AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

Credit ratings agency Standard & Poor's (S&P) has downgraded Canadian aircraft manufacturer Bombardier's credit rating from 'BB' to 'BBB-' or 'below investment grade' due to negative outlooks for key business areas.

S&P said that the continuing slump in the US airline industry, the higher Canadian dollar and the likelihood of falling revenues at Bombardier's rail division are hurting the company's near-term recovery. This, along with the airline division's high investment level, unstable profit margins and need to restore margins, led to the ratings drop.

All the major bond ratings firms are expected to drop their ratings for Bombardier after S&P's announcement and the decision by ratings agency Moody's to drop its rating in early November 2004. Bombardier has not been helped by three fatal air crashes involving its aircraft in November 2004 and the uncertainty over production of its regional jets, reports The Associated Press.

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