Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
15 Mar 2004
CORRECTION TO TEXT: MOODY'S UPGRADES AMERICA WEST AIRLINES, INC. SENIOR IMPLIED RATING TO B3 FROM Caa1 (Series 2000-1 Class C to B2 from B3)
Approximately $1.9 Billion of Debt Securities Affected
New York, March 15, 2004 -- Moody's Investors Service upgraded the Senior Implied Rating assigned
to America West Airlines, Inc. ('America West') to B3 from
Caa1 and its ratings of the company's senior unsecured debt obligations
to Caa2 from Caa3. Ratings of Enhanced Equipment Trust Certificates
('EETC's) and other debt instruments were adjusted as listed below.
The outlook is stable.
The rating action reflects the company's improved operating performance
as the losses experienced during 2001 and 2002 have been stemmed,
as well as the prospects for some further improvement in operations as
the economy strengthens. The ratings also consider the company's
greater ability to generate cash from operations and support its current
adequate liquidity profile. Nevertheless, Moody's noted
that the company's overall risk profile remains high due to elevated financial
leverage, limited access to alternate liquidity beyond its current
cash balances, and a difficult revenue environment due to aggressive
competition and weak demand.
Ratings affected are:
Senior Implied to B3 from Caa1
Senior Unsecured Issuer Rating to Caa2 from Caa3
Senior Unsecured Rating to Caa2 from Caa3
Enhanced Equipment Trust Certificates
Series 1996-1 Class A: confirmed at Ba1
Class B: confirmed at B1
Class C: to B2 from B3
Class E: Withdrawn due to full payment of principal
Series 1997-1 Class A: Confirmed at Ba1
Class B: Confirmed at B2
Series 1998-1 Class A: confirmed at Ba1
Class B: confirmed at Ba3
Class C: to B2 from B3
Series 1999-1 Class C: to B2 from B3
Series 2000-1 Class C to B2 from B3
Series 2001-1 Class C: to B2 from B3
Class D to B3 from Caa2
Enhanced Equipment Trust Certificates supported by an insurance "wrap"
(Series 19991-1 Class G, Series 2000-1 Class G and
Series 2001-1 Class G) are unaffected by the ratings actions and
Industrial Revenue Bonds: to Caa2 from Caa3
The primary factors leading to the upgrade of America West are its improved
operating performance and currently strong liquidity which should provide
a cushion should business conditions become more challenging. Cost
reductions have been a key to increasing the airline's earnings
and cash flow. Since the company's debt restructuring in early
2002, America West has reduced its operating costs and improved
its product offering. Total costs per available seat mile (7.86
cents for the year 2003, down from 8.05 cents for 2002) have
been reduced to among the lowest in the industry. Moody's does
not anticipate that substantial additional unit cost reductions can be
achieved but does expect the unit costs, ex-fuel, to
remain at these levels for the intermediate term. The company's
fuel costs are substantially unhedged. The ratings anticipate the
continuation or slight moderation of current fuel prices.
Revenue has benefited from the company's efforts to improve its product
by focusing on standard DOT performance measures - on time departures,
completed flights, lost bags and customer complaints. The
company's operating performance, as measured by these metrics had
slipped badly prior to 2001, but is now among the best in the industry.
As a result of the improvement in operating performance revenues,
earnings and cash flow have recovered for the past two years.
Revenue has also benefited from simplified pricing structures that help
to stimulate traffic and have allowed the company to reduce the number
of heavily discounted tickets sold. Nevertheless, in Moody's
opinion, future increases in yields will be constrained by intense
competition. Both of the company's primary hubs, Phoenix
and Las Vegas, and the company's transcontinental routes are highly
price competitive. Industry yields and those in the company's primary
markets are expected to remain low due to capacity growth being pursued
by most carriers. Particularly in transcontinental markets,
the company faces not only rapidly growing low cost carrier capacity but
newly aggressive hub and spoke carriers. The larger hub and spoke
carriers have added capacity and have begun to set prices at levels necessary
to meet low cost competition head on and to preserve market share.
In Moody's opinion, the growth of capacity and competition from
both low cost and large hub and spoke carriers will limit the company's
ability to increase fares and yields. Consequently, any further
improvement in America West's earnings and cash flow from current
levels will occur over a period of time. And, while current
levels of cash flow generation are expected to be maintained, increases
will be dependent on strengthening demand for air travel and the ability
of the company to balance its ability to maintain yields with capacity
increases in its primary markets.
The company has announced its intention to grow capacity 8-10%
in 2004. Two new aircraft were delivered late in 2003 (an A319
and an A320). These aircraft plus four additional A320 aircraft
to be delivered by mid-year 2004 will be financed using operating
leases, but will add to the company's already high lease adjusted
leverage. Capital spending is expected to remain below historical
levels and Moody's expects that aircraft acquisitions will continue to
be financed either through leases or debt secured by the aircraft.
