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.
31 Mar 2006
MOODY'S ASSIGNED B2 RATING TO US AIRWAYS $1.1 BILLION CREDIT FACILITY, UPGRADED SELECTED US AIRWAYS ENHANCED EQUIPMENT TRUST CERTIFICATES, CHANGED OUTLOOK TO STABLE
Approximately $3 billion of debt affected
New York, March 31, 2006 -- Moody's Investors Service assigned a B2 rating to the $1.1
billion secured credit facility ("Credit Facility") of US
Airways Group, Inc. ("Parent"). Additionally,
Moody's upgraded selected tranches of certain Enhanced Equipment
Trust Certificates (EETC's) supported by payments from US Airways
Inc.("US Airways"), affirmed the remaining tranches,
and withdrew the rating on one US Airways EETC that was repaid.
Ratings on EETCs supported by America West Airlines, Inc.
were affirmed. Moody's also assigned a B3 corporate family
rating at the Parent level and withdrew the corporate family rating previously
assigned to America West Airlines, Inc. The outlook has been
changed to stable.
The stable outlook reflects Moody's expectation of non-fuel
cost savings in line with the company's plan of up to $250
million as the operations of US Airways and America West Airlines are
integrated, modest revenue benefits from a somewhat stronger pricing
environment, and improving liquidity. Nonetheless,
Moody's notes that the company is in the early stages of the integration
of the two airlines and meaningful challenges remain, especially
on the labor front, before a low-cost operation is sustainable.
The outlook also anticipates some merger-related revenue opportunities
through better connections of U.S. cities served separately
by the two airlines, an enhanced frequent flyer program, and
expanding selected transatlantic and Latin America markets where passenger
yields have been strong. The proposed Credit Facility eases the
near term pressure on liquidity by extending the maturities on certain
existing loans. Unrestricted cash balances at FYE 2005 of $1.58
billion are adequate for near term needs as the company raised approximately
$1 billion of capital post-merger. Consequently,
Moody's expects the company to fund all of its near term cash requirements
(capital spending of $160 million and debt maturities of $200
million) through its operating cash flow or cash on hand.
Among the factors considered in the rating is the market position of the
combined airlines. US Airways Group, Inc. is a predominately
domestic carrier, which has achieved a lower overall cost through
the US Airways bankruptcy. The extensive domestic network of the
combined systems position the company to be successful in it business
model as a low cost carrier. US Airways and America West Airlines
continue to operate separately with separate airline operating certificates,
although management plans to combine the operating authority and is working
on a transition plan. The hurdles to fully integrate the airlines
and deliver on the business plan were also considered among the rating
factors. Labor continues to be a significant obstacle to fully
achieving the low cost structure. Although the company has made
strides in merging the work force, it is likely to be at least another
year before the workforce can be fully integrated. As well,
the company is working on developing a common platform for its systems,
including reservations and the frequent flyer programs, which is
expected to take some time still. Further, financial results
are highly sensitive to jet fuel prices. The company has a very
limited hedging program, and the prospects of passing on fuel costs
to the consumer through higher fares may limit the leisure bookings attracted
to low fares and which are important to the business plan. Moody's
also notes that the ability to sustain a low cost structure also depends
on an appropriate level of investment in the fleet. The company
will take delivery of only three new aircraft in 2006. With a relatively
older fleet compared to other carriers, the company's cost
structure may be pressured upwards through higher maintenance as well
as lower fuel efficiency, thereby weakening its relative competitiveness
in markets with high penetration from other low-cost carriers.
Further, leverage remains high for the rating category despite US
Airways having discharged approximately $3.3 billion of
debt through the Chapter 11 bankruptcy process. Consolidated pro
forma debt to EBITDA was 15.2x for 2005 (on a pro forma basis for
the full year for both America West Airlines and US Airways using Moody's
standard adjustments), and EBIT to interest expense was 0.2x.
