Air Methods' first significant debt maturity is in April 2024 when the company's $1.25 billion first lien term loan becomes due. Moody's believes that the company's weak operating performance and difficult refinancing conditions will challenge the company's ability to address its refinancing needs.

Social and governance risk considerations are material to the rating action. With respect to social risks, Air Methods is negatively impacted by both the implementation of the No Surprises Act and persistent labor shortages. With respect to governance, Air Methods faces operational headwinds stemming from inflationary cost pressures, resulting in weak operating performance, high financial leverage and the prospects of an unsustainable capital structure.

 
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Air Methods Moody's +9/-0 BigT 11/18/2022 12:38:31 PM