Current high levels of liquidity are expected to support the company in
the event of modest declines in recent earnings. The primary demand
on cash beyond capital spending is service of the company's high level
of debt and aircraft leases. Lease payments are heavily concentrated
in the first quarter. Aircraft rents are approximately $300
million for the year with approximately 50% of rent due in the
first quarter. In addition, principal payments of $85.8
million ($42.9 million in each of March and September) are
due on the company's term loan (guaranteed by the ATSB). The company
was very liquid at year end 2003 as a result of a combination of operating
cash flow, approximately $80 million received from the US
Government under the Emergency Wartime Supplemental Appropriations Act
and approximately $86 million convertible debt offering.
As of the end of 2003 America West reported $475 million in cash
and short term investments as well as an additional $40 million
in investments in debt securities. Beyond this, restricted
cash in the amount of $42.9 million has been set aside to
be used to pay principal due on the ATSB guaranteed term loan in September
The ratings reflect longer term concerns regarding the strength of the
company's cash flow and its high financial leverage. Despite low
operating costs, the current competitive fare environment continues
to constrain earnings and the cash flow available to repay debt.
The company's 2003 operating margin (1.5% excluding payments
from the US Government) was negatively affected by an operating loss in
the first quarter. The operating margin for the final nine months
of the year, excluding government payments, was 5%.
While Moody's expects a continued recovery in earnings and cash flow in
2004, high fuel costs, predominantly unhedged, have
been a negative factor in the first quarter and, if they remain
high, will negatively impact 2004 cash flow and earnings.
Although the company is making periodic payments to reduce the balance
of its ATSB loan, lease adjusted debt levels will continue to grow
as a result of additional aircraft leasing. Lease adjusted debt
is estimated by Moody's to be approximately $3.6 billion
as of year end 2003 and is expected to grow in 2004 as increases in aircraft
leases will more than offset principal payments on long term balance sheet
debt. In 2003, lease adjusted debt to adjusted EBITDAR (excluding
payments from the US Government) was estimated to be approximately six
times and adjusted EBITDAR to rent plus interest was approximately 1.2
The ratings assigned to unsecured debt, including the company's
Industrial Revenue Bonds, reflect the pledging of all of the company's
assets to secured creditors and Moody's expectation that unsecured debt
holders would experience a severe loss of principal in the event of a
liquidation of the company.
Enhanced Equipment Trust Certificate ratings were adjusted to reflect
the reduced risk of near term default considered by the upgrade of the
company's senior implied rating as well as an assessment of the value
of the aircraft collateral in relation to debt outstanding. At
the time of America West's financial difficulties and in the course of
Moody's previous downgrades of the company's senior implied rating,
the ratings of senior debt classes of EETC's, per Moody's methodology,
had remained at levels somewhat higher than a strict loan to value notching
approach would dictate. This ratings decision was based on seniority
of claim, the control debt holders at this level exercise in a bankruptcy
and the probability of a reorganization of the airline rather than liquidation.
With the reduction of debt holder risk, as evidenced by the upgrade
of the senior implied ratings, the senior debt classes in the company's
EETC's (Ba1 unless supported by financial guarantors) were confirmed at
levels that now more closely approximate ratings determined by Moody's
estimation of the ratio of loan outstandings to the current market value
of the aircraft. The most junior debt classes were upgraded by
one notch reflecting the reduced risk of a default by America West but
also the relative reduction of risk to junior debt holders as a result
of the company's increased financial stability and some stabilization
in the secondary market value of aircraft.
The ratings outlook is currently stable and anticipates modestly improving
cash flow to debt coverage over the near term and maintenance of current
high levels of balance sheet liquidity. Liquidity is of primary
concern due to the company's large lease, government guarantee fee
and principal payments due in the first quarter of the year. Moody's
anticipates that the large payments in the first quarter of 2004 will
result in a decline in reported cash balances at the end of March compared
to year end. This liquidity is expected to be rebuilt during the
course of the year though positive cash flow from operations. If
there is an indication at any point in the year that then current liquidity,
combined with expected cash flow, would not be sufficient to comfortably
meet first quarter 2005 payment obligations, the ratings could be
downgraded. Ratings upgrades are dependent on a stabilization of
operating cash flow and a substantial improvement in the EBITDAR coverage
and lease adjusted debt coverage metrics noted above.
America West Airlines, Inc., headquartered in Phoenix,
Arizona, is a passenger airline.
Michael J. Mulvaney
Corporate Finance Group
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.