As well, Moody's expects the company to be free cash flow
breakeven at best for FY 2006, even with a modestly better operating
environment as transition costs and high fuel could negatively affect
the cost structure. Ratings could improve if the company reduces
debt or improves operations to sustain debt to EBITDA below 7x with EBIT
to interest expense approaching 1.5x (both using Moody's
standard adjustments). Conversely, ratings could come under
pressure if balance sheet cash or cash flows were to decline significantly
from their expected levels.
US Airways Group has made notable progress since the September 2005 merger.
Since then, the company has obtained single-carrier certification
from the National Mediation Board (which permits the US Airways and America
West Airlines spare parts processing and crew scheduling to be combined),
and is implementing its transitional labor agreements at competitive wages.
Aircraft leasing expense has been reduced from its historical level;
55 aircraft were returned to lessors in 2005 and an additional 20 aircraft
are likely to be returned in 2006 as overlapping service is removed from
the system. Unit revenues grew substantially in 2005 supported
by stability in domestic yields and stronger demand in cities served by
its Express regional provider, as well as increased leisure traffic.
However, the company reported a significant net loss as a result
of higher fuel prices and a $100 million restructuring charge for
returned aircraft at America West Airlines.
All EETC's supported by payments from America West are affirmed.
The Aaa ratings for certain of the US Airways EETC's that are based
on the support of insurance policies issued by monoline insurance companies
have also been affirmed.
The rating upgrades for the EETC's supported by US Airways reflects
its successful reorganization and its September 2005 emergence from bankruptcy
and improving secondary market values for the aircraft collateralizing
the transactions. All of the aircraft collateralizing the transactions
are manufactured by Airbus and include the A320 family (A319, A320,
A321) and A330 aircraft. The A320's are in high demand at
All classes of the EETC's continue to be supported by liquidity
facilities intended to pay up to 18 months of interest in the event US
Airways or America West defaults on payment obligations under the equipment
notes. Any future changes in the underlying credit quality of the
company and its ratings, and/or meaningful changes in the value
of the aircraft pledged as collateral, and/or changes in the status
of the liquidity facilities or the credit quality of the liquidity provider
could cause a change in the ratings of all classes of the EETC's.
The B2 rating for the Credit Facility, one notch above the corporate
family rating, reflects the value of the collateral securing the
loan, principally the unrestricted cash and cash equivalents,
upstream guarantees from the main operating subsidiaries, its senior
position relative to approximately $625 million in unsecured debt,
and the frequency of appraisals for all collateral (annually at least).
Debt outstanding will not change, as the Credit Facility will refinance
existing debt (ATSB guaranteed loans, along with term loans from
GE Capital and Airbus Financial Services) and will extend maturities with
a new final maturity of 2011. Covenants include minimum EBITDAR
to fixed charges of 0.86 to 1.0 through September 30,
2006, 0.9 to 1.0 through December 31, 2006 and
0.93 to 1.0 through March 31, 2007 as well as minimum
unrestricted cash and cash equivalents of $750 million at all times.
US Airways Group, Inc. senior secured bank credit facility
at B2, corporate family rating at B3
America West Airlines, Inc. corporate family rating of B3
Rating upgraded for the EETC's supported by payments from US Airways
Series 1998-1 Class A: to Ba1 from Ba2
Class B: to Ba3 from Caa1
Class C: to B3 from C
Series 1999-1 Class A: to Ba1 from Ba2
Class B: to Ba3 from Caa1
Class C: to B3 from C
Series 2000-3 Class C: to B3 from C
Series 2001-1 Class C: to B3 from C
Series 2000-1 Series G: Aaa withdrawn
US Airways Group, Inc. and its two operating subsidiaries,
US Airways, Inc. and America West Airlines, Inc.
are headquartered in Phoenix, Arizona.
Michael J. Mulvaney
Corporate Finance Group
Moody's Investors Service
Gregory D. Clifton
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 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 ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S 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 RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S 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. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S 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 AND MOODY’S 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 OR MOODY’S 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.
CREDIT RATINGS AND MOODY’S 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 the Moody’s 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 OR 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 rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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 rating, agreed to pay to MJKK or MSFJ (as applicable) for 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.