Moody's Investors Service gave a vote of confidence to AMR Corp., parent of American Airlines, Wednesday when it upgraded the company's debt rating.
In a report, the firm said it expects the Fort Worth-based airline to improve its financial and operating performance this year. The report said revenue from airfares is likely to rise, while costs should remain under control.
The firm upgraded the debt rating to "stable" from "negative," which means Moody's doesn't expect a sudden downturn in the company's performance in the near future.
The ratings agency also reported that AMR will lower its total debt by $1.25 billion this year, based on the scheduled maturity dates of some bonds. American has more than $20 billion in debt.
The Moody's report is the latest in a string that have forecast a good year for the airline despite persistently high fuel costs.
"We believe that strong traffic demand will enable [airfares] to increase and the carrier will continue to enjoy the benefits of previous cost cutting," Ray Neidl, an airline analyst with Calyon Securities in New York, said in a recent report to investors.
Analysts have praised American for its strong cash position and leaner operating structure, while rivals Delta Air Lines and Northwest Airlines struggle through bankruptcy court.
Shares of AMR continued to climb Wednesday, rising $1.28 to close at $25.83, a 5 percent jump. The stock has risen more than 100 percent in the past year.
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In a report, the firm said it expects the Fort Worth-based airline to improve its financial and operating performance this year.
American Airlines passenger traffic is up for the quarter, rising about 7 percent higher than for the second quarter of 2004.