Fitch Affirms EADS at 'BBB+'; Stable Outlook
Fitch Affirms Sukhoi Civil Aircraftat 'BB'; Outlook Negative
Fitch Ratings-London/Warsaw/Moscow-14 August 2009: Fitch Ratings has today affirmed Sukhoi Civil Aircraft JSC’s (SCAC)Issuer Default Ratings (IDRs) and outstanding debt rating as follows:
Long-term IDR affirmed at ‘BB’; Outlook Negative
Short-term IDR affirmed at ‘B’
Long-term local currency IDR affirmed at ‘BB’; Outlook Negative
Short-term local currency IDR affirmed at ‘B’
Foreign currency senior unsecured rating affirmed at ‘BB’
Local currency senior unsecured rating affirmed at ‘BB’
National Long-term rating affirmed at ‘AA-(rus)’; Outlook Negative
National Short-term ratingaffirmed at ‘F1+(rus)’
Approximately RUB5bn of public debt is outstanding.
In line with Fitch's parent subsidiary linkage methodology, SCAC’s ratings are driven by its strong links to its ultimate majority shareholder, the Russian government ('BBB’/Negative).(The Negative Outlook reflects Fitch's negative outlook on the sovereign ratings of the Russian Federation.) Through the shareholding, Fitch expects SCAC to rely on the support of the Russian state for additional equity injections over and above what has already been contributed.
Other factors influencing SCAC’s ratings include the likely strong local demand for the company's product, the presence of French-based engine manufacturer SNECMA as a risk-sharing partner on the Sukhoi Super Jet 100 (SSJ 100) programme and the long-term positive cash flow generation capabilities of the company's business model.
Asof 31 December 2008, SCAC had gross debt of approximately USD820m, of which USD377m was short-term. Unrestricted cash and cash equivalents were USD34m. SCAC’s 2017 RUB5bn bond has a September 2009 put option, which Fitch expects to be exercised. The company is in the process of procuring a credit line to cover the bonds put to it, and Fitch understands that such an agreement is to be signed shortly. Any failure to obtain this funding could have a rating impact.
Established in 2000, SCAC is engaged in the development and production of civil aviation aircraft. At present, the Russian state controls 75% - 1 share of SCAC, following a 25% plus one share stake sale to Alenia Aeronautica (a 100% subsidiary of Finmeccanica, rated 'BBB+’/Stable) in Q209. The company's product range currently consists solely of the SSJ 100 aircraft, a regional jet which will initially be available in two sizes, offering 78 and 98 seats. Work on the SSJ 100 began in 2001, the first test flight took place in May 2008 and the first commercial delivery is expected in Q409.Given the start-up nature of the company, SCAC’s stand-alone credit profile is, and will continue to be in the medium term, very weak. As production ramps-up over the coming three years, Fitch does not expect SCAC to be EBITDA positive or generate free cash flow in that period, and the company will continue to remain reliant on state support to fund its operations.
Contact:
Tom Chruszcz, Warsaw, Tel.: + 48 22 338 6294;
Sergei Grishunin, Moscow, Tel.: +7495 956 9901.
Media contact:
Marina Moshkina, Moscow, Tel.: + 7 495 956 6904/9901, .
Note to Editors: Fitch’s National ratingsprovide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(rus)’ for National ratings in Russia. Specific letter grades are not therefore internationally comparable.
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