S&P Global Ratings has upgraded its outlook on Aircastle's BB+ rating from stable to positive, putting the lessor on the path to attaining an investment-grade rating.
"The positive outlook on Aircastle reflects our expectation that the company will maintain solid profitability, supported by the recently increased and improved composition of its aircraft portfolio," S&P says in a statement.
It noted that growth in the lessor's portfolio, focus on narrowbodies and diversified customer base were positive to its earnings, but also expressed concern over how 36% of its net book value is in widebody aircraft.
"A large number of these widebody aircraft are Airbus A330s and the lease rates for these aircraft are currently under some pressure," it adds.
The agency says that it expects to raise its rating on Aircastle over the next year if it sees evidence of the company improving its profits, and drives up its EBIT interest coverage to at least 1.7x.
Earlier in May, Aircastle chief financial officer and acting chief executive Mike Inglese said that a move to an investment grade rating would significantly expand its borrower base, and ultimately further reduce its funding costs in future.
The company ended the first quarter with an average cost of debt of 4.9% and average maturity of 3.8 years.
Source: Cirium Dashboard
