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Fitch Report: U.S. Airline & Railroad Sectors Liquidity Expected to Remain Strong

November 12, 2008

Today, Fitch Ratings issued a special report, ‘Liquidity Focus: U.S. Transportation’ which focuses on liquidity issues in the airlines, railroads and trucking sectors. According to the report, liquidity for the airline sector is relatively strong, with $17 billion in available liquidity at Sept. 30, 2008, versus $11 billion in estimated debt maturities through year-end 2010. Liquidity in the railroad sector is expected to remain strong, despite ongoing share repurchase programs.

Despite weakening economic conditions, airline liquidity is expected to remain adequate as long as fuel prices do not spike again. The significant capacity reductions put into place beginning in September will help to mitigate the effects that an economically driven decline in industry demand likely will have on airline revenues. Despite most airlines’ low credit ratings and very difficult credit market conditions, airlines continue to find opportunities to utilize the value of their unencumbered asset bases to serve as collateral for secured borrowings.

Fitch expects liquidity in the railroad sector to remain strong. Although market conditions in 2009 likely will be more challenging than the already weakened conditions experienced in 2008, industry pricing growth should drive ongoing strength in free cash flow despite an expected decline in volumes.

Among the rated trucking issuers, liquidity positions are mixed, although near-term debt maturities are relatively light. The truckers are expected to see very challenging industry conditions in 2009 that will put significant pressure on free cash flow.

Please visit Fitch’s web site, www.fitchratings.com, for the full report ‘Liquidity Focus: U.S. Transportation’.

Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.




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