OREANDA-NEWS. December 15, 2015. Fitch Ratings has published a new report on the 2016 outlook for Latin American Airlines sector.

'The outlook for the Latin America Airline sector is negative in 2016,' said Debora Jalles, a Director at Fitch. 'The tough environment will test companies' market positions, management effectiveness, and capacity to balance business growth and their hubs' strategies against capital structure strength.'

Fitch expects negative rating actions to prevail for Latin American airline companies during next year. Market fundamentals will be harsh in 2016, as a weakening macro environment, fierce competition and devaluated currencies across the region will continue to burden companies' operating cash flow generation.

Leverage ratios are already high for Latin America Airlines. Rating headroom is tight for LATAM Airlines Group S.A. (LATAM) and Avianca Holding S.A. (Avianca) given their weak positions within the 'BB' rating category. GOL Linhas Aeresas S.A.'s (GOL) 'B-' rating reflects the company volatile cash flow swings, but a recent cash burn trend increased credit risks.