OREANDA-NEWS. Considering weakening macro and business environment and the FX devaluation trend across the region, Fitch Ratings expects Avianca Holdings S.A.'s (Avianca Holdings) 2015 EBIT margin to be around 7%. This represents a downward adjustment from previously projected level of 9%; the risk of having another adjustment downward in expected 2015 EBIT margin is high. The company's Negative Outlook continues to be under pressure.

During 2015, Avianca Holding's net revenue growth rate is expected to be negative around 5%, with lower yields offsetting a single-digit percentage increase in the number of transported passengers. The company's capacity increase in 2015 is estimated to be about 7%.

Avianca Holding's readily available cash is expected to materially improve after the sale of a 30% stake in Avianca Holdings S.A.'s loyalty program to Advent International (Advent). In connection with this transaction, Avianca Holdings will receive total proceeds of USD343.7 million. This transaction is anticipated to be completed during the second-half of 2015.

Fitch forecasts that Avianca Holdings readily available cash will be about USD700 million at the end of 2015. This figure would be equivalent to approximately 16% of the company's latest 12 month (LTM) revenues. Fitch's liquidity analysis excludes the company's cash held in Venezuela (USD263 million, as of June 30, 2015).

Expected operational performance and net capex will limit the company's capacity to reduce its gross adjusted leverage during 2015. The company's gross adjusted leverage, as measured by total adjusted debt/EBITDAR, remains high as it was 7.1x as of June 30, 2015. Fitch expects the company's gross adjusted-leverage ratio to be in the 6.5x to 7.15x range during 2015-2016. During the LTM June 2015, the company's free cash flow (FCF) generation was negative USD273 million, resulting in FCF margin (LTM FCF/LTM revenues) of negative 5.9%. Fitch forecast the company's 2015 FCF margin to be negative 4%.

Fitch currently rates Avianca Holdings S.A.'s (Avianca Holdings) and its subsidiaries as follows:

Avianca Holdings S.A. (Avianca Holdings)
--Long-term Issuer Default Rating (IDR) 'BB-';
--Long-term local currency IDR 'BB-'.

Avianca Leasing LLC
--USD550 million unsecured notes due in 2020 'B+/RR5'.

Aerovias del Continente Americano S.A. (Avianca)
--Long-term IDR 'BB-';
--Long-term local currency IDR 'BB-'.

Grupo Taca Holdings Limited (Grupo Taca)
--Long-term IDR 'BB-'.

The Rating Outlook for the corporate ratings is Negative.