West Jet Airlines Ltd., Canada's second-largest air carrier, saw its bonds fall to their lowest level since issuance in June, weighed down by rising fuel costs and trade tensions dimming its earnings outlook. The 8% bond maturing in 2031 was trading around 85 cents on the dollar Tuesday, down 3% from Monday's close and paring an earlier decline. The bond has slid steadily since early October, when it was trading around 95 cents.
S&P cut West Jet's rating deeper into junk to B- from B in September, following earlier downgrades from Moody's Ratings and Fitch. The Calgary-based airline reported weaker-than-expected second-quarter results. A flight attendant strike in August caused "meaningful disruptions" expected to affect third-quarter results. Jet fuel price increases and volatile Canada-U.S. trade negotiations also pose risks.
This year, West Jet cut 10 US-bound flight routes from Canada, Simple Flying reported. The combination of operational challenges and macroeconomic pressures has eroded investor confidence, pushing bond prices to record lows.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing