Standard & Poor's Ratings Services placed its ratings for Oregon-based Evergreen International Aviation - one of the leading air cargo carriers for the Pentagon and once reputed to be in the employ of the CIA -- on CreditWatch with negative implications.

The CreditWatch placement, which includes the 'B' long-term corporate credit rating, reflects growing concerns over the carrier's liquidity and ability to meet financial agreements given recent weaker-than-expected operating performance.

Now a private company, Evergreen reported 2006 revenues of about $757 million and placed second last year among air carriers serving the Defense Department with about $1 billion in transactions, a Traffic World analysis shows.

But the airline's debt issues raise concerns, with annual interest expense and amortization totaling close to $38 million

"Evergreen's revenues and earnings have fallen below our expectations and this has caused covenant compliance to become extremely tight," said Standard & Poor's credit analyst Lisa Jenkins.

Part of Evergreen's financial problems stem from delays in deliveries of the new Boeing 787 aircraft.

If the company fails to improve soon or cannot renegotiate its financial agreement, Jenkins said, the company could lose access to its credit facility.

Michael Fabey
Traffic World